Comprehensive Prospect Research

Happy 2023!

Welcome to Part 2 of our ongoing series on how to structure research most cost effectively.

Here are the key questions to consider, when considering a strategic partnership with a vendor:

Do the costs of outsourcing research outweigh the benefits of in-house researchers?

When hiring any new member for an internal team, you would be wise to consider:

For the fastest ROI in the short term, an external vendor will typically be much more cost-effective than a full-timer. One reason is today’s hyper competitive market. It typically requires up to six months to find a full-timer, who must then learn their job. Alternatively, top vendors are up-to-speed on day one. There is no learning curve.

This, in turn, provides any organization time to adjust based on the operational needs as a whole, and to reallocate funds for other critical functions, including providing additional tools for gift officers.

When should we consider an in-house researcher over outsourcing?

It is imperative that employers understand that most full-timers don’t last more than 14 months. From their first day on the job, they’re often looking to keep their career options open. Therefore, staffing the research with full-timers burdens the non-profit with non-recoverable, sunk costs. This effectively doubles the cost of the function.

On the other hand, with the savings realized by outsourcing, funds can be reallocated to create larger budgets for other needs. These real savings -- as much as $100,000 annually -- can be used to retain key fundraising staff through better compensation.

That being said, if more than 50% of an organization’s prospect researcher data needs are going to be narrowly focused on moves management, it may be advisable not to outsource. Some employers may need flexibility from their research employees to switch tasks accordingly.

How do you know if outsourcing is right for you?

Always be mindful that it is important to do your due diligence and get multiple quotes before choosing the best vendor for your needs. Making an educated decision during an RFP process should not be rushed.

We hope this will shed some light on the decision-making process when it comes to outsourcing research. We’ll be evaluating additional pros and cons during our next post.

Stay tuned.

Here is more in the series:

Outsourcing Prospect Research: A Primer