New Research Underscores the Importance of Major Gift Fundraising

Evidence is piling up from more than one source in the world of philanthropy regarding the reduction in small and medium-sized gifts.

In the past year, both Giving USA and the Fundraising Effectiveness Project report have reported that the level of giving from small and medium gifts is dropping.  

Nonprofit Quarterly recently referenced the Giving USA data that speaks to this issue.

This is reflected in the table below where the percentage of households participating in philanthropic giving continues to decline:

the importance of major gift fundraising

The NPQ article spells this out in the following excerpt:

There is one inevitable conclusion from these trends: if total household giving is growing but the share of donor households is declining, and the typical (median) amounts donated per donor household are declining (all after adjusting for inflation), then gifts at the higher end (minimally greater than the median) are driving the increases in total household giving. We must ask the following questions: Are these trends good signals for philanthropy specifically and society more generally? If not, what can be done to remedy these circumstances?

Before we get into possible remedies, consider that the itemized deductions for households above one million in income has grown from just over 7 billion in 1993 to just over 66 billion in 2015.

This is reflected in the table below:

the importance of major gift fundraising

The more affluent households are not only growing in number, but are also increasing their charitable giving.

Now, for more recent data.

The Fundraising Effectiveness Project’s 2018 Q3 report is just as telling in regard to the decline of small and mid-level donor results.  

The bottom of the report reflects the YTD change for three key groups. Here is the chart:

the importance of major gift fundraising

Notice that in the third quarter, which continues the trends from the previous 2018 quarters, that donors under $250 have a YTD change of minus .3% and donors in the $250 – $1,000 range have a YTD change of minus 1.1%

Please contrast that with the positive change of 3.1% for major donors giving over $1,000. This becomes more and more significant as the trend continues!

We would be remiss if we did not also mention the precarious drop of the overall donor retention rate by 5.6% to a YTD rate of 31.7%. Thankfully, the retention rate for major donors is usually higher than the overall average.

Summary

The above data points summarize and point unequivocally to the fact that nearly every charity engaged in fundraising should either place a greater focus on major donor relationship building and solicitation or begin a major donor program immediately.  

The data now suggests that the trends above will continue into the future.

Those nonprofits who realize this and act upon this message and data will be the ones growing the funding of their mission in the future. Those who do not heed this change will most likely be facing mission funding shortfalls.

Thankfully, the Bloomerang Blog has offered ideas, advice and suggestions about beginning and/or improving your major gift programs.

Have you taken steps to begin or to enhance your major donor program?   

Major gift fundraising

Jay Love

Jay Love

Co-Founder & Chief Relationship Officer at Bloomerang
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman.
Jay Love
By |2018-12-10T16:34:09-04:00December 11th, 2018|Data, Major Gifts|

One Comment

  1. Sophie Penney December 11, 2018 at 1:00 pm - Reply

    I agree on one level and would even add start a planned giving program if you don’t have one. That said I would also ask and investigate why retention is down and why the number of new donors is down (if it is) and take steps to address. Starting a major or planned giving donor program is necessary but not sufficient. Without a healthy donor base there will be a small or even non-existent pool of major and planned giving prospects in five, 10 or more years.

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