major gift fundraising basics

Today we begin with a 3-part series about the most cost-effective way to fundraise — Major gifts from individuals. Not foundations. Not businesses. Not events. Studies show over 88% of all funds raised come from just 12% of donors. You get a huge bang for your buck from an individual major gifts program which, by the way, costs you roughly just 5 – 10 cents on the dollar – beating every other fundraising strategy!

James Greenfield wrote the book on Process in 1999, and these metrics have remained sound to this day. It’s my bible for calculating cost of fundraising. The Association for Fundraising Professionals calculations, while slightly different, are in basic agreement. If you’re concentrating on special events fundraising it costs you 50 cents on the dollar (more when you take into account staff salaries and time), and you actually lose money on direct mail donor acquisition.

major gift fundraising basics

Of all the fundraising strategies you can implement, given their respective impact on your fundraising total, it’s clear a vigorous major gifts program should be a year-round priority.

Major gifts are not just for capital or endowment campaigns. If you play your cards right, they should account for the lion’s share of contributions to your annual operating budget. And the relationships you develop with these key supporters should be sustainable, so you’re able to count on this support year after year.

Even if you already have a major gifts program in place, it’s not a bad idea to review the basics to assure you’re operating on all cylinders. Let’s get started!

What is a Major Gift?

It’s exactly what it sounds like. MAJOR. What constitutes ‘major’ for your organization may be different than the organization next door. For a large university or hospital it may mean $100,000+. For a small human services agency it may be $1,000. For a brand new start-up it could be $500.

The first thing to do is determine what your major gift is. There’s more than one way to skin this cat. Here are a few possibilities:

Quick and Dirty Calculus

Jay Love of Bloomerang suggests dividing your database into three groups. Look at individuals and family foundations only (i.e., you don’t need to submit grant proposals; the foundation is like a separate “giving wallet” for the family and individual members make the decisions).

  1. Donors who give 90% of your funds over last 12 – 24 months
  2. Donors who give 10% of your funds over last 12 – 24 months
  3. Donors who’ve given 0% of your funds over last 12 – 24 months

Look at the top tier of donors, and see what the range of gifts are. If one is significantly larger than the rest, you may want to throw that out for purposes of choosing an average major gift in this major donor cohort.

Benchmark Calculus

According to a recent major giving study, organizations of different sizes had different major gift thresholds:

  • Under $1 million budget: $1,000
  • $1 – 5 million budget: $5,000
  • Over $5 million budget – $20,000

Data-based Calculus

Run a report from your database in descending order of cumulative annual giving. Slice it off at the top 10% of givers. Find the mean or median gift (again, you may want to throw out outliers), and check your gut to see if that seems like a reasonable figure for your organization to shoot for. If you have more prospects than you can handle, your amount is too low. If you have too few prospects, your amount is too high.

What is the Major Gift Fundraising Process?

Major gift fundraising is no different than any other type of fundraising when it comes to the steps you must take to get to success. It just takes a bit longer.

Which is why you really need to (1) make a plan, (2) commit to executing that plan and (3) follow through. Because on averages it takes 12-15 touches to build a relationship before a major ask should be made. And it can take an average of 18 – 36 months before you’re ready to make the ask. Note, this isn’t always the case; sometimes you’re ready to ask within a matter of just a few months. It all depends on how “ready” your prospect is.

How do you get your prospect ready to commit to a major gift? Let’s look at the BASIC 5 STEPS in the process:

  1. Prospect Identification – Where’s Your Waldo?
  2. Prospect Qualification – Assessing who Wants a Relationship
  3. Prospect Cultivation – Making the ‘Moves’
  4. Solicitation – Making the ‘Ask’
  5. Donor Stewardship – Keeping Love Alive

Today we’ll cover (1) Prospect Identification, and (2) Prospect qualification & cultivation planning. In Part 2 we’ll cover qualification and cultivation strategy. In Part 3 we’ll cover solicitation and stewardship.

Prospect Identification – Where’s Your Waldo?

It’s important to understand that a major donor for another organization in town is not necessarily a major donor for you. You see, it’s not just about money. That’s one consideration, but just because someone has capacity to give doesn’t mean they’ll care to give to your mission.

Spend time first developing your organization’s major donor profile (aka persona). Look at your current major donors, and see what patterns you detect. Similar age, gender, profession or other demographic characteristic?  Similar type of affiliation with you (e.g., volunteer; parent; client; event attendee, etc.)?

If you’re just getting started, and don’t have a dedicated major gift officer on board, you’ll want to identify no more prospects than you can manage. A recent major gifts study revealed this number to be about 20 prospects, with a balance of first time major gifts prospects and repeat major gift donors.

If you have less, that’s okay. The point is that major gifts fundraising is eminently doable, even if you don’t have 150 prospects!

Where should you look?

Begin with your own database.

Look at a number of qualifying factors by running database reports:

  • Largest donors (begin by looking at cumulative annual giving over the past two years)
  • Most loyal donors (begin by looking at those who’ve given 5 of the past 7 years, or 7 of the past 10 years, or whatever makes sense for you given your longevity and the size of your database. Even if they only give $10/year, they may be excellent legacy giving prospects)
  • Donors who make multiple gifts (excluding monthly annual campaign donors, look at folks who make additional gifts throughout the course of the year. This is a sure sign you’re top of mind for them, and your organization is one of their priorities.)

You’ll now have names of those donors who already love you and may want to become even more invested with your cause over time. Organize these lists from top to bottom so you can address your best bets first.

Next get referrals from folks who know you and your mission well.

The best strategy is to sit down with these folks face-to-face and ask them if they’d be willing to help you make their friends your friends. Next best is setting up a telephone appointment. Next best is giving them a worksheet to complete, asking them to include names and contact information of X number of their friends or colleagues who they’d be willing to introduce to your cause. The best place to begin is with:

  • Board
  • Former Board
  • Committee Members
  • Current Donors
  • Staff
  • Former staff

This is a time to also ask if they’d be willing to make the introduction personally, or if they’d simply allow you to use their name.

Now that you’ve got a preliminary prospect list, what do you do next? You begin to plan how you’ll connect with the folks on your list!

Prospect Qualification & Cultivation Planning – Preparing to Make the ‘Moves’

This is your plan to reach out and get to know your top prospects better. People give to people, and major gift fundraising is all about building relationships. The folks with whom you build really strong relationships will be likely to accept a visit from you to make a solicitation. The folks with whom your relationship is tenuous, not so much.

Develop a list of ‘getting to know you’ moves and touches.

Depending on how well you know your prospect, and on how well they know you, you’ll want to embark on a series of actions so you all get more familiar with each other’s passions, hopes and dreams. Even if you know your prospects relatively well, you still must think strategically about how you’ll move them to the next level.

I like to brainstorm a list of meaningful actions based on what I’ve found donors seem to enjoy most at my organization. This may include things like:

  • Written or video program updates (report back to donors on the outcomes of their giving in a variety of creative ways)
  • Open houses (you can host these onsite or in a donor’s home; have clients speak or show a video that tells a story, and then leave ample time for Q & A)
  • Behind-the-scenes tours (this is a non-stressful way for donors to learn more about you, and for you to engage them with your mission)
  • Volunteer activities (donors who volunteer become steeped in your mission; the activity reinforces their values and predisposes them to want to do more)
  • Special events (perhaps assign a staff member or volunteer to welcome major donor prospects and get to know them better; then they can follow up with another appropriate ‘move’ based on what they learned)
  • Private face-to-face advice meetings (you’re not asking for money yet; just requesting donor feedback and showing you’ve an interest in them)

Now you’ve got your basics covered:

  1. Your major gift amount – so you know the level of gift you’re targeting
  2. Your major donor persona – so you know the type of prospect you’re looking for
  3. A list of major donor prospects – so you can begin to qualify them for cultivation
  4. A list of moves and touches – so you can begin to learn more about your donors’ passions

The Good News:

Every organization can generate major gifts if they put a system in place, commit to working that system, and persevere. It’s well worth the effort, because a single major gift, especially a passionate one of six figures or more, can be more than all the gifts you receive from new donors over the course of an entire year.

In the next article in this series, we’ll explore ways to begin the all-important cultivation process – starting with the too-often overlooked step of qualification.

Interested in learning more about the most cost-effective way to fundraise?

Enroll in the Clairification Winning Major Gifts Strategies 8-week e-Course commencing January 23rd, 2018. No matter the size of your organization, you need to get serious about investing in major gifts development. They aren’t just for behemoths; they’re for everyone. It’s a commitment that will really be worth your time and effort.

Major gift fundraising

Claire Axelrad

Claire Axelrad

Fundraising Coach at Bloomerang
Claire Axelrad, J.D., CFRE is a fundraising visionary with 30+ years frontline development work helping organizations raise millions in support. Her award-winning blog showcases her practical approach, which earned her the AFP “Outstanding Fundraising Professional of the Year” award. Claire runs “Clairification School” online, teaches the CFRE course that certifies professional fundraisers, and is a regular contributor to Guidestar, NonProfit PRO and Maximize Social Business.