To Use or Not to Use Corporate Capacity Ratings

Recently Aspire Research Group put together a panel on corporate fundraising as part of Donor Search’s Unbound, a virtual conference. We invited three speakers to speak about corporate fundraising and posed the question about capacity ratings.

While capacity ratings are the typical researcher’s bread and butter, we asked our panelists about the use of capacity ratings when it comes to corporate prospects. This is a critical challenge for many prospect researchers and organizations to tackle. Capacity ratings are used to help prioritize prospects and also used to help quantify an ask amount. How do gift officers evaluate a company as a prospect for their organizations?

Chris A. Mildner, CFRE, Prospect Research Analyst at The Nature Conservancy, explained they used their capacity ratings with companies in addition to individuals. She mentioned the use of an affinity rating to help identify the possible intersections between the company’s mission and the nonprofit.

Tracy LaMondue, Vice President, Development at American Geophysical Union, says the first thing she looks for is alignment between the organization and the company. That’s essential. She looks to see where the company has given, how much they have given, as well as looking at the company overall to see their behavior over 30-120 days, or longer. She takes a holistic approach to a company to ensure that the relationship could be win win as well.

Dixie Ost, Director of Corporate Giving and Sponsorship at Field Museum of Natural History, takes a similar approach to evaluating a prospect. At her organization, they use research to determine if they should cultivate a corporate prospect, or not, or wait for a better opportunity. An organization may approach companies at different levels at your organization, such as corporate board, corporate membership program and/or exhibition/event sponsorship.

Ost prefers this strategy over using a strict numerical capacity rating that tries to quantify what a company may give, which most prospect researchers think of when it comes to capacity ratings.

From the panelists, it seems clear that affinity and alignment are key to prioritization. The quantified capacity can also help with prioritization, but it may be more critical further down the line when an ask is made.

In a 2018 #ChatBytes interview, Sarah Anderson, Research Analyst, Development & Alumni Engagement, University of British Columbia (UBC), talked with Jen Filla about corporate and foundation capacity ratings. She had done panels on the topic at APRA International and has fielded lots of questions from other research shops. She says many organizations are looking at the same factors, notably financial indicators, previous giving, and linkages, but treat the factors differently in the final evaluation. She also found that the relationships between the nonprofit and corporation are critical.

But quantifying a corporation’s capacity can be tricky. Some experts have used a percentage of profits or revenues, but that can be unreliable if you’re dealing with a private company. Anderson notes that what companies give may not be commensurate with their profits. At UBC, they have three factors such as capacity rating based on financials; level of inclination; and interest codes. They are intended to be viewed together but that may not happen. UBC was working on dealing with overvalued capacity ratings. They were thinking about implementing something akin to University of Alberta where they weight the capacity rating with likelihood to give to the organization.

Other people in the industry have suggested looking at the published gift amounts to organizations like yours as a guide. If a company has a foundation, it’s possible to use the company foundation’s IRS Form 990 to see their grants and make an estimate based on gifts to organizations like yours in a year.

Moreover, how do you quantify a corporation that gives in many ways, such as direct giving, foundation giving, matching gifts, etc.? There may be “different pots of money” depending on the program and part of the company, which you may not know about without the help of a gift officer, Anderson says. Then again, it’s common to see individual donors giving directly as well as through family foundations, their companies and/or their donor advised funds.

If you do go the route of coming up with a quantified dollar amount as a capacity rating, Anderson suggests using corporations you know to develop that formula to see if it passes muster and then working from there.

Ultimately, the best strategy is what works for your organization. Gift officers and prospect researchers should talk about what is the best way to communicate priority and alignment to help unpack those nice corporate dollars for your organization.

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