Savvy fundraisers are moving in the direction of major individual gifts. At least those who want to be successful generating greater philanthropy are doing so!
TREND: The level of giving from small and medium gifts is dropping.
So if all you’re set up to raise is small and medium-size gifts, largely from direct mail or special events, you’re likely to raise less and less in the years ahead.
Are you swimming against the tide?
In 2017, $410 billion was given in philanthropy. But guess where it came from? Approximately 91% of high net worth households give to charity, and just one percent of donors gave 49% of the gifts.
Simply put, fewer households are participating in philanthropy. Total philanthropy has not dropped however. The inevitable conclusion is that more than ever, the lion’s share of giving is coming from a smaller and smaller number of wealthy and wealthier households. Evidence of this trend is piling up: See here and here. Or go directly to the source and see the latest data being reported out of Giving USA or the Fundraising Effectiveness Project.
What does this mean for your nonprofit?
If you’re not set up to raise gifts from those folks giving the preponderance of today’s philanthropy, you may be sunk.
Major Gifts. OR BUST.
In today’s zeitgeist, whether or not you engage in major gift fundraising is likely to control your destiny. Get set up to do it, or suffer the inevitable consequences.
Lots and lots of little gifts from lots and lots of small and medium-size donors may sound good in theory. And it may work for a few organizations who raise most of their philanthropy online and have large enough constituencies. But… for most nonprofits it’s just too much of a slog.
And then there’s the added reality of donor retention. Because the trend there is downward. Donors tend to come in and out through a revolving door. Well over a majority don’t stick around, because they aren’t cultivated properly. No one takes the time to build relationships with them.
And relationships are the ties that bind. Without them, donors likely won’t stay loyal. They’ll move on to the next shiny object. Or the next friend who asks for their support in a peer-to-peer fundraiser. Or… to the organization that does invest the resources in getting to know them better.
3 Pre-Conditions to Success
Want to kick your major gift fundraising into high gear? Then begin at the beginning. If you get ahead of yourself, it’s a recipe for failure. And once you fail, that experience becomes ingrained in your culture.
Too often I meet with nonprofit staff and boards who say “Oh, our organization can’t do major gift fundraising.” Why do they think this? They’ve engaged in major donor cultivation in the past, but tell me no one has really been responsive. Or they’ve made major gift asks, but tell me they haven’t gotten many gifts.
Usually the problem is quite simple: They’ve tried to engage with cold or lukewarm prospects. They’ve ignored a fundamental tenet of successful fundraising:
Pick no unripe, indigestible, unnourishing fruit!
Cultivation is often likened to gardening. You plant a seed, nurture it with water, soil and fertilizer, oversee its growth and blossoming and, when the time is right, you pluck the fruit from the stem and allow it to spread its seeds to grow new plants.
It’s an apt metaphor because, just like the seeds you plant, not all of your prospects will yield fruit. Some of the prospects, like seeds, will be stick-in-the-muds. They don’t want to be nurtured. They don’t want to grow. They’re content exactly as they are. (Or in dating terms, they just want to be friends).
Before you go full throttle into major donor cultivation and solicitation mode, there are certain pre-conditions that must be in place. Just as you wouldn’t ask someone you just met on a date to run away with you to Vegas to get married that same day, you shouldn’t ask someone to give until you’re certain they’re “into you.” Once that’s established, then you must build the relationship prior to asking. Before you get married there’s some background research, wooing and relationship building to be done.
But first… you must identify who merits an investment of your limited resources in all this research and cultivation. Before you build relationships, you want to be sure you’re building relationships with the right people. Otherwise, you’re spinning your wheels. You’ll be working hard, but not smart.
To kickstart a serious major gift fundraising endeavor, here’s what you must understand, embrace and fully commit to:
1. IDENTIFICATION precedes prioritization.
If you’re really small, it will pay to treat every donor like a major donor. Put in place a thoughtful, strategic Donor Love and Loyalty Program and work it! For most organizations, however, there simply are not enough resources to do this with everyone.
It pays to begin by identifying who you have to work with.
What databases does your organization have? Who is in them? Who among them might be major donor prospects? How might you tell? You’ll want to look at the (1) depth of their connection to you, (2) demonstrated concern about your mission, and (3) anything you know about their capacity to give.
Let’s begin with a down-and-dirty ‘Identification Hierarchy’ of importance:
- Donors who gave 90% of your funds over the last 12 – 24 months
- Donors who’ve scored high on ‘major gift likelihood’ or ‘planned gift likelihood’ on purchased donor analytics
- Donors who’ve made multiple gifts over the course of a year
- Donors who’ve already demonstrated loyalty by giving year over year
- Prospects rated highly (based on connection, concern and capacity) by peer screenings conducted with your volunteers.
- Board and former board
- Staff and former staff
- Committee members
- Beneficiaries (i.e., clients, members, subscribers, students, patients, program attendees, ticket purchasers)
- Families of beneficiaries
Once you’ve identified these prospects, it’s time to set up your plan to prioritize moving the best ones along the major gifts pipeline. If you find you have too many prospects to handle effectively, you need to tier them (e.g., Good, Better, Best). If you find you have too few prospects, it’s time to set up your plan to go on a treasure hunt – both inside and outside your own databases.
2. PRIORITIZATION precedes qualification.
You won’t have time to try to qualify every single person in your database for major gift cultivation. So… you must identify the best prospects; then sort them accordingly. It’s the old Pareto Rule again: Put 80% of resources into the 20% of prospective donors likely to give you 80% of your funding.
It pays to prioritize your most productive and likely-to-be productive prospects. You’ll find many of your best prospects hiding inside your own database(s). Others you’ll find by looking outside your organization – but not too far afield. Remember, you’re looking for likely, not pie in the sky.
Let’s begin with a down-and-dirty ‘Prospecting Hierarchy’ of importance:
- Donor who’s said “Yes” I want a deeper relationship
- A donor who’s made an outright gift at a level higher than your average gift
- A prospect referred by a qualified major donor
- A prospect referred by a board or staff member
- Someone in the community who has demonstrated passion/interest in your mission
Here’s some information about giving by generation that’s also good to know:
- Boomers 61.9 billion/year – have most disposable income
- Matures 30.7 billion/year– have next most disposable income
- Gen X 28.9 billion/year (born 1965)
- Millennials $15.8 billion/year (born 1985)
How to look inside for major donor prospects:
Start in your own database with donors who’ve already raised their hand and said “I believe in what you do.”
- Do a wealth overlay to determine which of your current prospects you may want to research more. Wealth Engine, Target Analytics and others take your donor file and run it through their data set with information on folks throughout the country. They then append to your donor file and rank your donors according to capacity. Not foolproof, but a place to start. If you can’t afford this, you can do your own research. Zillow. Real estate tax records. Google searches. Learn about donors’ jobs, where they live, etc.
- Look at giving trends. See who’s giving year after year and/or multiple times a year.
- Look at mid-level donors who are stuck there. Consider starting a mid-level donor program that challenges these folks to give more. Mid-level will be different for different organizations. The point is that these folks are different than your $10 donors. Give them some attention and see what happens! [You can do A/B tests to see if those who get extra attention move into your major donor level. If so, you can afford to do so with your entire list]
- Review any planned giving donors on your file. They can be asked to make a major gift now as well. If they’ve told you they’ve made provision for you in their estate plans, you know they love your mission!
- Ask stakeholders “who knows our donors?” Talk to your “connectors” to learn who among your current supporters you should research further and perhaps try to get a meeting with.
How to look outside for major donor prospects:
Sit down with folks one-to-one to help overcome any shyness or reluctance they may have to share information about prospective supporters.
- Board contacts
- CEO contacts
- Donor contacts
- Events – Ask current stakeholders to hold house parties; Hold institutional events as a way to meet new friends and use emotion to persuade them they should stay in your community; they belong there [the very fact they attend is an indicator of willingness to become more involved].
- Community presentations – civic events where you’ll encounter folks you’d otherwise not meet.
3. QUALIFICATION precedes cultivation.
Major gift fundraising is not rocket science. You can learn how to do it! There is, however, a science and art to it.
Too often organizations go astray because they bite off more than they can chew. And some of the meal is simply not digestible. To put this another way, not every prospect wants to be wined and dined.
You can lead a major donor prospect to water, but… if you want them to drink you better qualify them first.
You’ve got to winnow your list down to a manageable level for cultivation and stewardship. Everyone who gives $1,000 (or whatever your major gift level may be) is not, ipso facto, “qualified.” The qualification process is about getting to know your prospects, nurturing them and getting them to agree to a more personal relationship.
I like to begin with something known in marketing as the ‘Rule of 7 – in most cases it will take 7 tries to get a conversation with a potential donor. [This may occur within a three month period]. If you make a good faith effort, and your prospect doesn’t ‘bite,’ move on. This prospect doesn’t belong in your major donor cultivation portfolio.
How to qualify major donor prospects: