Raising major gifts

Today’s guest post is from my good friend and colleague, Karen Erren. As a career nonprofit executive and fundraising leader, Karen has spent more than 20 years building, growing, and leading social service organizations. She’s exactly the right person to share some valuable insights with us about raising major gifts from donors to local social service causes. 

Here’goes…

I get to help nonprofits raise money. It is amazing work and I feel really lucky to get to do it. Right now is a specifically interesting time in fundraising for my clients, the majority of whom are human service organizations that provide food, shelter and other services for our neighbors in need.

For many years, the majority of these organizations funded their significant organizational and programmatic growth through direct response fundraising comprised of individuals gifts of any amount, from $1 up, though the mail or online. In fact, the past 10-15 years were a golden era for direct response programs for these organizations. So during this time, while other types of nonprofits reached into this annual fund donor base to further deepen relationships and cultivate larger gifts, for many human service organizations direct response was the fundraising program. It wasn’t completely exclusive, of course, there were also events, grant income and some additional types of revenue, but by far and for many years, most money came in via envelopes.

This worked while it worked.

But direct response should never be the sole or primary revenue stream for an organization. Its greatest asset is the quantity of donors it procures and secures gifts from. It introduces your cause and organization to thousands of prospective supporters and is an entryway to giving, in order to build your program. But because human service organizations were able able to fund their efforts primarily in this way for so many years, they did.

This golden era has ended. While direct response maintains its critical role of providing a base of both revenue and donors, it will no longer bear the weight of the growth required for these organizations striving to meet the needs of the community. Many food banks and shelters have seen direct response revenue plateau.

Because the program grew for so long, organizations have had to take a renewed look at the Return on Investment and re-establish expectations, based on national philanthropic industry standards and metrics. These organizations are also looking at additional revenue streams. As they look toward continued growth, the greatest and most immediate opportunity lies in Major Gift programs, which are traditionally defined as specific to donors who give single gifts of $10,000 or more.

It takes very different infrastructure, expectations and effort to procure a million dollars a couple of dollar bills at a time than it does to have the support of one donor who gives you a single million dollar gift. Or perhaps a few donors, each of whom gives six-figure gifts. Now, our social service organization clients, while continuing to honor and appreciate the many that give at all levels, are simultaneously working to accelerate and deepen their support from this specific group of supporters, the Major Donors.

Come to find out there are some differences between building a major gifts program for an organization such as a hospital or college vs building one for a food bank or shelter. Don’t get me wrong, the fundamental components of relationship management, the basis for any fundraising program, are the same:

Identification— Who are our giving prospects? Who are the donors most likely to support this organization?

Cultivation—How do we get to know each other better? What motivates the donor to support an organization and are those qualities, programs or services that our organization offers?

Solicitation—A direct ask for a gift of a specific amount.

Appreciation—The ongoing opportunity to thank and thank and thank. And then to thank again.

There are also some challenges to building a Major Gifts program that transcend industries, including:

  1. The Bill Gates Syndrome—What I call the belief that an organization must have the support of the most philanthropic individual in a community in order to succeed. This is not true. There are more than 1.5 million registered nonprofits in the United States, according to the National Center for Charitable Statistics of organizations, and I promise you that the vast majority of them survive, and even thrive, due to the support of everyday citizens and neighbors. This is particularly true for human service organizations.
  1. Because they can, they will—The mistaken understanding that someone’s capacity to give is in direct correlation to their giving level. Sometimes our partners perform a wealth append to identify an individual’s capacity to give with the expectation this information should form the basis of its fundraising program. It should not. There is a big difference between ability to give and willingness to give. This is why we utilize a Charitable Giving index when evaluating prospective donors. A wealth append can be one of many useful tools utilized to build a strong philanthropic program but it is not a guarantee of success.
  1. Anybody can be a Major Gifts Officer—There is a significant shortage of Major Gift Officers (MGOs) in every single community across the United States, as best I can tell. There is more need than there are qualified candidates. And, as we will discuss below, human service organizations have some characteristics that make it even more challenging to find the right fit.

So while the basic tenants of building a program are the same for all organizations and while there are some similar challenges across all industries, there are some clear distinctions as well. Let’s take a look at the top challenges in building a Major Gifts program specific to human service organizations:

DONORS

“Because this donor is one of my most generous supporters, (s)he must be a Major Donor.”

There are a myriad of distinctions between Major and Middle Donors (defined as those who give single gifts between $100-9999.99):  they have different wants, needs and behaviors. When we treat one category of donors like the other, we leave both dollars and relationships on the table.

VOLUNTEERS

“My board members must be my primary volunteer fundraisers.”

Many board members are not fundraisers. They never will be. Contrary to widely held belief, you do not have to have a fundraising board in order to have a successful major gifts program.

NEED

“But people are hungry! We have to grow our “ ” program! This donor should want to support hungry seniors, or children (or whatever the greatest internal need is).” The human services industry is filled with passionate, caring individuals who want to make lives better for their neighbors in need. Too often, I see fundraisers try to convince a donor to support a program that doesn’t resonate with the donor’s giving priority. The priorities of the donor are not always in alignment with the priorities of the organization.

I also see the opposite side of this equation, mission creep, where an organization wants to create a program solely to meet the donor’s giving priorities. This won’t work either—the donor’s desires cannot supersede the organization’s needs. The win is in the overlap between the donor’s passion and the programs and services specific to the organization

STAFFING

The requirements for an MGO at a human service organization are very different than those for a college or university. At a large organization with an established program, an MGO is allowed to be a specialist. There are additional people on the team who perform individual functions: one person develops portfolios, another does the donor prospect research, another creates the Moves Management infrastructure regarding how to deepen and cultivate the relationship, and often there are many volunteers prepped and ready to open doors and help build and deepen relationships. An MGO’s responsibility at these large organizations is solely to manage the relationship and procure gifts.

At a smaller organization with a fledgling program, the expectations are very different and the MGO must figure out every component, from which prospects to prioritize, how to utilize the internet for prospect research, putting together appropriate cultivation metrics and moves, and then often finding out the relationship development resides squarely with staff and there isn’t any volunteer support in place. Many times, the Chief Development Officer or Development Director is expected to operate as the MGO, at least until the position “proves itself.”  So overwhelmingly, at most human services organizations, the MGO must remain a generalist.

EASE

This is a big one, because I’ll be honest with you:  building a major gifts program is HARD. There is often nonexistent infrastructure, and both internal and external resistance. Each component takes time to develop, vet and implement, in a program and organization where there are more priorities than capacity. Most significantly, relationship management is a process and a long term investment. Not a quick fix.

So what’s a social service organization, dependent on growing and diversifying their revenue streams in order to care for their neighbors in need, to do? There is opportunity for success. It can be done! Here are some steps to get you going:

  1. Start where you are. Whatever that means. I guarantee that you have donors who need to be appreciated. Whether it’s because they have supported your work for decades, or because they do give the largest gifts your organization receives, the first step in developing a Major Gift program is saying thank you to those who have gotten you where you are today.
  1. Don’t assume you have a ready prospect pool of Major Donors. If your most generous supporters qualify as Middle Donors, honor that and them. Speak to them the way they want to be spoken to, which is through a combination of mass and individual communications. My colleague Andrew Olsen has a great post on how to engage Middle Donors. You can access some of that content here.
  1. Develop a Wish List of prospective Major Donors you want to support your organization. These should be philanthropic leaders in your community, the most generous givers, and not necessarily your community’s wealthiest individuals. If the relationship develops well and offers the appropriate opportunity, the first gift from these prospects can be a Major Gift.
  1. Focus on what you need to accomplish instead of how the books tell you it has to be done. So if you need a community member to open doors, perform introductions and set introductory appointments and your board isn’t that type of board, find an individual in who can help you, regardless of whether or not they currently have a relationship with your organization. You can cultivate volunteers in exactly the same ways you cultivate donors.
  1. Know your organization and your community. Know who is giving and what causes are important to them. The more you know about what is going on both inside your organization and in your community, the easier it is to elevate your organization’s level of community support because there are natural connections that occur.
  1. Remember, as John F. Kennedy said, “A rising tide lifts all boats.” An organization focused on cultivation and appreciation sees increased giving in addition to their Major Gifts program. All donors want to be appreciated and too many organizations don’t do this well. So when you make it a priority, you set a clear distinction between yourself and many of the other nonprofits in your community. Your donors appreciate it. And appreciated donors give more gifts and larger gifts.
  1. A true Major Gifts program requires face-to-face asks. Period. So it doesn’t have to happen immediately—chances are you aren’t ready. But that’s where we are headed, so assess and filter your activities to ensure they are moving you forward toward this specific goal: face-to-face asks with qualified donors who care about your organization and have both the capacity and the willingness to make seven-, six-, and five-figure gifts.
  1. Start one step at a time. Just start.
  1. Enjoy the process. Really, what is more fun that getting the opportunity to call a donor and say “thank you!” Thank you for letting us change lives, thank you for allowing us to ensure that children have food each day, thank you for ensuring seniors have a warm bed on a cold night, thank you for putting apples and tomatoes in the hands of those who don’t have access to fresh produce. One of my first Major Donor mentors told me, “I’ve never been on a Major Donor visit I didn’t have to force myself to go on. And I’ve never been on a Major Donor visit I didn’t enjoy.” At the end of the day, we are transforming lives. What a gift.
  1. I’m going to say this one again: Celebrate! It is easy to focus on all there is to accomplish. Make sure that you celebrate the wins along the way.

The transition from an organization focused on annual giving into an organization that successfully procures transformational gifts is hard. It takes time. It is also exciting and rewarding to become an organization with deep relationships that lead to transformational gifts. If you are leading this effort at a human services organization, there are some challenges specific to your process. Hopefully the tips outlined above will help you navigate this path more successfully.

Do you have additional questions about developing a Major Gifts program for your organization? Are you in the process of building a program and have experiences to share? I’d love to hear from you

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