May 30, 2022
Whether it's your first or next major gift, be sure you're prepared to accept larger gifts.
It’s every nonprofit’s dream: enough major donors to fund everything we do. We hear from dozens of nonprofits and speak with dozens more about their concerns around funding and many of them look at major donors as a panacea that will solve all of their financial concerns.
In this article, we’ll talk about the ways nonprofits can prepare for a major gift program, cultivate and solicit major donors, and steward them well. This article is a brief overview of the training that we provide to our clients and nonprofit associations. There are also several reputable resources on major giving including Amy Eisenstein and the Veritus Group.
What is a major gift?
Aside from planned gifts, major gifts are the most significant donations received by a nonprofit. The threshold for a major gift differs from organization to organization. A smaller organization might consider a major gift at $1,000 while another one at $100,000. One way to think about a major gift threshold is to run a list of your top donors from your donor database and see how many people give above a certain level. While there’s no specific number, if you have hundreds of people giving above that threshold, it might not be a major gift threshold.
For our example purposes, we’ll use $5,000 as a major gift threshold.
Major gifts are not just for capital or other special projects. Done correctly and sustainably, major donors are part of a balanced fundraising system that includes annual, planned, and special gifts such as campaign donations.
How Can My Nonprofit get Major Gifts?
Who should we consider?
The most important thing that every nonprofit needs to hear is that wealth is not an indicator of generosity. Wealth is not an indicator of generosity. Likewise, generosity to one cause or organization does not indicate generosity towards your organization or anyone else’s.
There are three principles of giving that include linkage, ability, and interest. The LAI principle triangulates the donors that are most likely to give significantly to your organization. The more they are connected to the cause your organization supports, the organization itself, and the people within it (board and staff), the more likely they are to give. This alone is a necessary but insufficient condition. Ability is their capacity to give a major gift. We may never know the true financial situation of any donor. In fact, there are numerous cases of donors who made transformational gifts after making very small gifts or living extremely frugally. This is a good reason not to pre-judge a prospective donor’s capacity to give. However, some indication is helpful in prioritizing whether they might consider a major gift. Endowment Partners provides our clients access to publicly available information that helps provide this determination. If your investment adviser does not provide such tools, you can either purchase access yourself or conduct a series of interviews with donors to understand their ability, in addition to their linkage and interest. In fact, face-to-face discussions are the primary way of ascertaining the prospective donor’s interest in your organization and/or project.
For the most part, your major donors will come from existing donors who have been stewarded well for their previous giving and cultivated over time for a major gift. This comes as a surprise to some nonprofit leaders and board members who think that major giving is an acquisition strategy of getting new high net worth individuals to make a gift.
While that strategy mostly fails at the outset, it also fails significantly in the long run. Since the individual doesn’t have a strong linkage or interest in the organization or cause, even if they do give, it’s a single gift or a few gifts before they disappear from your donor file. Since it costs five to ten times more to acquire a donor than to keep a donor, the ‘whale hunting’ strategy actually costs organizations more in the long run and undermines financial sustainability.
Develop personal ties with potential significant donors.
Building solid relationships with your existing donors is the most effective strategy to secure significant gifts. A good donor experience, stewardship, and cultivation cycle is the best way to keep your current donors, upgrade their gifts, and identify the individuals who can give significantly more.
A major gift phase can take eighteen months or longer on average. Here are some ideas to help you develop a personal relationship with your potential donors:
• Through one-on-one interactions, learn more about what motivates them to support your cause.
• Invite potential supporters to volunteer or advocate for your cause.
• Host smaller, more intimate gatherings (like luncheons, galas, or a tour of your facilities)
Our team provides a workshop for fundraising staff on major donor engagement strategies that walks through the identification, qualification, cultivation, solicitation, and stewardship of major donors. Reach out to us to learn more.
Making the ask
Once you understand the donor’s interests, and have a sense of their linkage and their capacity, it’s time to make an ask. When we provide clients with research on their major donors, we include a range of giving levels as well as types of gifts that might be useful to consider as they are making the ask. The board or staff member engaging with the donor can be trained how to ask appropriate questions to help position the ultimate ask and determine the answers to the following questions:
a. When is the right time to make an ask?
b. Who is the right person to make the ask?
c. What is the right project to ask about?
d. What is the right amount to ask for?
e. What is the right giving vehicle to suggest?
f. What is the right way to steward the gift?
We recommend that all of these questions are answered in some way, even obliquely, before a solicitation occurs. That allows the person asking to form the ask in this way:
Donor, because you’ve shared your interest in this project and your desire to fund it in its entirety, I would love for you to consider a gift in the range of $5,000 of XYZ stock this year.
Then the asker shuts up. Then remain silent and allows the donor to consider and respond. The asker should be prepared to reply if the donor says no or maybe as well. Immediately after the gift is made, it is important that the asker set a follow-up for stewardship. For example:
Thank you so much for your generous support! I’d like to set up a time next quarter for you to come in and tour the facility to see your gift in action. Does June 15th work for you?
Make it simple to give more complicated gifts.
Making it simple and accessible for your major donors to give in ways other than cash will help you generate bigger donations from existing donors. Major gifts are often gifts of assets such as stocks. If you don’t have a way to accept or facilitate more complicated gifts, building this infrastructure is the first step. Even with gifts of cash, the process needs to be frictionless for a major donor.
Your nonprofit should also have a team of advisors ready to support your fundraising efforts and donor experience that you can call on a moment’s notice to facilitate anything more than a check. If they want to create a gift annuity, a charitable trust, donate a second home, or a stamp collection they inherited, you need a one-stop-shop to help you get the gift.
Inform all of your significant donors about the complexities of major gifts.
Many of your donors want to make a bigger difference but aren't aware of the tax-advantaged giving alternatives available to them. The ideal technique for securing non-cash gifts is to educate all of your supporters through ongoing storytelling.
These may include stories of gift vehicles in action, other major donors who have already stepped forward to support a similar project or stories of people who are in need.
Steward all of your donors well including your major donors
Donor stewardship is the practice of thanking, acknowledging, and perhaps recognizing a donor after they make a gift. It’s always good to thank someone for doing something good. But major donors are also more likely to become repeat donors, so making them feel valued will encourage them to give again in the future. That stewardship and donor experience extend from your team to anyone they interact with including any advisors that work on your behalf.
The success of any major donor program depends on a significant annual giving program with all levels of donors stewarded well. It also requires certain internal structures are available to ensure that major donors can give how and what they want. If you need help setting up, scaling up, or fine-tuning your major gifts program, we’d be happy to help!