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.
Why Are Major Gifts Important?
Have you heard about the 80-20 split? What about the 90-10? You've likely come across these statistics in past conversations about major gifts. The 80-20 split suggests that 80% of an organization’s funds come from the top 20% of its donors. Likewise, a 90-10 split suggests that 90% of funds come from 10% of donors.
While the exact statistical percentages fluctuate, the principle remains constant. In general, when you start to implement a major gifts strategy and secure more and more major gifts, your fundraising numbers will climb to previously unimaginable heights.
But what are the specific benefits of a major gifts program? We've identified the following primary benefits of major gifts:
- Major gifts are some of the largest donations your organization will receive. 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 purpose, 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.
- Major gifts make up a huge portion of your fundraising goal. Have you ever heard of the Pareto principle? We referred to it above as the 80-20 split. Essentially, this principle claims that 20% of an event's causes make up 80% of the event's effect. In nonprofit fundraising, the principle suggests that at least 80% of a fundraising total comes from 20% of donors—specifically major gift donors. What does this mean? Major gifts control approximately 80% of your fundraising totals. That's far too big a number to be ignored!
- Major gift programs give interested supporters guidance in the allocation of their funds. When you establish your program, you can determine the parameters of major gift size, the programs and options that donors can allocate major gifts to, and timelines for giving. 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.
- Major gifts differ between organizations. There's a common excuse that nonprofits use when justifying why they do not actively seek major gifts. Usually, these nonprofits claim that major gifts are only for large organizations and are beyond the scope of a smaller, newer nonprofit. For those who feel that way, we'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.
- Major gift prospects are hiding in plain sight. 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.
Remember: When someone has the means to give a major gift to your organization and a strong enough connection to philanthropy (and your particular cause) to follow through with the process, that person should go on your prospect list.
To start your search, begin with your pre-existing pool of donors. As long as you keep track of donor data in your CRM, you'll be able to sort out the major giving prospects from your list of donors.
Donor Cultivation Strategies for Major Gift Fundraising
Before you can make an ask and secure a major gift, you have to cultivate a relationship with the donor. However, the scope of cultivation is defined somewhat differently, depending on whom you ask.
For the purposes of this guide, donor cultivation is the process leading up to the ask. On the other hand, donor solicitation is the process of making the ask itself. Finally, once a major gift has been donated, you enter into the donor stewardship phase. We'll talk about stewardship and solicitation in the following sections.
For now, let's take a look at the primary major gift donor cultivation strategies:
- Strategy #1: Put a Plan in Place. Use software and tools, such as a major gift calculator, to map out your financial need and how you'll meet it.
- Strategy #2: Build Personal Relationships With Major Donor Prospects. Use a variety of techniques, including one-on-one meetings and get-togethers, exclusive events, and office tours, to build a strong foundation.
- Strategy #3: Track All Interactions and Adjust Accordingly. Don't forget to track and organize all your major giving and donor data in your CRM solution.
All of these activities will help your organization start building a relationship with your donor prospects. Out of these relationships comes the passion and drive for supporters to give major gifts to your organization.
After you’ve done the hard work of cultivating a relationship with a major gifts prospect, it’s time to transition to the solicitation phase.Learn more about these major gift donor cultivation strategies
Soliciting Major Giving: How to Ask for Major Gifts
Asking for money is never easy, but when you’re asking for a large sum, it can be even more difficult. Even when you’re asking for all the right reasons, the situation can be stressful. No matter the circumstances, it's intimidating and nerve-wracking to sit across a table from someone and say a variation of, "Would you mind donating $50,000 to our organization?"
Combat your anxieties and worries with these five steps to the perfect major gift solicitation:
1. Do Your Research
Major gift donors are a big deal, and they have to be treated as such. You certainly don't want to mix up a major gift donor's name or use the wrong salutation.
When it comes to personalizing an ask of this magnitude, major donors (like anyone!) appreciate the little things that prove that you've been listening and paying attention to them. You can ensure that your team shows major giving prospects just how well they know them by:
- Keeping track of valuable information from your prospect research. Prospect research uncovers your major gifts prospects and also provides plenty of additional insights into a prospect's contact details, biographical information, and business affiliations. With that kind of knowledge, your major gift team knows, for example, that Ms. Smith is now Mrs. Jordan or that Janet Jacobs is a close friend of your board chair.
- Incorporating what you learn during the cultivation process into the ask. A prominent component of the major gift cultivation process is building relationships with prospects. Major gift prospects need to get to know your organization before they commit to giving a sizable gift, and your organization needs to get to know your major gift prospects in order to make the right kinds of asks.
During cultivation, your fundraisers spend a good amount of time conversing with and meeting with the major gift prospect. Track all interactions in your CRM to ensure that the ask itself is coming from the most well-informed angle possible.
2. Map Out an Outline of How the Conversation Will Go
In the nonprofit world, resources are limited and efforts are all hands on deck. You often rely on people to fill roles that they're unfamiliar with. That's where pre-written fundraising scripts come in.
For instance, if you need auction items for a gala, you can write out a phone script that volunteers can use when cold calling local stores and businesses for in-kind donations. In this scenario, a script acts as a conversation safety net and provides quality assurance.
A script can do the same thing for your major gift solicitation. Now, you might be able to get away with a word-for-word script over the phone, but that won't work in person. For major gift solicitations, instead of a script, use an outline. An outline will have the same purpose as a script but will keep the authenticity of a free-flowing conversation intact.
Even if you never end up looking at the outline during the proposal, simply the act of putting a plan on paper will ease your nerves and help you prepare.
3. Have a Specific Ask Amount in Mind and Backups to Account for New Information You Learn
To secure a gift, you have to ask for the gift. That's fundraising 101. In the case of major gift solicitation, in particular, the intimidation of making a direct ask leads fundraisers to talk around the action instead of just flat out saying, "Would you be interested in donating X amount to fund Y?"
Physically stating the ask is a bridge easier crossed when you have a specific dollar amount in mind. Using giving calculations and formulas, combined with the knowledge you gained during the cultivation process, your team should be able to determine a specific ask amount.
There's a fear that asking for too much will turn the donor away, which it can. However, asking too little is just as significant, if not more, of an issue. It's common for a fundraiser to leave a meeting, gift secured, and recognize that his ask was too low. Trust your research and instincts when crafting a number and don't let discomfort with asking for a lot of money cloud your judgment.
4. Engage the Prospect in a True Dialogue
It is easy to slip into default pitch mode. You get to talking about your organization and 15 minutes later, after your spiel, the prospect's eyes have glazed over and you realize you have basically been talking to yourself.
Part of being able to adapt during the ask is engaging the prospect in a true dialogue, and your solicitation will have a much bigger impact if you make it a conversation.
Talk to your prospect about their:
- Charitable interests
- Ties to your organization
- Current giving inclinations
Let their responses frame your conversation. If major gift solicitation is a car, your major gifts officer might be driving, but the prospective donor is your GPS. You can't leave the parking lot without their directions. Successful solicitations should be donor-centric, because, at the end of the day, this process is all about the donors.
5. Be Ready for the Next Steps: Stewarding Your Existing Donors
Much of the discussion surrounding major gifts solicitation is about the moments leading up to the big question and how you handle that ask, but there's also the transition stage from ask to stewardship. How you go about handling that process can affect the way your brand-new donor sees your organization and thinks about leaving future gifts.
Donor stewardship is the relationship-building process with donors after they've made a gift. While it should always involve thanking donors for their gift, it can (and should) also include a range of additional activities, such as phone calls, personalized letters, galas, events, and volunteer opportunities.
With each of these steps, focus on regularly acknowledging the impact your major donors can have on your organization and purpose. However you choose to make this acknowledgment, you should put your major donor solicitation strategies and goals into a clear plan that can be followed by anyone on your major giving team.
Writing Major Gifts Proposals
In the sections above, we've focused primarily on making major gift requests in person. But that's not the only effective way to solicit a major gift. Another option, as a supplement to your cultivation practices, is making your formal major gift proposal in a letter.
Usually, the best major gift conversion rate comes from face-to-face asks. However, if this is not possible due to financial constraints, travel restrictions, or other circumstances, your organization needs to make sure it makes the most of its proposal letters. These letters draw from the knowledge gained during prior conversations and then get right to the specific major gift proposal.
When you write your proposal letters, be sure to follow these best practices:
- Personalize the letter. Have you ever gotten a generic letter in the mail that addresses you as "To Whom This May Concern"? Most likely, you immediately ignored the rest of the letter. Generic salutations as well as suggested donation amounts make your nonprofit seem detached from your major gift donor, as if you don't know each other or (worse) you simply don't care. Be sure when you send these important letters, you are addressing each donor as an individual. Your CRM software likely stores personal information such as an individual's preferred name, title, and wealth data. Use this information to start your proposal letter off on the right foot.
- Compliment your prospect. We don't mean a generic or off-topic compliment like "You look great today!" or "Nice boots!" Rather, compliment your prospect based on their previous philanthropic deeds or relationship to your organization. Generally, major gift prospects have previously given to your organization. Call on this loyalty to praise and acknowledge the great work they've completed in the past. When a prospect feels appreciated for their work, they are more likely to continue doing good work, hopefully by making a major contribution to your organization.
- Explain the cause and effect. Considering your prospect’s past philanthropic actions, explain how your organization's cause fits in directly with their interests. While the general formula for the "cause and effect" aspect of your letter is: "We need X amount for Y program, so that we can accomplish Z together and prevent M," you'll want to be much more descriptive. Add descriptive language and details to make sure the prospect feels connected to your nonprofit. If you're finding yourself stumped during the writing process, try referencing fundraising letter templates for inspiration. Proposal letters are key to any proposal, no matter if it's sent by mail or eventually talked over in person.
Read this article to learn more about writing a major gift proposal
Ultimately, major gifts can make a significant difference in your organization and your ability to make an impact in your community. However, because of their size, it's important that you take the time and dedicate the resource to make and implement a detailed strategy.
If you want to unlock more supporter management and fundraising tips, check out these additional resources:
- 60+ Fundraising Event Ideas for Nonprofits. Major donors love engaging, exclusive events. Take note of this collection of event ideas to incorporate into your next fundraising event.
- What is Legacy Giving? Read this easy-to-follow guide to learn more about planned and legacy giving for nonprofits.
- 30+ Fundraising Strategies & How to Create a Fundraising Plan. From mobilizing donors to developing partnerships, leverage these comprehensive strategies to increase your nonprofit's fundraising impact.