"A major gift is not something that donors do on a whim or a lark, or on the spur of the moment.... And in all likelihood, they do not materialize without a great deal of time, talent, or effort attached.... Making the major gift is a very special expression on the part of the donor, which lets the organization know that the donor believes in the organization 100 percent."
- Laura Fredricks, Developing major gifts: Turning Small Donors into Big Contributors
Individual contributions in 2008 were estimated to be 80% of the $307 billion that was given to nonprofits that year. A commonly cited statistic is that approximately 90% of individual giving comes from the top 10% of donors. The question then is how to reach those top donors.
Especially in today's landscape where competition for grants and new donors is increasing while operating budgets are decreasing, nonprofits are wondering how to get more with less. One option may be implementing or improving an existing major gifts program. An interesting characteristic about major gifts programs is that many of the elements that can make it successful are often already in existence even before the program is created – such as passionate staff members, a worthwhile organizational mission, and untapped donor assets. Part I will address tips for implementing a major gifts program from an event hosted by professional fund raising counsel, Essex & Drake. Part II will address potential legal issues related to charitable giving and tips for fostering legal compliance.
Last month I attended an informative roundtable "Major Gifts 101" hosted by Essex & Drake Fund Raising Counsel with presenters Sharon Svensson, CFRE and President of Essex & Drake, and Rob Kusel, Vice President of Essex & Drake. Svensson and Kusel shared many helpful strategies, tips, and takeaways for successful implementation of a major gifts program.
What is a major gift?
Kusel's rule of thumb: treat any gift more than or equal to 0.1% of an organization's entire budget as a major gift.
What is the key to reaching major donor prospects?
Svensson and Kusel emphasize relationships and storytelling.
- Kusel suggests disavowing the concept of "contacts." Major gifts fund raising is not about contacts, it's about relationships.
- Remember, it is easier to make a major donor out of a current donor.
- Nothing is as powerful as face-to-face communications. A national study showed that for every $1 received through a mail solicitation, $12 can be raised by telephone contact, and $50 can be raised through face-to-face communications.
What do major donor prospects look like?
Unfortunately, there is no single profile for major donors. However, the "Triple A" attributes – of affinity, access, and affluence – are essential characteristics for your best prospects.
- Affinity – individuals who are passionate about the organization and its mission. Passionate individuals are not necessarily top donors. They are often the consistent donors who give small amounts over long periods of time. They can even be individuals who do not currently give to your organization but give to other similar organizations.
- Access – individuals who someone on your Board or staff has access to.
- Affluence – individuals who have the capacity to make a major gift. Importantly, Svensson highlights that this should be the lowest priority of three attributes.
What do we do with our list of major gifts prospects?
Qualify your prospects. An organization should be strategic about who they approach and how. Additionally, as Svensson points out, being selective with your first prospects in a major gifts program can help create momentum - "Nothing motivates volunteers, staff, and others better than success."
Review the data with the Board and other dedicated volunteers
- Collect information such as currently known background information, who knows them, potential giving level, and thoughts on how to proceed.
Triage the data with the development committee or other committee
- For example, assign a score to each of the prospects you've screened as being the best qualified in each of the "Triple A" categories – affinity, access, influence. The highest totals are likely your best prospects.
- Kusel suggests creating a five year look back giving matrix. The best major donor prospects are always your recent donors.
- Start with 25-50 top prospects; estimate ask amounts; assign solicitors.
Maintain an ongoing process
- Prospect list screening should be an integral part of the development committee.
- Consistently ask, "Who has a relationship with this prospect and how are we managing it?"
- Keep lists active – they should always be changing and growing organically.
Who at the organization should be involved in the major gifts program?
A true culture of cultivation includes everyone, and everyone should be "singing the same song."
- All board members need to be involved in the process in some way. For example, a director not involved in soliciting might instead help host a major gifts fund raising event.
- Don't forget to involve the staff. Staff members have a hyperaffinity for the organization but they are the most often forgotten constituency. They can be your best ambassadors if they understand the process and objective of the major gifts program.
- Ownership fosters accountability, but ownership can only happen if you give people the tools to do it. (E.g., creating and maintaining prospect profiles; setting goals prior to fund raising events).
What are effective ways to cultivate major donor prospects?
- Communications can come from a variety of sources: in person, by telephone, by postal mail or email, through social media, at events, etc.
- Smaller, more frequent events work better than larger, less frequent events. Small informal events hosted by Board members in their homes are one of the most effective ways to cultivate prospective major donors. The frequency of events will depend on resources, bandwidth, and strategic imperatives.
- Follow-up phone calls after sending invitations to an event have shown to be very effective (e.g., to discuss a preview of what will happen at the event).
- If the organization has the resources to follow-up after the event, it is advisable to just provide take home materials (e.g., newsletters) and to avoid having fund raising materials or pledge forms at the event.
- Plan to debrief with the board and staff after the event, and to follow-up with prospects.
What are effective discussion points with prospects?
- Talk about the organization and its mission. The "ask" is for what it will do for your community and constituents, not because of internal needs. Avoid fund raising "faux pas" such as stating the organization is having a great fund raising year as well as stating the organization is not having a great fund raising year (people like to support success).
- Be donor-centric. Donors like to know how their money will make a difference and what results it will produce.
Any major gifts program will ultimately be adapted to best fit with the organization, and I personally found that Svensson and Kusel's major gifts roundtable provided a great introduction to important discussion points. For me, the key takeaways were to cultivate relationships with prospective and current donors, facilitate organizational involvement on all levels, and set up appropriate processes for the organic growth and ongoing oversight of a major gifts program.
This is the first in a series of two articles. Click Major Gifts - Part II: Considerations for Legal Compliance and Avoiding Lawsuits to read the second article in this series.
About the author
Emily Chan is an attorney with Adler & Colvin in San Francisco. She is licensed in California and advises nonprofit and tax-exempt organizations on corporate, tax, and governance issues. Ms. Chan was recognized as the 2012 Outstanding Young Nonprofit Lawyer by the American Bar Association Business Law Section's Nonprofit Organizations Committee. She can be reached by email or by phone at 415-421-7555.