When seeking major gifts, charities are best served by consistently using a system — almost any system — for identifying people who can give generously, rather than using a system erratically or not at all, according to a new survey.
While that may seem like common sense, the study found that only 37 percent of charities surveyed follow a major-donor identification system consistently. Three out of four of those organizations said they meet their major-gift goals nearly every year.
By contrast, 39 percent of charities said they have processes in place to find major donors but use them inconsistently. Only 39 percent of those organizations said they nearly always reached their goals for snaring big donations.
Those groups fared worse than the one in four charities that reported that they had no system at all. Forty-three percent of those organizations said they still met their major-gift goals nearly every year.
The takeaway couldn’t be clearer, says Melissa Brown, whose company conducted the research and analysis: “Have a plan and do it. Whether it’s signing up for a service to track electronic engagement or asking your board members, just do it.”
A lot of fundraisers “put all of major giving into the relationship bucket,” says Missy Gale, president of the Association of Philanthropic Counsel, which sponsored the study. As a fundraising consultant, she says, “I often hear clients say, ‘Well, we don’t have the right kind of board members. We don’t have anyone who can open doors.’ Or ‘I don’t know enough rich people.’ But this shows if you put enough processes in place, both human and technical, you can have good outcomes.”
The survey of more than 600 charities in the United States and Canada was conducted in February and March. Funding was provided by MarketSmart.
4 Tactics That Work
The study identified four methods of finding affluent donors that were most closely associated with charities meeting their fundraising goals:
- Conducting prospect research
- Asking for referrals from current donors, volunteers, and other supporters
- Analyzing the charity’s donor database
- Tracking donors’ engagement with the organization’s online content
“Some of the tried and true methods that we always talk about don’t seem to be super associated with success,” Ms. Brown says. For instance, a common practice of asking board members to rate prospects based on their ability and likelihood to give didn’t show up in the survey among the most effective methods for finding big gifts.
The most surprising tactic might be tracking donors’ digital activity. Online content and appeals are not usually directed toward supporters who can give big donations, and yet 89 percent of groups that used this method said they usually met their major-gift goals.
“Most organizations are using online engagement more as a donor-acquisition tool than for major gifts,” says Ms. Gale. But its use by 28 percent of the charities in the survey, she adds, is “nice to see. It’s another tool in the toolbox.”
Where Major Gifts Start
The survey found that many organizations consider relatively small amounts of money to be “major gifts.” For all groups except arts and education nonprofits, the median starting point for what they consider a major gift was $1,000 to $2,499. For arts and education nonprofits, it’s $4,999 to $9,999.
Only 1 percent of charities cited $1 million or more.
Ms. Gale says the data reflect what she’s seen as a fundraising consultant who’s analyzed many charities’ giving data: Most organizations’ relationships with their donors grow closer when those supporters begin giving in the very low thousands.
That fact may not jibe with the message charities send publicly. Oftentimes, nonprofits are raising fewer truly large gifts than they would like the public to believe, she says. “Typically organizations will say, ‘Oh, our major gift is $25,000,’ " Ms. Gale says. “But when you go in and analyze, there’s really only six or seven gifts at that level, but there’s 50 at $1,000, and the only way they got those was by a direct ask.”
Ms. Brown said the survey’s finding about how organizations define major gifts indicates that many charities need to set their sights higher and expect more from donors who give in the low thousands of dollars. Says Ms. Brown, “Don’t be afraid to ask for more.” One way to start, she suggests: Raise the minimum required annual contribution from board members.
Giving Opportunities
Among the report’s other findings:
- Fifty-nine percent of organizations said they are planning a capital or endowment campaign, conducting a feasibility study for one, or already involved in such a campaign. For some smaller organizations, Ms. Gale says, launching a campaign is a way to start a major-gifts operation in their fundraising shops. “They start doing major giving when they have some urgency or direct need, rather than on an ongoing basis,” she says.
Giving short shrift to major donors when not in a campaign can hamper an organization’s overall ability to raise revenue, she says.
- The three biggest challenges cited by organizations to major-gift fundraising were lack of sufficient time or staff (54 percent), lack of board members’ help (47 percent), and difficulty identifying gift opportunities to match donor interests (41 percent).
Organizations with budgets of $3 million or more were most likely to choose the last one, with 97 percent of groups with budgets of $25 million or more citing problems in matching donors to giving opportunities.
It’s not a new phenomenon, says Ms. Brown. She cites the early 20th-century story of philanthropist Andrew Carnegie, who rebuffed an appeal by Woodrow Wilson, then president of Princeton University, to support a law school, and instead built Princeton a man-made lake for its rowing team. (Reportedly, Mr. Wilson responded, “We needed bread, and you gave us cake.”)
“Donors can come in with too many of their own ideas,” Ms. Brown says. “Lots of donors are not yet persuaded that the organization’s priorities are their own.”
It’s up to charities to make the case for their own needs. However, she adds, “Some donors won’t be persuaded. Some will still want to build the lake, no matter how brilliant Woodrow Wilson’s plans are.”
