Studies show over 88% of all funds raised come from just 12% of donors.
In fact, the top tier of donors account for the lion’s share of all philanthropy. Just 3% of donors give 76% of all gifts.
If you’re not focusing your fundraising resources on these donors, this should give you pause. You’re missing a really big boat.
Plus, chances are good you’re fundraising in a manner that’s not exactly cost-effective.
You’re not alone. I run into this problem all the time. Board members want to do events. E.D.s want to focus on grants. New staff think the future is all in digital fundraising. Existing staff are wedded to increasingly less productive direct mail fundraising. There’s nothing wrong with any of these strategies. However, generally they won’t give you the biggest bang for your buck. You get a huge return on investment from an individual major gifts program, which costs you roughly 10 cents on the dollar vs. 50 cents or more on the dollar for special events fundraising and actually losing money on direct mail donor acquisition.
If you know the Pareto 80/20 Rule, you might want to focus just 20% of your resources on the lower-yielding strategies and 80% on major individual and legacy fundraising.
What’s holding you back from doing something so sensible?
Usually I find it’s one of the following reasons:
- We don’t have the resources — we’re small and don’t have enough staff, volunteers or budget
- We don’t do things that way — and everything’s just fine (or fine enough)
- People are too afraid of asking for gifts — our board will do anything else, but won’t fundraise
These are excuses — “invented reasons folks create to defend behavior, postpone taking action or simply as a means of neglecting responsibility.” Or ” Excuses are mainly a means of placing the blame of an internal problem on an external condition.Think of it this way: It’s your organization’s responsibility to steward your resources in such a way that you fulfill your mission to the fullest extent possible. If you’re raising money inefficiently, you’re preventing your nonprofit from fulfilling its potential. By leaving money on the table, you don’t help as many folks as you could or should.
Is your organization in the excuses business when it comes to major gift fundraising? In an excellent article from IQ Matrix we learn that people mostly make excuses for the following reasons:
- Fear of Failure
- Fear of Embarrassment
- Fear of Success
- Fear of Change
- Fear of Uncertainty
- Fear of Responsibility
- Fear of Making Mistakes
- Perceived lack of confidence or resources
Fear, fear and more fear.
We naturally fear what we don’t know. We even think the enemy we know is better than the one we don’t. It takes a lot for us to do anything to move away from the status quo. Even when we’re in pain (as in not raising enough money, or really sweating every year over whether we’ll balance our budget). We’re afraid if we change we might end up in even more pain. It’s not rational.
A key to overcoming irrational fear is knowledge. Which is why last year I authored a three-part series for Bloomerang on The Whole Major Gift Fundraising Shebang: The Basics; Get Started and Rev it Up, . Even if you already have a major gifts program in place, it’s not a bad idea to review the fundamentals to assure you’re operating on all cylinders. So I encourage you to read these articles carefully. In addition, if you really want to get serious and get everyone in your organization on the same page, consider enrolling in Winning Major Gift Fundraising Strategies for the small to medium-size shop (see more below)
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. Do it the right way, and 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.
Fundamentals of a major gift fundraising program.
You need a plan. A clear road map. What’s your destination, and how will you get there? Ask and answer the following for your organization:
1. What is Your Major Gift Size?
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. According to a recent major giving study, organizations of different sizes had different major gift thresholds (but these may still not be right for your particular organization; you need to look at past history):
- Under $1 million budget: $1,000
- $1 – 5 million budget: $5,000
- Over $5 million budget – $20,000
2. What is Your Major Gift Fundraising Process?
You really need to make a plan, commit to executing that plan and then follow through. There are no short-cuts in major gift fundraising. It can take an average of 18 – 36 months before you’re ready to make the ask. Sometimes you’re ready to ask within a matter of just a few months, but usually you must work to get your prospect “ready.”
Ask yourself whether you’ve got the following process steps under control:
- Prospect Identification – Where’s Your Waldo?
- Prospect Qualification – Assessing who Wants a Relationship
- Prospect Cultivation – Making the ‘Moves’
- Solicitation – Making the ‘Ask’
- Donor Stewardship – Giving the Love
3. What Prospects Do You Have, and Where Else Must You Look?
One place to begin is by developing a profile of your current major donors. What characteristics do they share/not share? Look not just at demographics but at interests, affiliations and giving habits. Figure out who might want to become further engaged and invested with you by engaging in internal prospect evaluation, external peer rating and qualifying touches and moves (e.g., have staff and/or volunteers reach out with phone calls, invitations, thank you cards, recognition opportunities; see who “bites.”).
4. What is Your Cultivation Plan?
First, do you have a revenue goal for each prospect? Next, what “moves” do you have up your sleeve, and how, when and where will you use them to move them towards that goal? This is your ‘moves management‘ or ‘relationship-building‘ or ‘donor love and loyalty‘ plan (call it what resonates best for you) to move folks closer and closer to a point of readiness to be asked for a passionate gift.
5. Who is Available to Make Asks, and How Will You Get Them Comfortable in this Role?
There’s no one right person to make the ask. Generally, think in terms of: (1) the person the prospect will have the hardest time saying no to, and (2) the person with whom the donor has the best relationship. Also consider each potential solicitor’s asking style. It may make sense to pair folks up to make them both more comfortable and more effective. If you don’t have enough solicitors to engage with all of your prospects, consider your top priorities as well as whether it might make sense to add to your staff. It doesn’t pay to be pennywise and pound foolish when it comes to fundraising. Just one gift could ultimately pay for a salary!
6. What Follow-Through Plan is in Place?
This is the most obvious, yet most overlooked, step. Don’t just take the money and run. The stewardship process must be managed, just like anything else. As management guru Peter Drucker says: “Good intentions are no substitute for organization and leadership, for accountability, performance, and results.”
What You’ll Need to Really Rock Major Gift Fundraising
- Your major gift amount – so you know the level of gift you’re targeting
- Your major donor profile – so you know the type of prospect you’re looking for
- A list of major donor prospects – so you can begin to qualify them for cultivation
- A revenue goal for each prospect – so you know where you’re headed and can establish priorities
- A qualification and cultivation plan – so you hold yourself accountable in getting prospects ready to be asked
- A solicitation plan – so you assure you have the right people in place and they’re confident about their role
- A follow-through plan – so you keep the love alive and make it likely this gift will not be the donor’s last.
Ready to Rock? Register TODAY to Become a Major Gift Fundraising Rock Star
Registration closes Saturday, August 18th. If you’re tempted, I encourage you to take the leap. Whether you’re new to raising major gifts or have had a program for awhile, this 8-week online course, Winning Major Gifts Fundraising Strategies, will enable you to take things to the next level. There’s nothing else you can do that will have such an enormous impact on your bottom line. An upfront investment will yield results far into the future – as long as you take things step-by-step according to a plan. Learn exactly what to do – and when and how to do it — in this course. Check out the full syllabus HERE. You’ll get CFRE credits… there’s a refund policy if you’re not satisfied… and you can enroll up to 5 additional people for no extra fee. I’m here to help you, if you’ll let me.