Here's the question at the center of this article: Why does a nonprofit need a major gifts strategy?
Ready for the short answer? Nonprofits need major gifts strategies because major gifts are game-changers.
The reasons for a major gifts strategy are plenty. You could write a book on the benefits, but these five points should be sufficient to convince you that your team needs to start strategizing ASAP.
When developing your major gifts strategy, it’s important to keep in mind the following data points to be on the lookout for. These data types can signal a major gift or planned giving donor.
- Previous donations to your nonprofit.
- Past giving to other charities.
- Donations to political campaigns.
- Relationship with your nonprofit.
- Real estate and stock ownership.
- Business ties.
- Volunteer involvement.
Now let’s get started!
1. Major gifts are some of the largest donations your organization will receive.
Excluding once-in-a-blue-moon, gigantic donations, major gifts and planned gifts are the largest donations an organization receives.
Any gift that has a significant, positive effect on your organization's fundraising is a major gift. The exceptions to this rule are planned gifts, which are decided on in the present and given in the future and constitute their own category of giving.
Your nonprofit might be growing and performing well with a large pool of small to mid-level donors, but if you want to move up and be able to accomplish bigger and better aspects of your mission, you need to incorporate major giving.
To use an example with easy calculations, imagine that your organization regularly receives gifts right around the $25 range and rarely over that mark. A major gift of $1,000 from one donor is equivalent to 40 gifts of $25.
The extra effort it would take to secure just one gift balances out when you consider just how many small gifts you would need to reach that number. Find the time and resources to combine both efforts and your fundraising total jumps up by $2,000 from 41, not 80, donors.
2. Major gifts will make up a huge portion of your yearly fundraising total.
Have you ever heard of the Pareto principle? It's perhaps more commonly referred to as the 80-20 law. Essentially, the principle claims that 20% of an event's causes make up 80% the event's effect.
What does that mean in practice? Well in sales you could say that 80% of your sales come from 20% of your customers or in business you might say 80% of your profits come from 20% of your clients.
The principle is popularly extended to major giving as well. Many organizations see approximately 80% of their fundraising total coming from 20% of their donors. And you know who those donors are...major gift donors.
There's even a defensible stance that the comparison is much more drastic, which argues that the break down is closer to 90-10 for major gifts. Regardless of just how extreme you think the disparity is, for mature nonprofits, that percentage is usually somewhere between 80 and 90.
Major gifts are just that significant. They can control approximately 80% of your fundraising totals. That's far too big a number to be ignored.
3. Major gift programs give interested supporters guidance in the allocation of their funds.
There will always be major gift donors out there. The true question is then, is your organization taking advantage of the opportunities available?
With a clearly defined major gifts program, your nonprofit can capitalize on interest from your supporter pool.
When you establish your program, you are determining the:
- Parameters of major gift size. Those interested will want to know how large a donation has to be to count as a major gift.
- Programs and options that donors can allocate major gifts to. Someone might be okay with giving a large sum of money to your general fundraising budget, but more often than not, you'll be working with donors to find the right place within your organization's needs to allocate their funds to.
- Timelines for giving. Let donors know if they can allocate their gifts over multiple years. Maybe someone wants to give a total of $25,000, but only has the available funds for $5,000 this year. One gift of $5,000 is still beneficial, but multiple gifts totaling $25,000 over a multi-year period is even better. Remember, the guidelines of your major giving program do not have to be rigid.
Implementing a major gifts strategy pushes your organization to investigate and answer these questions so that interested parties don't go elsewhere with their funds. If a donor supports two nonprofits and their respective causes equally and has major giving level money to spare, that donor is going to give to the nonprofit that makes its major gift aims apparent.
4. Major gifts differ from organization to organization.
There's a common excuse that nonprofits use when justifying why they do not actively seek major gifts. Those nonprofits claim that major gifts are for large organizations and are beyond the scope of a smaller, newer nonprofit.
For those who feel that way, I've got great news! Any organization can seek major gifts because the parameters of major gifts are defined by the respective fundraising capacities of the nonprofits seeking them. Whereas one nonprofit counts anything over $3,000 as a major gift, another might say major gifts have to be over $75,000.
The exact size of the gift is not the most important principle driving major giving. What's more critical is the action of securing gifts far larger than your standard. Elevating average gift size is an excellent formula for growth over time.
5. Major gift prospects are hiding in plain sight.
You hear numbers about how few major gift donors you'll have in comparison to your annual fund donors. Those numbers make it easy to write major gift donors off as too rare to worry about actively soliciting.
Here's the catch. If you actually know the donor qualities you are looking for and how to look for those characteristics, you won't have trouble finding major gift donors. Sure, the process of going from cultivation to solicitation to stewardship is not without its challenges, but troubles with identifying major gifts prospects should not hold you back.
Depending on what constitutes a major gift at your organization, you'll be looking for a combination of:
- Wealth, aka giving ability
- Interest, aka giving willingness
When someone has the means to give a major gift to your organization and a strong enough connection to philanthropy (and your particular mission) to follow through with the process, that person goes on the prospect list.
To start your search, you'll begin with your pre-existing pool of donors. As long as you have kept track of donor data in your CRM, you'll be able to sort out the major giving prospects from your list of donors.
That wraps up these five reasons why you need a major gifts strategy. As you can see, the fundraising potential is there for the taking.