Helen Brown Group

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Access and Enhance Data Without Leaving Your Spreadsheet

by: Kenny Tavares, Senior Consultant & Lead Data Analyst

 

Kenneth Tavares

Kenny Tavares

Microsoft Excel is undoubtedly one of the most adaptable tools I have used in my prospect research and data analysis work. To paraphrase an old commercial: “It slices, it dices, it makes julienne fries!”

Seriously, its many applications have led me to always assume Excel can accomplish what I need and then find a way to make it happen. I love unlocking the formula or macro that makes arduous tasks effortless. Even as I delve deeper into coding for data transformation and analysis in other more sophisticated tools, my foundational understanding of data structure is rooted in using Excel. I’m sure many of you share this sentiment.

Fortunately, Excel is here to stay, with Microsoft continually enhancing its functionality to match our evolving workflows. However, as creatures of habit, we often overlook these new features; we stick to what we know.

I’d like to highlight the Data Types feature, which enhances data, making it more dynamic, thus making analysis more robust. It’s straightforward to use and can save you valuable time. You might be surprised at what you can do without running to your web browser!

There are three Data Types available: Stocks, Currencies and Geography.  We’ll explore Stocks in detail as a case example:

How It Works

Imagine you’re tracking a prospect’s portfolio that includes stocks in Apple, NVIDIA, and Microsoft. You enter their ticker symbols in a column, select those cells, go to the Data tab, and choose Stocks.

Excel will then turn these symbols into linked data fields. If you see an icon next to the stock name, it means it worked:

Clicking on the floating menu next to the cell will give you more than two dozen data points to choose from:

Let’s say you are interested in stock price simply select that option and the data will then be added in a new column — Voila!

Then, you can just multiply the stock price by the number of shares:

Even better, the next time you open the spreadsheet, the stock prices will update automatically. You can also manually update the data by choosing Refresh from the Data menu.

Other Use Cases

Stocks: Another great use for the Stocks type is business valuation. To assess the value of a privately-owned company, create a custom list of similar publicly-traded companies and use the floating menu to add useful info like employee counts, market cap, and price-to-earnings (P/E) ratio. Instead of copying and pasting from a web browsesr, you can gather all this info using Excel.

Furthermore, you can pair the Stocks information with the STOCKHISTORY formula to generate a list of historical prices for a selected date range without exporting from another website.

Geography: The Geography type is great for enriching a list of addresses. By applying it to a zip code, you can get city/town info like population, county, state, and coordinates.

With the Power Map add-in, you can map out your prospect’s locations. From the county data, you can access more info like the largest city. From state data, you can get Census info like median income and home values. In no time, your simple dataset can be transformed into something more insightful.

Currencies:  Using the Currencies type, you can get updated exchange rates by entering the abbreviations for the two currencies you want to check, for example, Hong Kong Dollar to US Dollar (HKD/USD). Excel will give the rate, which you can then use in your calculations. This makes it easier to evaluate an international prospects’ wealth, especially one with a lot of foreign holdings.

Summary

Excel’s continuous evolution and feature expansion ensures it remains an invaluable tool for prospect researchers and data analysts. Hopefully, the Data Types feature will make your workflow more efficient. By leveraging these innovative tools, you can unlock new possibilities and insights, making your data work for you more effectively. So, take the time to explore these features and see how they can transform your approach to data.

 

 

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Crafting a Meaningful Donor Profile: Connect with the Donor Behind the Dollars

by: Susan Barclay, Consultant

Susan Barclay

Profiles are the bread and butter of the prospect research world. We write them day in and day out. But, have you ever thought about what makes a good profile go from good to, well, great?

Say you’re like my colleague Karla Davis and you’ve been asked to research someone like This Guy. Your fundraiser has already had the initial visit with This Guy and is anxious to learn more, counting the moments until your profile is in their hands (or inbox). A good profile includes all the usual information, but what else can make it great?

A great prospect profile goes beyond the numbers; it delves into the prospect’s interests and values and presents a picture of the donor behind the dollars. It answers questions.

Let’s take a look at those different categories, shall we?

 

What’s in a Name?

First things first: always include the essential details. This includes the donor’s name, contact info, and affiliations.

But don’t stop there!

Make it a point to understand who they are beyond these basics:

  • What’s their background?
  • Who are their family members?
  • What led them to philanthropy?
  • What compels them to give?

By grounding your profile in personal details, you set the stage for a deeper connection.

Hint: Two of my favorite sources are LinkedIn (be sure to follow your organization’s social media policy) and Lexis Nexis for Development Professionals.

 

Uncover Their Philanthropic Interests

Let’s dig into what truly drives your donor. Research their giving history to spot patterns—this is where you can find insights that aren’t just about the size of their gifts but also about their values and priorities.

  • What causes are they passionate about?
  • Do you see a consistent history of giving to particular organizations, or are they one-time givers?
  • What are their most significant gifts?
  • Do you see any endowments, major gifts, multi-year gifts, or scholarships?
  • Are they involved with any organizations as a member of a board or as a trustee?
  • Do they serve as a volunteer in other capacities?
  • Do they support those organizations?
  • Have you run across any articles mentioning their involvement with non-profit organizations?

Hint: One of the first sites I always go to when looking for board involvement is ProPublica.

 

Analyze Their Giving Capacity

Look for wealth indicators—like properties or business ownership—but also consider their lifestyle.

  • Do they have an art collection, watercraft, horses, car collection?
  • What about public company securities?
  • Are there any assets held under their spouse/partner’s name or under an LLC?
  • Do you see evidence of a DAF, family foundation, or a family office?

Hint: DAFinitive® is a great tool to help you search for DAFs. It contains over 90,000 funds from over 700 DAF sponsors, with more being added every week!

 

Personal Insights Matter

This is where you really start to connect with the person behind the donations.

  • Can you find any personal anecdotes?
  • How about information on their hobbies, or passions?
  • Has the donor been featured in a local magazine or spoken at events?

Quotes or stories can provide a glimpse into what matters most to them. Occasionally a tiny nugget of information mentioned in an article about your donor can reveal a world of information you never expected.

Hint: My favorite resources here are to check out local publications and newspapers for your prospect’s hometown, as well as their alumni magazine and any trade journals within their business industry.

 

It’s Alive!

Finally, remember that donor profiles should evolve. Update them regularly with new information or changes in the donor’s status.

A dynamic profile ensures you always have the most relevant information at your fingertips, keeping the focus on the person rather than just the data.

Creating a detailed donor profile doesn’t need to be overwhelming or complicated. By keeping it simple, answering the immediate questions and focusing on the individual behind the donations, you can craft profiles that truly resonate.

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Ode to the Obituary – A Prospect Research Perspective

by: Maura Monley Baron, Consultant

Maura Monley Baron

Maura Monley Baron

From the beginning of my career as a researcher I have always been drawn to obituaries. Not only because they provide information essential to our work, but I also love the stories they tell and the generational history that can be learned from them.

I see obits as a window into the lives of individuals and families and the people, places, and things that they care about. Last December I worked with my family to write an obituary for a beloved family member. As a researcher, my first instinct was to be cautious with the amount of personal information shared because I know how researchers use this information, and I knew it could be used for identity theft.

However, as we started writing, I found myself letting go of my concerns and wanting to share because I was proud of my family member, and I wanted to tell their story. This experience advanced my appreciation for obituaries and inspired this blog post.

A Brief History of Obituaries

As I started working on this blog my first step was to do a little research about obituaries. In doing so I learned that obituaries have evolved from simple death notices to detailed narratives that tell the story of a person’s life.

The earliest known obituaries date back to ancient Rome. With the invention of the printing press, the newspaper industry boomed, and the tradition of publishing death notices continued. During the American Civil War newspapers published death notices for soldiers, which included biographical details. This practice helped communities keep track of the living and the dead, making obituaries a vital part of the public record.

By the late 20th century, obituaries had become more personal, including family stories and photographs. Today, obituaries are often published online, allowing for even more detailed memorials. Funeral home websites, and the platforms they utilize provide space for families to share photos, stories, and memories, creating a digital tribute and a valuable source of information for our research.

Sometimes you cannot find an obituary – which is frustrating – however my research informed me that obituaries are not a legal requirement, and certain religions and cultures may choose not to publish them for various reasons. Some families may opt not to publish an obituary due to privacy concerns, financial constraints (most newspapers charge by the word to print obituaries), or because the deceased requested not to have one.

Newspaper archives are the best place to find older obituaries and a subscription to Newspapers.com is helpful. Other resources include Legacy, Genealogy Bank, Family Search, Dignity Memorial, and Find a Grave.

Tips for Using Obituaries in your Research

The Basics

To be clear I do understand that a deceased person is not a good prospect. However, the obituary can confirm key information about a person’s life, including birth date and place, education, career, where they lived, and other life events. This gives you an overview of an individual and is useful for verifying information about surviving family members.

Generational Wealth

A “good” obituary can be one of your most valuable tools when working on a complex prospect with generational wealth. Most obituaries list surviving relatives, including spouses, children, siblings, and sometimes even grandchildren or great-grandchildren. This information can help you build family trees and identify connections between different branches of a family. I often find myself revisiting an obituary as I move through my research, and I like to keep the obit open in my browser for reference.

From the 1870s to the 1950s, in conjunction with the publication of an obituary was the practice of publishing details about a deceased person’s will and estate in newspapers. While this seems like an incredible invasion of privacy, I learned that during this period, newspapers were a primary source of information for the public, and legal notices, including probate notices, were often published as part of the public record. This was how surviving family members were notified of the contents of a will and provided a means for distant relatives to discover information about an inheritance (or a missed one). These articles, though not an obituary, will provide detailed information about how much family members inherited, including cash, securities, and real estate.

Democrat and Chronicle, Rochester, NY, February 12, 1944

So Much Can Be Learned from a Name

A middle name or even a middle initial can be very helpful for confirming a prospect with a common name. An obituary can also confirm where a prospect lives. By finding these additional details it will be much easier to confirm your prospect when you utilize research tools like LNDP, Kindsight, or ResearchPoint. I also look for a relative of my prospect with a less common name and search for that person on social media which can lead to more information about the family and the ability to confirm relationships.

Obituaries can be particularly helpful in identifying women’s maiden names. Often, I find an indication of generational wealth from first or middle names which identify a last name of a previous generation.

    Baltimore Sun, May 23, 1973

Finding Clues for Further Research

Obituaries detail community affiliations, such as religious organizations, professional associations, or social clubs. Sometimes they include information about where a prospect’s family has lived, including second homes, that may still be in the family. The name of a business found in an obituary can lead to the discovery of a current company and a history of stock ownership by the family. Following these leads often brings you to additional records and sources of information.

 

Star Tribune, Minneapolis, Minnesota, May 6, 1996

 

Sacramento Bee, April 15, 1952

Philanthropy

Obituaries also indicate organizations a person was affiliated with as an alum, board member, or volunteer. This may help you confirm gifts from your prospect to these organizations. Information about where a family directs memorial donations can confirm a family’s philanthropic interests or reveal significant donations recognized through naming opportunities. Sometimes a specific donor advised fund name is provided as well.

Democrat and Chronicle, Rochester, NY, February 1, 1995

In the End….

When using obituaries for research, it is important to remember that the information provided may not always be 100% accurate, as it is often provided by family members. Cross-referencing with other sources is always necessary for verification.

As with many things in prospect research the obituary will serve as a piece of a larger puzzle. A detail from an obituary may lead you down the road to finding information about your prospect that influences your rating or creates a connection to your organization. I feel most satisfied with my work when I can provide my client with a strong prospect in terms of capacity but also when I feel I have found evidence of a connection between the prospect and their family and the work of the organization, and an obituary often helps with both.

Obituaries have changed significantly from their simple beginnings to the detailed digital memorials of today. They continue to serve not only as a public record of death but also as a celebration of life.

It will be interesting to see what the future holds for obituaries. Like all things their evolution will be influenced by the complex digital world we live in. As a human and a prospect researcher I hope they do not become obsolete as they are important to the process of grieving and provide an opportunity to tell the story of a life well lived while also being an indispensable resource.

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Front Door Locked? Use the back door!

We just celebrated my colleague Jennifer Turner’s fourteenth anniversary with HBG (!), and one of the things Jen has become known for around here is her skill at tracking down hard-to-find information. In today’s article, Jen shares some of her tactics for finding contact information when the usual resources are less than helpful. Thanks, Jen! ~Helen

Jennifer Turner

Senior Consultant Jennifer Turner

Let’s face it – it isn’t easy getting a phone number for the likes of MacKenzie Scott (trust me, I’ve tried). I’m sure I’m not the only one who’s ever been given the daunting task of finding contact information for a famous philanthropist. It’s hard enough finding all their real estate assets, disguised under the names of various LLCs, let alone a direct phone number.

While it may be difficult reaching that donor directly, I am here to let you know that there is hope! Try reaching them through what I affectionately refer to as “the back door.” Below are some examples of alternative ways to connect your colleagues with those hard-to-reach prospects:

  1. Try to find the prospect’s personal assistant

Company websites usually just list the top executives, so you may need to dig a little deeper to find their assistants. I usually begin by searching the name of the prospect’s company in ZoomInfo’s “institution” tab. From there, I click on the list of individuals. Depending on the company, the number of names listed can range from a few to hundreds of thousands. I then sort this list by title, and scroll through until I find anyone whose title matches personal assistant, executive assistant, administrative assistant, etc. With any bit of luck, you will not only find the name of an assistant, but an email address and direct telephone number for them as well.

  1. Search within the prospect’s company’s website for “hidden” email addresses

Using an extension such as Hunter, you can quickly obtain a list of email addresses within a company’s website (note: Hunter offers a variety of subscriptions ranging in price, but even the free subscription gives you 25 monthly searches, so you won’t need to ask your supervisor to pay for another resource to have success with this method). Sometimes the email address will be accompanied by a complete name, and if you’re lucky, their title. Other times it will not. When I don’t have a name, I simply conduct a new internet search putting the email address in quotation marks. If/when I find the name, I can then run it through LinkedIn to see if I can obtain that person’s title. This method may sound a bit time consuming (which it can be) but has proven invaluable when I cannot find an email address for the actual prospect.

  1. LinkedIn

And speaking of LinkedIn, whether you have a paid subscription or use the free version (I use the free version), this can be a great tool for finding personal assistants. Look up the prospect’s company, then review its list of people. From this list, you can search employees by title, or you can simply scroll through the list of people to see if any titles are for an assistant. Once you have a name, you can then try to find their contact information in ZoomInfo or via an internet search. (Just remember that sometimes people hide their full names in LinkedIn.)

Of course, with these tips also come some hiccups…. 

Caveats

Sometimes there can be lots of administrative assistants. You can handle this a couple of different ways:

  • Include them all and let the fundraiser go from there.
  • Limit the ones you pass on to the fundraiser to those for which you have found an email address and a direct phone number.
  • Check to see if you can find the assistant’s location. Depending on the size of the company, the assistants may be scattered across various locations. Try to make sure the assistant’s name you provide is in fact employed at the same location as the prospect.

 

Outdated titles

  • People change jobs. Often. And sometimes information is outdated. Therefore, whenever possible, try to cross-check titles and companies to ensure the assistant is still, in fact, employed at your prospect’s company.

 

You simply cannot find an assistant.

  • It happens. When all else fails, try to give your colleague something. You may not be able to provide them with the prospect’s personal email or direct telephone number, but putting them in touch with a person whom they can refer to by name is the first step in getting them connected.

In conclusion….

 Don’t just give your fundraising colleagues a generic email (such as info@xxx.com) found on the main page of a company’s website, or their main business telephone number; take that extra step to provide your colleague with a specific name and a title, even if it isn’t for the intended prospect.

Chances are, they will have more luck speaking to an actual person this way, which can then lead to a future conversation with the desirable prospect. While it may be premature to expect an immediate call with the likes of MacKenzie Scott, there’s no harm in having an initial conversation with those connected to her. From there, you can let your colleague work their magic to get a meeting with a billionaire prospect.

 

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The RiF Prospect Research Handbook is out today!

Lots of times we might have a brilliant idea to nudge forward (or perhaps even revolutionize) our profession, but then we think, ugh, is it worth it? That would take forever! And we go back to whatever it was we were doing before our daydream.

Fortunately for all of us that’s not what happened back in 2019 when Ben Rymer, then chair of Researchers in Fundraising (RiF), dreamed up the bold idea to create a soup-to-nuts Prospect Research how-to Handbook. In case you’re not familiar with RiF, it’s the professional association for prospect researchers in the UK. Just like Apra here in North America, RiF has a great conference every year (theirs is in November in London) as well as gatherings throughout the year.

The RiF Handbook (available today!), called Researchers in Fundraising: Best Practice Guide and Handbook for Prospect Research has been a labor/labour of love for many of us in the prospect research community. I was lucky enough to be one of the volunteer editors for a segment or two, and I was impressed at what a well-run machine it was, and what a great job that the project’s manager Ally Lee-Dudley, founder of Adcumulo, did of keeping the operation running so smoothly.

I was interested to learn more about the Handbook and the process of creating it, so I got in touch with Ben, Ally, and Chris Davis, RiF’s current chair, to find out more. Sincere thanks to Ben, Ally, and Chris for sharing these great insights!

Helen: Ben, how did the idea come about to do a Handbook for prospect researchers?

Ben Rymer: When I sent the initial proposal to the Chartered Institute of Fundraising (CIoF) in August 2019, I’d known for a while that a handbook/textbook/how-to guide was needed. My feeling was that prospect research was still something of a trade, rather than a profession or discipline. We have a huge amount of expertise, experience and goodwill in the community, but it had never completely crystallised into a finished product so we could build on and improve existing good practice.

HB: What was your initial plan for the scope of the project, and did that change at all as it evolved?

BR: All I knew was that the main areas of research practice should be included. Basically I wanted to create something that I would’ve found practically useful in my first job in the sector. We cast the net wide in starting, with plans for 23 chapters. The big trade-off since then has been in response to volunteer availability. All the content is crowd-sourced, and so we have to work in sequence with the expertise of volunteers who come forward … Also, Covid hit a short time after project kick-off, but we pivoted to remote working pretty well, thankfully.

HB: Ally, how did you get involved with the project?

Ally Lee-Dudley: My involvement with the project began in January 2020 when the Steering Group were looking for a Project Manager to move the Handbook from a great concept to a work in progress. At this time there were not yet any structures, processes, or resources in place so this really was the beginning of the Handbook as an active project.

HB: How many volunteers were part of it?

AL-D: To date around 90 volunteers have contributed to the Handbook, some as writers, some as editors, some as beta-readers, as some as micro-volunteers. Volunteers come from 3 different continents, and around a dozen different countries making the volunteer effort an international collaboration.

HB: How many chapters are there, and how was the decision made on which topics to include?

AL-D: At launch, 8 chapters are available for readers plus a Resource Director and Glossary of industry terms and phrases. There are another 7 chapters in progress which will be published as and when they are completed and a further 11 chapters that are yet to be started. Publishing content on a staggered basis like this means we are able to start getting useful content out and into the prospect research community far more quickly than if we wait for a ‘complete’ Handbook. The original list of potential chapters was developed through discussions between the volunteers who make up the RiF Committee. Over time several additional chapters have been added to that list as a result of suggestions made by volunteers involved with the project.

HB: Chris, as the scope of the project evolved, what changes did that cause you to make?

Chris Davis: As we added more chapters to the Handbook, we found ourselves looking beyond our immediate peer group for input and advice, to those with specific expertise or lived experience. For example, in our chapter on Strategic International Prospecting, we were aware that we needed to get as much input as possible not only from researchers with extensive knowledge of international prospect research, but also from those with experience of living or working in different countries and communities. This was definitely a challenge, but I hope we got the balance right! Similarly, when we start work on the chapter on Equality, Diversity & Inclusion in Prospect Research we’ll be seeking involvement from those who are experts in the ED&I space.

HB: What surprised you most about the process, or what created the most changes or opportunities as things went along?

CD: I think I was surprised by how much content we ended up generating! I knew that the prospect research community would be hugely generous with their time and knowledge, but I was still taken aback at times by the volume of work we ended up producing. At this point I’d have to give a big shout out to our beta-reading and editing volunteers, who were a major help in clarifying and refining the chapters and getting them to where they are now.

HB: Ben, what do you think are the top 3 things that readers will find that might surprise them?

BR: 1. Reach: it is a big thing! Chapters I’ve worked on have ended up being 10,000-20,000 words long. We also have a very broad range of topics, so I think readers will be pleasantly surprised at that.

  1. What’s still to come: by the same token, there are some big chapters in the pipeline, so reader may be left waiting for those. If anyone has suggestions, please feel free to get in touch via the Handbook website, www.rifhandbook.info.
  2. Quality: we’ve put a lot of effort into making the content as good as it can be. For a wholly volunteer-generated initiative I think it is a solid product, but I’m biased of course!

HB: Chris, what do you think are the top things that you think readers will find most useful in the Handbook?

CD: I think that will be different depending on the needs and experiences of readers – throughout the Handbook we’ve tried to ensure that content is relevant for both those who are new to prospect research and for experienced researchers who are looking to innovate and upskill.

For early-career researchers or those who are setting up a prospect research function, we hope our New Researchers Guide chapter and the chapter on The Prospect Research Role will be invaluable. Within the Data & Skills Domain of the Handbook, there is some very detailed, nuanced, and in-depth content on estimating wealth and assigning capacity ratings – topics that we know are of eternal interest to prospect researchers and fundraisers alike!

Finally, we’ve made extensive use of case studies throughout the Handbook, drawn from the real-life experiences of researchers. We hope these will really bring the content the life and illustrate how the principles and techniques outlined in the Handbook can be applied practically.

HB: Chris, what did you enjoy most about the process?

CD: I’ve really enjoyed the experience of being involved in creating content for the Handbook, especially the early stages of this where you are exchanging knowledge with your peers. I’ve been working in prospect research for over a decade, but being involved with the Handbook has absolutely encouraged to rethink some of my settled views about the work that we do, and how we do it. I think the Handbook does reflect this process of peer exchange, and I hope that everyone who uses it will find something new and different in there that challenges their assumptions.

HB: Ally, What tools did you use for collaboration on this massive project and how well did they work? If you had another large collaborative project to undertake, would you use the same tools?

AL-D: The Handbook was always intended to be primarily a remote project, so in that sense we were lucky and the pandemic didn’t significantly affect our plans. In order to help ensure both accessibility of tools at no cost for volunteers and to help embed project sustainability by keeping the financial burden of the project low for RiF, we’ve largely drawn on tools that are available for free. As a Steering Group, our project management hub is a tool called Freedcamp, and this enables us to plot and track actions, deadlines, and milestones and assign task accountability at a strategic level.

For the Handbook’s wider volunteer community, the free version of MS Teams is our collaborative workspace. Teams provides us with a place to create, share, and store documents such as meeting agendas and action plans, and to work collectively on producing and editing content in real-time whilst being able to communicate quickly and easily with each other. Within Teams volunteers can access the web versions of MS Word and Excel so we’re all using the same tools to ensure compatibility plus there is in-build versioning history and storage back-up for those ‘just in case’ moments.  We’ve recently made the switch from using Zoom for our regular meetings to using MS Teams’ video calling service; it doesn’t quite have all the same features as Zoom but it does come at zero cost rather than requiring a subscription to hold meetings for small groups for up to an hour at a time.

The Handbook itself is created using a custom-made WordPress website. We chose the route of e-publishing over hard copy for several reasons and the WordPress platform, with its almost unlimited flexibility and versatility, is the best fit to meet the Handbooks needs both now and in the future. As an e-publication it is not only much easier to keep the Handbook content up to date, it is also far simpler to ensure its availability to readers around the world who can access the content from any device with a web browser.

Overall, aside from the usual occasional IT glitch, (we’ve done the equivalent of turn it off and on again once or twice), the tools we’ve chosen have been effective and created not only a conduit for remote productivity and development, but also a space to come together a a community and experience that sense of being part of a team working towards a common goal that is so important to the Handbook.

Many thanks again to Ben, Chris, and Ally for sharing the inside scoop on the RiF Prospect Research Handbook, and for all of the hard work and coordination that went into creating it! Check out the Handbook website at www.RiFHandbook.info. If you would like to be a volunteer writer or editor for future chapters, please visit this page to learn more.

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Shadow banks

Dark Alley. Image by Petr KratochvilThis week I watched another fascinating/informative/alarming/stellar PBS Frontline documentary called The Power of the Fed, which I highly recommend if you want to get a well-explained idea of what is happening with US financial markets right now.

One of the phrases that came up repeatedly during the program was shadow banking. It’s one of those terms I delved into pretty intensively during and after the 2008 financial crisis, but it’s one I haven’t heard come up again until recently.

I thought it was time to explain what shadow banking is here on The Intelligent Edge because it’s becoming relevant again and is more in the news. Which maybe isn’t such a good thing, you know?

What are shadow banks?

They’re called shadow banks because, in the flow of money globally, there are some financial institutions that operate outside of (or under the radar of) traditional banking regulation because they do things that traditional commercial banks don’t do.

On a very simple level, commercial banks (like Bank of America, or Fleet Bank, or Watertown Savings Bank) exist to store money from the public, invest it, and lend it back to the public. You can go into any commercial bank and deposit money in a savings or checking account. They will take that money and lend it to others and give you back some of the interest from those loans. Or they’ll take your money and hold it for you until you spend it using your debit or credit card.

How banks do what they do is intensely regulated by federal and international laws and agreements. There are things that commercial banks are not allowed to invest in, like junk bonds for example, because they’re too risky. Also, they’re required to hold a certain amount of money in reserve and to guarantee your deposits up to a certain amount. If you give them $25,000 to hold in an account for you, they are required to have insurance that guarantees that you’ll get it back.

Shadow banking is pervasive in the world and most of the activity centers on the creation and re-selling of collateralized loans and repurchasing agreements used in short-term lending between (non-bank) institutions and broker-dealers. There are no reserves backing the investments, and there’s no insurance to cover any losses. Which is why, when deals go well, investors can make a l-o-t of money because they take on a lot of risk.

Because of their description, it sounds like the participants are hiding in some shadowy back alleys, but you’ve probably heard of (and maybe even used the services of) some of them. Some of them even have banks as subsidiaries (yes, that’s as weird as it sounds). Here’s a list of examples of shadow banks:

  • investment banks, like Goldman Sachs or Morgan Stanley
  • mortgage lenders (ever taken out a Quicken Loan? In 2018 they surpassed Wells Fargo as the largest mortgage holder in the US.)
  • money market funds (here’s an example of a hybrid: Schwab is a broker-investor for money market funds that also has an affiliated bank)
  • insurance/re-insurance companies
  • hedge funds
  • private equity funds
  • payday lenders
  • peer-to-peer lenders, like LendingClub

Shadow banks move money around in the background. They bundle and invest in things in aggregate, like thousands of mortgages, and sell them on to others. They invest in start up companies (which banks can’t/won’t do). They invest in repossessed assets, and flip them for profit. They buy, re-bundle, and sell commercial bonds (including junk bonds). Amongst many other ways, they make money from their management fees and from betting that interest rates will go up (or down) on the assets they’re buying or selling. And by making risky deals that work out.

These money-movers use short-term, quickly-raised money to fund longer-term assets, so if the market goes bust in the long-term asset area, the shadow bank needs a bailout from somewhere or it goes bust, too, since there is little regulation and no reserve funds to guarantee the investments.

Anticipating that happening (and preventing it) is one of the jobs of the Federal Reserve, and their skill in watching the mile markers whip by on this current economy’s journey (and deciding where the economy should exit or put on the brakes) is where the Frontline program was particularly fascinating. I love hearing insights from people who either are on the inside, or recently were, and Frontline’s interviews pulling out what we should see next from regulators (and what might happen instead) was a real education.

How big is the shadow banking sector?

According to the Financial Stability Board’s (FSB’s) most recent Global Monitoring Report on Non-Bank Financial Intermediation released in December 2020, the shadow banking sector accounted for almost half (49.5%) of the global financial system in 2019. Almost half of money moving around right now is unregulated. What could possibly go wrong?

The US is the global leader in shadow banking asset holdings with China not far behind; this sector makes up nearly one third (29%) of China’s total banking assets, according to a recent article in The Banker. China’s banking regulators are currently working to keep the sector in check by banning banks and wealth managers from holding sub-investment grade assets, and time will tell how effective the legislation is. The shadow banking sectors in Brazil, Canada, and India are also growing apace. Our economies are all interconnected, so it’s important for us to understand this as we research ultra high net worth prospects involved in these sectors, and estimate their future potential giving.

And not only that, of course. It’s important to understand because we may not even realize how deeply shadow banking impacts our own daily lives and personal assets. If you have 54 minutes, I recommend spending it on the Frontline documentary this week.

 

 

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How much is that private company worth?

Finding information about public companies is so easy! Unfortunately, the majority of companies in the world are privately-held, so finding information about them – especially how much a company is worth – is a daunting task. Thankfully, today my colleague Grace Chandonnet provides a huge hand up for those of us who aren’t professional company valuers with this enormously helpful article. ~Helen

Grace Chandonnet

                Grace Chandonnet

It’s an age-old prospect intelligence challenge. Especially if you’re new to our field, placing a value on a privately held company, and on your prospect’s stake in that company, can seem daunting. Publicly traded companies are required to report their financial information to the SEC, and that information (things like market capitalization, revenue, number of employees, and insiders’ stock holdings), is then available to the public. Privately held companies are not under the same legal obligations, so getting at their financial information is a bit trickier and less straightforward. The good news is that there are some pretty simple tricks that can help a researcher arrive at a reasonable guess as to the value of a private company.

You will need a couple of pieces of information, and the fact is that sometimes you will not be able to know enough information to make a realistic estimate. But there are some resources to help.

If you can uncover a reliable estimate of the company’s revenues, that’s a great start. The unicorn is to find a news article, often published in business or industry publications, that is talking about the company’s industry and uses your prospect’s company as an example. In this article, the exact amount of revenue is not reported, but enough information is provided about the company, a provider of solar energy, to figure it out. The company “reported a 124% gain over 2018 gross sales – an increase of $42.4 million” – when you do the math, you will arrive at 2019 gross revenue of about $76.6 million.

If I have information like this, the first thing I will do is try to find one or more publicly traded companies with a similar line of business and similar revenue, and then compare the public company or companies to the privately held one that I am researching. To find similar public companies, I use a stock screener like this one, which is a free resource.

Select Create Custom Screen and then pull down on Select Category to Current Financials and select Revenue. Enter the revenue criteria (I use a range of values, in this case between $60M and $80M). Once you’ve entered that and clicked in the box to activate the search, go back to the pull-down menu. Pull down to Company Overview and then click on Industry (scroll down in the box, it’s slightly hidden). For this example, I picked “Alternative Electricity”. As you’ll see in the image, there is only one search result, but it’s a good one – click on View Screen Matches to see results. The piece of information to look for in those results is the market capitalization or market cap, which is the total value of the publicly traded company because it is reasonable to assume that there is some similarity between the market capitalization of the public company ($373.1 million) and the value of the private one.

If I have multiple companies in my search results, I will use the average market cap for the companies in the list that are the most similar to my prospect’s company. When doing this, I leave out any outliers – where the market cap is a lot lower or higher than most of the companies in the list.

If, however, you know that your prospect is trying to sell her company or that she already has, the value you want to look for is the enterprise value rather than the market cap. Enterprise value is the amount that a company could fetch in an acquisition. You can find this number by looking up the comparison public company or companies at any number of free sources. I like Yahoo Finance, where you can find the enterprise value under the Statistics tab.

Of course, a good deal of the time, you won’t find an article that tells you exactly what your prospect’s company’s revenues are or there just won’t be good comparison public companies in your search – sometimes a close industry match isn’t available or (if you do have an estimate of revenue), there won’t be any companies with revenues in that range.

My second go-to in cases like this is the Business Reference Guide, which is a paid resource, but not terribly expensive. This resource is available as an online subscription, a book, or both. It is focused on pricing businesses and franchises and is geared toward entities that are seeking to buy a company or franchise.  It is chock full of industry benchmarks and trends, rules of thumb when assessing certain industries or franchises, and ways to assess a ballpark figure for what a company is worth using a host of different data points that you may have. If you have an estimate of the number of employees a company has, for instance, you can often find a simple multiplier to use to estimate a company’s valuation.

This of course brings us back to whether you have that information and where to find it. I like to look at my prospect’s company in several different resources, including Dun & Bradstreet and ZoomInfo, both of which are included in a Lexis Nexis for Development Professionals (LNDP) subscription, and see how these resources’ results compare to one another. If you have access to LNDP, you not only have access to both of these resources, but also to a host of others, including Gale Group Company Briefs, IAC Company Intelligence, and Lexis Nexis Corporate Affiliations.

iWave is another great source of aggregated company information. Dun & Bradstreet has often been maligned in our profession for not containing trustworthy information because its data is frequently based on self-reported numbers and/or modeling, so it should be taken with a grain of salt. I’ve been finding lately that ZoomInfo often returns data about revenues and number of employees that seem pretty accurate to me. With practice, you will be able to identify which information is probably wildly inaccurate versus information that seems quite reasonable. D&B Private Company Insight (also available in LNDP) often has information about what percentage of the company is owned by whom, and this is great to know. Estimating the value of a company is one thing, but knowing how much of the company your prospect owns is the next (and important) step to including these numbers in your capacity score.

The more you do this kind of research, the more you will trust your instincts about what seems to be relatively accurate numbers, both for revenue and number of employees. There will always be things we can’t know abut a privately held company, such as the value of inventory or machinery and other hard assets, and debt/liabilities, but I believe that we should at least attempt to understand what a privately held company could be worth when assessing a capacity rating for a business owner, and I also believe that these relatively simple calculations can result in a strong estimate.

Some additional things to consider:

  • What percentage of the company does your prospect own? If you don’t know, estimate conservatively – I like to use 10 to 25 percent ownership.
  • Is it a multi-generation family business? This could indicate that there are minority shareholders (family members) and should be taken into account when assessing your prospect’s true stake.
  • Did your prospect found, grow and continues to head the company? This could indicate 100 percent ownership for your prospect.
  • Is it venture funded? Investors will own some stake in the company if so. Sometime the percentage of company owned by the investors can be found in a news search, but not always. If not, be conservative when estimating what your prospect’s ownership percentage is.
  • A company’s valuation is not a liquid asset for your prospect until/unless she sells it, but it is an asset that should be included in your capacity rating, just as real estate values are.
  • It is conventional wisdom that privately held companies are often not as valuable as publicly traded ones, so as for all the other steps, be conservative in your estimates.

Good luck – and remember: sometimes you just will not have enough information to make a reasonable guess about a company’s valuation and this is not a bad reflection on you or your research skills!

 

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Alert and Prepared

Not long ago, a client confided to me that she was worried that her major gifts team was missing information about their top prospects. She fretted about a recent instance where information had come to light – six months too late – about a dear donor/volunteer that had sold their company to another for a significant amount of money.

Which, from a fundraising standpoint, we all know isn’t great. You’d rather know about these things in real time, or at the very least within the month.

What was worse was that the client felt like they’d missed the opportunity to celebrate with the donor. Selling their company was an event that the donor had mentioned with delight and anticipation – a new chapter was opening in their life. My client felt like the fundraising team had unwittingly blown it. Congratulating the donor half a year later felt lame and tainted with opportunism, which wasn’t the message they wanted to give. [Read more…]

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Primary Sources

Much of the time we rely on information aggregators like Lexis Nexis or terrific lookup sources through wealth screening companies, but sometimes they misinterpret, or don’t include information from primary sources. So in this week’s article, HBG team member Angie Herrington shares some great advice to help you strategize where to find prospect information directly from primary sources. The added bonus is that many of them are free. ~Helen

“Card Catalog Sculpture” photo by Sage Ross https://bit.ly/2NLZtPl

In college, I majored in history and was required to take a class on methodology. Holding our blank index cards, our class walked to the university’s library, met with the reference librarian, and then were set free to browse… the card catalog drawers. We were there to learn about historical evidence – primary and secondary sources. [Read more…]

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Back-of-the-napkin privately-held company value calculator

Coming up with the value of a privately-held company is one of the hardest balancing acts that prospect researchers do. No matter how hard we try, we will get it wrong around 100 per cent of the time. The only consolation is that it’s very likely that not even the owner of the privately-held company has any idea what their own company is really worth. The value is simply what someone else is willing to pay on any given day.

The Small Business & Entrepreneurship Council reports that the vast majority of companies in the United States – 99.7% of employers – are privately-held small businesses, and firms with less than 20 workers made up 89.4 percent of businesses in America.

That’s a lot of businesses that aren’t publicly-held, but when I talk with researchers about things that are hard to do, there are few who don’t express doubt in their ability to read and interpret SEC forms. Understanding them is important, but it’s not what a researcher is going to spend 99.7 percent of their time doing, and – to my mind – valuing privately-held companies is harder by about the same percentage.

Of special note is the fact that, according to a U.S. Small Business Administration report, women own 36% of all businesses and 20% of employer businesses. That figure continues to grow as entrepreneurial women, eager to sidestep short-runged corporate ladders, continue the trend of building opportunities for themselves. As these successful women become a larger part of our frontline fundraisers’ portfolios, understanding how to value their companies (and understand their philanthropic priorities) becomes increasingly important for us, too.

So, how do we value privately-held companies?

Normally when we want to value a privately-held company, we do one of a few things:

  1. We get lucky and find that an intrepid business reporter has valued it for us.
  1. We get lucky and learn that the owner has revealed the information themselves, either on their company website, or in a published interview, or in conversation with a fundraiser.
  1. We get lucky and see that Dun & Bradstreet has estimated a value for the company in its Business Information Report. (NB: this is a red herring. D&B estimates are to be trusted as much as an unsupervised Labrador with a coffee table full of appetizers.)

When none of those pans out, we start doing the hard work of estimating a privately-held company…

  1. We look for a comparable company or “comp,” which means that we try to find a publicly-held company that is in the same line of business with the same number of employees in the same geographical area with roughly the same sales. We then look at the publicly-held company’s market value, and…there you go. (Except there you don’t go, because finding apples-to-apples comps are as common as finding a lost Picasso print in someone’s attic. It happens, but not often.)
  1. We go through a highly scientific process to estimate value using betas, estimating revenue, expenses, etc. to come up with a value. To assist you in this venture if you dare, here is a 170-slide masterclass from NYU professor Aswath Damodaran walking you through four valuation examples. (It’s useful to know this, and I do highly recommend further education on how businesses work, and balance sheets, and P & L statements because you should know this, but we’re prospect researchers, not Goldman Sachs executives working out an IPO and we’re usually on a deadline.)

SO:

  1. Here’s my small business, private company, back-of-the-napkin estimating tactic to use if you don’t know the company’s sales. (If you do know its sales, stop now and go to the end of this article).

This technique won’t work for every company (the sole-practitioner attorney or the self-investing money manager, for example). But I think it’s a quick conservative baseline to use for companies with ~5-25 employees because we’re going to focus on how much a small company with employees has to generate annually in order to simply pay their bills. If they’re running a demonstrably successful company, then you can be sure they’ve got at least that much (and probably more besides). How much more you  want to add into the calculation based on your – and your frontline fundraiser’s knowledge – is then up to you.

First, you calculate Payroll

How many employees are there? Check the company’s website, or D&B (caveat: see above), or LinkedIn, or the company’s Facebook page.

What’s the average salary for people in that profession? Check salary websites or job descriptions on search & recruitment sites for ranges.

Now, take the employee number times the average salary = S

Multiply S times .3 to calculate benefits = B (benefits cost ± an additional third of an employee’s salary)

If this is a profession that frequently rewards employees with extras like bonuses or commission, multiply that average amount per employee to calculate Extras = E.

Add S + B + E = Payroll

Second, look at annual Costs

Ignoring things that a business owner would only have to buy once (like computers, desks and chairs, etc.) what does it cost to do what this profession does annually?

  • Insurance?
  • Rent/Mortgage payment/Upkeep?
  • Travel/Fuel?
  • Software fees? (Lexis? Bloomberg? Salesforce?)
  • Phone/internet?

Add these together to estimate Cost = C of doing business.

Add Payroll + Cost to calculate Total Expenses

This figure is what the owner has to come up with every year simply to stay afloat, so you know the company’s sales are at least its Total Expenses. (And so, to circle back to my comment earlier, if you know the sales figure, you can simply use that as a baseline to spitball the value of the company.)

Voilà, a back of the napkin company value.

Caveat caveat blah blah caveat

This isn’t perfect, I know that. But there are a lot of things we’re never going to know, like a privately-held company’s sales, its debts, and if the owner is offshoring profits.

But if we have a pile of profiles to work on and need to come up with a baseline estimation, I offer this rough estimate as a good place to start.

I’d love to hear if you have other off-the-cuff valuations that you use!

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