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[ASK AN EXPERT] How To Budget For Major Donor Cultivation And Stewardship?
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Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity. Today’s question comes from a nonprofit employee who wants advice on creating a major donor stewardship budget:
Dear Charity Clairity,
We are in the beginning stages of creating a major gift program. Historically, we have spent almost nothing on stewardship. Is there a rule of thumb or suggestions on creating a stewardship budget? I’m thinking impact videos (less formal – low cost), gatherings, impact mailings, cost of donor meetings, etc. We will raise roughly $2M this year and are looking to increase that through major gifts. As I create a budget I have lots of ideas, but trying to be reasonable about my budget request.
— Responsible Steward
Dear Responsible Steward,
You are on the right track!
Cultivation and stewardship are the grease that keeps a major gift pipeline well-oiled.
If you don’t budget for this, you can’t realistically say you have a major gift program.
Period.
No exceptions.
In other words, you have to spend money to make money.
Major gift development has a natural arc.
Prospect identification… qualification… cultivation… solicitation… and, finally, stewardship.
My guess is you’re talking about both cultivation (moves and touches before the ask) and stewardship (the same thing after the gift has been made). You can never stop. Cultivation makes the plant bloom; stewardship makes the blossoms last longer.
If you simply bring a sapling home from the nursery, stick it outside and then hope it will grow (pretty much all by itself) into a major tree, you’ll be sadly disappointed most of the time. The same holds true with donors you identify as potential major gift prospects.
The cultivation phase is your opportunity to take your donor on a journey that crosses the bridge from the values they hold dear and the values you enact.
Bridge building takes great care. If you do a sloppy, careless job you’ll get a careless gift. That’s not what you’re after. You need a cultivation plan and budget; you need to follow that plan. You need to think about the donor’s needs every step along the way of that plan. Don’t expect this to happen overnight. You need to learn more about them, and vice-versa. They need to come to trust you, and this results from increasing levels of engagement and follow-through on your part. Perseverance is key.
All of the strategies you’re suggesting are excellent. Think of these “moves” as things you design to emotionally and psychologically move your prospect to make an impact gift. In this regard, the more tailored and personal you can be, the better.
Every single major donor prospect on your list should have their own individual cultivation plan.
Some of the moves and touches can be similar, but not all of them. For example, if John is most interested in helping seniors, John should get an impact video with the story of a senior his gift will help. Jane, who prefers to designate giving for children’s services, should get a different video with a story that sparks her interest.
The larger the gift you intend to ask for, the more personal your cultivation should be. And it needn’t be expensive. For example:
- Donor one-on-one meetings. The late, great major gift fundraising guru, Jerold Panas, used to say: “When you get the visit, you’re 85% of the way toward getting the gift.” Offer to meet wherever the donor finds most convenient. It doesn’t have to be at an expensive restaurant! The best place is their own home, if they’re comfortable there. You get to learn a bit about them, their tastes, their hobbies and so forth; this always makes for good small talk as you ease into a conversation. And the refreshments (if any) are on them! Or you can invite them to come to your place where you can offer them tea and maybe fruit or cookies. Or ask if they have a favorite café where you can take them for coffee. And, finally, Zoom is a perfectly lovely way to meet.
- Donor group meetings. These are often called parlor meetings or porch parties. Keep them small enough that every attendee has an opportunity to speak. Include name tags! Plan ahead with a warm-up ice-breaker activity that gets people comfortable talking. Follow up with a brief story-based presentation about your mission. Leave time for questions. These gatherings can also include behind-the-scenes tours, opportunities to hear an interesting speaker, or even service activities. Have someone take notes as guests talk so you can remember what their interests and concerns are. Be sure to follow up personally with every attendee.
- Tailored, one-to-one emails. You can include links to videos on your website or YouTube channel or links to articles on your blog or in your newsletter. Try saying something like: “Jane, based on our last conversation, I think you’ll be interested in this particular article. Let me know what you think!”
- Tailored, one-to-one text messages. Ditto. Research shows roughly 30 – 35% of people open an email vs. 90 – 95% for texts. So, consider doing more of this (just make sure your donor has opted in to receive texts from you).
- Surveys. These not only provide you with valuable information, but also offer the donor a way to engage with you other than simply giving you money. They can be really simple (even as short as one question) and the software can be purchased for very little (there are free versions, too) with tools like SurveyMonkey. It’s a great way to reach out to selected donors to let them know how special they are to you, and that’s why you really value their feedback as you plan ahead to best serve your community. Learn more about surveys here.
- Impact reports. Again, the more personal the better. An annual “Gratitude Report” is a nice touch. But also consider updating donors about the specific impact of their gift. This works best with donors who earmark their gift for a particular purpose, but you can also send to donors who’ve made unrestricted gifts. And, remember, stories are more appreciated by most donors than data. Aim for at least annual, but quarterly is not excessive.
- Handwritten notes and cards. To show you’re thinking of the donor, consider sending a birthday card, donation anniversary card, and/or holiday card (pick any holiday you like; I like Valentine’s Day). Make your own, buy a stock card, or send an e-card. Just make sure you add your own personal message – don’t just leave it to Hallmark!
- Recognition and appreciation. Don’t underestimate the power of appreciation items like plaques, small awards made by a local artist, logo swag, etc. I’ve found even when people tell you to your face they don’t need this sort of thing, they’ll still display it at home or in their office if you give it to them.
Let’s get back to budgeting for cultivation.
Keep in mind major gift programs will show a lower ROI in the first year or two than in the years that follow. This is because major gifts development takes time. Once you get in the groove however, major gifts (and legacy gifts) will deliver the best ROI and net income of any fundraising program. By far.
You’ve got to plan for the upfront investment.
There’s no one right way to do this, but here are some guidelines:
- Among the best major gift consultants in the business are the team at the Veritus Group. They suggest: “As a rule of thumb, the salary is the base cost. Then you add 25% of the salary to cover benefits. Then you add the salary and benefits number to get a subtotal and multiply that by about 30% for the other costs.” They’re talking about the Major Gift Officer (MGO) salary. Don’t forget to also budget for some administrative support. Realistically, you’re going to need it to execute all the wonderful cultivation ideas you have.
- You might borrow from the generally accepted wisdom to budget 10% of your capital campaign goal as campaign expenses. If your major gift goal is $1 million (over the $2 million you’d otherwise plan to raise), then you would budget $100,000 in addition to what you’ve already got budgeted for development. This could cover administrative support, outside consultation, technology, materials, communications and events as well as appreciation and recognition expenses.
- For recognition and appreciation items specifically, I’ve always used a guideline of 1 – 3% of the size of the gift. For smaller gifts, I’ll spend 1%. For larger gifts, I’ll spend up to 3%. So, you might spend $100 for a $10,000 donation and $300 for a $100,000 donation.
It’s very responsible to spend money to make money!
— Charity Clairity (Please use a pseudonym if you prefer to be anonymous when you submit your own question, like “Responsible Steward” did.)
How do you budget for major donor stewardship? Let us know in the comments.
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