Whether you work in advancement at a university, development at a museum, or fundraising at a charitable organization, you understand the prominent role major gifts play. Major gifts are the largest single donations an organization receives, alongside planned gifts. As a crucial resource for nonprofits of all shapes and sizes, major gifts help fund the projects and programs that make an impact on your community.
In this guide, we'll walk through the basics of major gifts, the best methods and strategies for soliciting them, the role of a major gifts officer, and the major gifts metrics you should track.
What Is Major Giving?
From a donor's perspective, major giving is the act of making a significant donation to a nonprofit. However, from a nonprofit's point of view, it's a bit more complicated than just depositing a big check. Major gift fundraising encompasses the stewardship, solicitation, and cultivation processes of major gifts.
In this sense, major giving can change the game for a nonprofit in the best way possible. Because of its relative scarcity yet immense fundraising potential, major giving is extremely important for nonprofits.
Outside of massive bequests such as lucrative planned gifts, major gifts sit at the top of the traditional donor pyramid and tend to be relatively scarce. Excluding these planned gifts, major gifts are the largest donations your organization receives in any given year.
Usually, nonprofits have a specific funding range (more on this below) that encompasses each level of the donor pyramid, including their major gifts. As your major gift program grows, the range will likely shift upward.
In this section, we'll look at the crucial elements of a major giving program and answer the most frequently asked major giving-related questions.
5 Types of Major Gifts
While principal and major gifts are relatively rare, they can account for much of a nonprofit's fundraising totals for any given year. In action, major gifts are incredibly varied and can take a wide range of forms. In general, there are five main types of major gifts:
- Stocks, including publicly-traded stocks, mutual funds, bonds, and privately-held stock, can all be gifted to nonprofits. When donating stock, donors don’t pay capital gains tax and can also receive an income tax deduction for the current value of the shares.
- Real estate, such as land and property holdings, tend to be some of the largest types of gifts to nonprofits. As with stock donations, donors won't pay capital gains tax on appreciated real estate and can receive an income tax deduction on the current value.
- Cryptocurrency (or crypto) is a form of digital currency that can be invested in for long-term gains. Crypto is held by many of the wealthiest potential donors, making it likely that they might want to donate in this form.
- Qualified charitable distributions are tax-free gifts made from a traditional IRA. For older, wealthy donors, this type of major gift decreases their income tax and counts toward the amount they're required to withdraw from their IRA each year after turning 72.
- Donor-advised funds allow donors to make a lump sum charitable contribution to a private fund administered by a third party. As a result, the donor receives an immediate tax deduction for the entire amount, and then can recommend grants and add to the fund over time.
Why should you accept all of these types of major gifts? Not all major donors are alike or have the same financial situation. Giving donors options makes it more likely for them to find a suitable giving option with your nonprofit and ultimately make a major gift.
How to Define a Major Gift at Your Nonprofit
From one organization to the next, the definition of a major gift is almost always unique and requires specific, customized calculations. For example, a new, small nonprofit might count anything over $2,000 as a major gift, whereas an established, international organization might count anything over $100,000 as a major gift.
For your own nonprofit, you’ll have to look into your donor pool and gift history to determine what constitutes a major gift. To determine the major gift size range at your organization, follow these steps.
Once you have these in order, follow the steps below to determine what constitutes a major gift at your organization.
- Pull the 5 to 10 donors who have given the largest gifts to your organization and examine the range of those gift sizes.
- Eliminate any outliers. If all the gifts are between $7,000 and $11,000, except for one at $25,000, eliminate the $25,000 gift from your list.
- Accounting for the remaining gifts, estimate a major gift minimum. Using the numbers from the previous step’s example, you might say $8,500.
- Go back to your database and test that number—$8,500 in our scenario. You will look for how many gifts of that amount or greater have been given to your organization in the past year.
- Decide if the frequency of gifts above your minimum amount is in the major gift sweet spot. Remember, major gifts are scarce, but they are not so scarce as to be nonexistent. Make sure you don't set the major gift amount bar too high.
Once you move your estimate from the theoretical to the concrete, you can adjust as needed. For instance, when you begin making asks and securing donations, if you notice that your fundraisers are converting nearly all of your prospects into donors, your major gifts minimum amount should likely be higher. To make the most of your major gift efforts on an ongoing basis, track metrics like the conversion rate and amount raised, and adjust your minimum as needed.
Remember, you can’t compare major gift thresholds across organizations. There are far too many variables to do a side-by-side evaluation. $5,000 is going to mean a whole lot more to a small nonprofit than it would to a much larger one.
Where Does Major Giving Fit Into Your Overall Fundraising Strategy?
While your major gifts program is crucial to your nonprofit's fundraising success, it should be one of many tools in your belt and work in tandem with your other strategies. For many nonprofits, major giving can often be paired with other types of giving on the donor pyramid, including annual giving, capital campaigns, and planned giving.
- Annual Giving. Often, the best major gift prospects are already giving to your organization on an annual basis. As a result, it's critical to your major giving that you dedicate time to annual fundraising program and building existing relationships with regular, recurring donors.
- Capital Campaigns. Capital campaign fundraising is used to raise large amounts of money over a limited period of time for specific significant investments, such as new construction, creating a new program, or building an endowment. Most experts suggest that successful capital campaigns raise 40 to 60% of their total goal in a "quiet phase" before the campaign is publicly announced. In general, this 60% is constituted primarily by a handful of major gifts. For successful fundraising results, your major gifts strategy must work hand in hand with your capital campaign strategy.
- Planned Giving. Planned giving is the allocation of gifts to be given in the future, often through wills, after a supporter has passed away. Major gifts and planned giving share so much fundraising DNA that organizations will often combine the roles for managing the two into one position.
How your nonprofit integrates these three types of giving will boil down to your nonprofit's current situation. More likely than not, you'll find a happy medium somewhere between the pendulum swing from planned giving to capital campaigns to annual giving to major gifts.
How to Identify a Major Gift Donor
Before you can go through the major gift donor acquisition and retention processes, you have to find your prospects. Most experts say that for every four or five qualified prospects, your fundraisers will be able to secure one major gift. If you want to be able to build that qualified prospect list, you will have to know what to look for.
Yes, your donors' wealth is important, but major giving does not start and end with wealth. Wealth is only half of the equation. Someone donating a major gift to your nonprofit must:
- Possess a connection to your cause. This tie can manifest in many ways. Your major gift donor might be a long-time supporter or they could also be a person who has been directly affected by your organization, like a graduate of a university. It is difficult to predict what will bond a prospect to your nonprofit, but you should be able to identify those bonding factors in your candidates as you search for qualified prospects.
- Have the means to donate a gift at your nonprofit’s major giving level. This second half is the wealth component. A qualifier for major giving, to some extent, is the financial capacity to donate such a large gift. Keep in mind that the number of prospects in your donor pool will change according to how high the major giving level is set. For instance, the pool will be larger for small organizations asking for $1,500 rather than a large one asking for $50,000.
How do you assess a major gift prospect's relationship to these two factors? Keep in mind the indicators that can signal a major gift donor's financial means and organizational interest. These include:
- 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
Your major gift prospects are going to be incredibly valuable no matter how much you expect them to give. Your cultivation, solicitation, and stewardship of them should reflect that. Personalized, attentive, and professional handling of major gift prospects is the surest way to big fundraising gains.
What Is a Major Gifts Officer?
A major gifts officer, also known as a director of major gifts, is the leader of a nonprofit organization's major giving efforts. In nonprofits without full-blown major giving programs, the major gifts officer still coordinates a similar effort, just on a less comprehensive scale.
Major gifts officers are experienced fundraisers who have backgrounds in major and planned giving positions. Officers have to be persistent, goal-oriented, and driven by donor need. When you find someone who balances that combination of skill-set, qualifications, and personality characteristics, you’ve found your major gifts officer.