Editors’ note: This article, first published in print during June-1998, has been republished for Nonprofit Quarterly with minor updates.
A rating system is a tool most often used by universities and other large fundraising institutions to organize their donors and prospective donors, usually for capital campaigns. This is not just because these institutions have thousands of people to track, although the need for a rating system does increase with the size of a database. Even organizations with relatively small lists of prospects and donors can benefit from using ratings.
Although rating systems differ in complexity, basically a donor or prospect is assigned both a letter representing their inclination towards an organization and a number representing their ability to make a donation. For example, an A1 rating can indicate someone who is highly involved with and enthusiastic about the organization (A) and can give $10,000 (1). A rating is a shorthand way of
assessing a prospect using all the information you have, from giving history to remarks made during a visit or insights from board members.
A rating system is useful for a number of reasons. It represents a valuable analysis of the donor base, singly and as a whole. Knowing to the letter (and number) what kind of potential you have for raising money is always helpful. Ratings preserve institutional memory. This is a concern to all organizations, especially with the sometimes-quick turnover of development staff. When maintained consistently, a rating system remains even when staff does not. In this way, it helps ensure that the organization’s relationship with a donor proceeds smoothly.
Ratings also enable an organization to sort, and therefore target, donors quickly. With a rating system in place, staff can easily identify who should be receiving attention and what kind. For example, someone whose inclination represents “Little or no involvement” or “displeased” needs to be involved first and cultivated before being solicited.
Since ratings directly correspond to “best guess” ask amounts, they are useful when setting goals, whether for an annual fund or a capital campaign. It will be easy to construct a feasible gift chart if your goal is $10,000 and you know how many of your prospects can be approached for gifts of $1,000.
Additionally, a rating system demonstrates how much information you have (or don’t have) about your donors and prospects. If you find that you cannot rate your major donors, or even identify them, this is a signal that more information gathering is needed. If you cannot judge someone’s inclination or ability, you are not ready to approach them to ask for a donation.
Although many people focus primarily on the ability component of a rating, it is secondary to inclination when it comes to tangible results. Identifying someone with lots of money but no connection to your organization results in paralysis. Crafting an approach to a prospect is frustrating and ultimately futile if you have no realistic way of reaching them.
Inclination indicates a person’s connection to your organization, not to the cause in general. Although Ted Turner has an interest in international humanitarian causes, he is an A to the United Nations, not necessarily to your organization. At best, ability indicates how much someone could conceivably give. However, it is the inclination that gets that person to give in the first place.
Inclination is a mixture of interest/enthusiasm about a cause and level of involvement with an organization. Together, these factors determine a prospect’s inclination or readiness to be solicited. The timing of the solicitation is also affected by other information known about the person. A recent capital gift, a divorce, or business reversal may postpone the solicitation, although this is a judgment call in each case. Do not assume a change in circumstance automatically precludes a gift. Here is a sample of the inclination component of a rating system:
A High level of involvement and/or enthusiastic about the organization
B Some involvement and/or enthusiastic
C Little or no involvement and/or unhappy with some aspect of the organization
Z Not yet rated as to inclination
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First, your solicitation efforts should focus on A’s. In most cases, A’s have given before or are good prospects for doing so. This is not to say that B’s and C’s should be ignored. Some B’s are ready to be solicited, although probably not for the highest gift in their ability range. Their willingness to give will help determine if they are ready to become A’s. Other B’s and all C’s and Z’s are simply at the beginning of the donor cycle — cultivation. If handled well, B’s and C’s are your future A’s.
Ability refers to a prospect’s giving ability. Research — whether it includes subscribing to online computer search services, poring through local newspapers, reviewing alumni or client questionnaires, or getting feedback from board or staff who know the prospect — will provide
information to help you determine ability. However, just because a person has the money does not mean they are willing to give it away. Finding out what they actually give to other organizations is a good indication of ability. Look at annual reports of other organizations, where donors are often listed by gift levels. These will be solid indicators of a prospect’s possible gift range.
Here is a sample ability component of a rating system:
- $5,000 – $9,999
- $1,000 – $4,999
- $500 – $999
9 Not yet rated as to ability
Assigning and maintaining ratings is labor intensive. You should only rate someone your organization considers a major donor, whether determined by the solicitation approach (usually a personal visit) or by the amount of their donation or potential donation.
For consistency, one person should assign the ratings after reviewing all the data on each person. The key that explains the rating criteria (beyond the descriptions contained in the chart) should be written down so that a future rater has a sense of how the ratings were determined. You wouldn’t want a 1 rated in 1998 to be different from a 1 rated in 2002. Here are two samples from a rater’s
key for an A:
A= Former board member, current outreach committee vice-chair, close friend of executive director, has given every year since 1987
A= New member of alumni association, scheduled to host event in home for new students. No giving history, but has told the trustee (a close friend) of intention to contribute.
The “rater” should develop the ability part of the system based on the current donor base, with room to grow. If your largest current donor gives $25,000, a 1 rating of $250,000 will be meaningless, unless you have good reason to suspect such a gift might be forthcoming in the future.
Make the system work for your specific situation. It can always be revised later.
Everyone in the development department should be aware of the rating system and what the different levels mean. Maintenance, which includes upgrading current ratings and adding new ones, should be done by either the original rater or whoever is directly responsible for managing the prospect or donor — tracking their involvement, initiating contact, or deciding upon an approach strategy.
Make a note to the file or computer record of the reason a change was made. For example, during a visit from a board member an estranged donor says, “Now that I’ve heard your reasoning, I’m satisfied with the shift in the organization’s strategy.” This encounter should be written
up, however briefly, and dated with the notation, “Upgrade from C to B.” Likewise, if a newspaper clipping reveals that a prospect has sold their business for a large profit, put that in their file with the note to reflect the change, e.g., “Move from 4 to 2.”
A rating system can help you see the results of your work that are not reflected in money raised. Try to see each visit as an opportunity to build a relationship that will lead to a larger gift in the future. Even if a visit does not result in a gift, it will result in more information and possibly an upgrade. This is progress.
Some may shrink from using a rating system because they feel it turns their donors into numbers. Of course, both names and numbers are merely symbols for a person. The important thing to remember is not to treat your donors like symbols, that is, impersonally. A rating system actually can help you avoid this by forcing you to learn more about your donors, by analyzing them first as individuals, then approaching them in the most appropriate way.
One final word about rating systems. Do not use the formation of a rating system as an excuse for avoiding solicitations. Although gathering and organizing information is important, at some point you will have to approach the prospect directly. Ultimately, the only way to discover if, and how much, someone will donate is to ask them.