MAJOR GIFTS FUNDRAISING

WHAT DOES THE TERM “MAJOR GIFT” MEAN TO YOU AND YOUR NONPROFIT - BY JIM ESKIN

Conventional wisdom says major gifts are given by individuals, corporations and foundations. Here’s the actual truth. Every major gift ever given in this history of humanity was given by a PERSON. So let’s answer the question “what is” and “how big is a major gift?

What is a major gift? The truth is that it means different amounts to different organizations and different amounts to the same organization, depending on where they are in their history. One size doesn’t fit all. In other words, you can ask 10 respected non-profit leaders, and quickly receive 10 different answers that are all based on credible rationale.

This much is very clear and consistent among the nation’s 1.5 million non-profits. Without an effective major gifts strategy, the organization is going to fall short of successfully championing its noble mission without the resources it deserves.

At last count, some 88% of total gift income came from just 12% of the donors. But in today’s era of billionaire mega-donors, many experts are now estimating the split to be closer to 95% to 5%.

Major gifts, especially the solicitation of individuals, will make or break the success of any fundraising program. Keep in mind that gifts from individuals comprise 70% of America’s astounding $471 billion annual philanthropy enterprise. When you factor in bequests and gifts from family foundations the share rises to an impressive 87% of American philanthropy. So, for starters, major gift initiatives need to focus on gifts from individuals. As the notorious 1940s bank robber Willie Sutton, put it when asked why he robbed banks: “Because that’s where the money is.”

Another reality we can’t ignore is that an estimated 88% of our nation’s non-profits have annual budgets of $500,000 or less.

This means that, to many organizations, a major gift as modest as $10,000 can achieve major impact. More established and sophisticated development departments might easily place the standard at $100,000 or more.

Then, as the late Jerold Panas – arguably the most respected fundraising authority of our time – asserted, it is the donor, not the non-profit, that decides what and how much a major gift is.

Putting together and implementing a major gifts initiative doesn’t have to be ominous or burdensome. And it doesn’t have to be expensive. The chief requirement is the time commitment made by non-profit leaders to initiate, nurture, and sustain personal relationships that culminate in lifetime friendships and gifts.

The conviction and passion of professional and volunteer solicitors will influence results more than elaborate print, video, and digital collateral material.

Every non-profit has an inner circle of supporters and friends that make your organization their top philanthropic priority and are more than willing to back up that conviction with their precious gifts of time and money. They will play hugely crucial roles in the discovery, cultivation, solicitation, and stewardship of major gift donors.

Major gifts, leadership gifts, principal gifts and other descriptors fill the vocabulary of the fundraising world. Again, they will all have different meanings and different numbers to illustrate them.

This is why I prefer to rely on the standard of million-dollar gifts. There is absolute clarity on what the goal is and how success is measured. I strongly believe every non-profit, especially smaller and mid-size operations, should be thinking in terms of obtaining its first or next million-dollar gift. The timing couldn’t be better. The money is out there, and societal needs are overwhelmingly compelling. American philanthropy awards those non-profits who cogently request support at a pace of about $1 million a minute.

If I were to write a check for million dollars to purchase your home, despite all other variables, that is precisely what your home would be worth. It’s the same in the world of fundraising. Once you receive your first million-dollar gift your non-profit suddenly becomes an organization that is viewed by donors and prospects as a non-profit worthy of seven-figure gifts.

Receiving your first million-dollar gift completely changes how your non-profit is viewed both internally and externally. Suddenly everyone believes that more is possible. And it is!

For that reason, let’s focus on proven principles, strategies, and best practices toward obtaining first or next million-dollar gifts.

A Starting Point: A Time-Tested Paradigm

Let me emphasize that the principles, strategies, and best practices for successful resource development really aren’t that different for earning $1,000 gifts and $1 million-gifts.

I like organizing major gift initiatives around the four distinct parts of the gift cycle:

  • Discovery: What are the donor/prospect’s values, priorities, and interests?
  • Cultivation: What are you doing to forge a personal and emotional bond?
  • Solicitation: When, how much, and for what are you asking?
  • Stewardship: What are you doing to thank donors for the last gift?

Let’s take a closer look at each of these phases.

Discovery: The process begins with the identification of those most likely to give. Who should you consider approaching for support? To identify these donors, you can use what I call the “CIA Prospect Identification System”: C= Capacity, I= Inclination, A= Access.

Capacity: This is what usually comes to mind first when you start searching for prospects. It identifies someone’s financial ability to make a gift, driven by their income and wealth. Over and over, I see non-profit ears perk up when hearing that so-and-so has a lot of money. Of course, there can be several significant nuances to this information, such as liquidity, financial commitments, and other pressures. Too much emphasis can be placed on wealth indicating a hot prospect. Just because someone is wealthy doesn’t mean they’re going to give to your organization or cause.

Inclination: This is where you start to dig deeper and understand motivations. If the donor prospect is wealthy, do you know if he or she is philanthropic and has demonstrated this by donating to charitable causes? And, if that person is philanthropic, why do you believe he or she will care about your cause? The philanthropic landscape is fiercely competitive. You should have strong rationale to conclude that a donor prospect has a genuine connection to the cause or could be cultivated to develop such an interest.

Access: Even if you can establish capacity and inclination, the final — and biggest challenge — is figuring out how you’re going to be able to get to the donor prospect. Usually, the bigger the donor, the tougher the challenge.

This is where board members, volunteers and friends of the organization can and should play a huge role. By serving as connectors and breaking the ice, they can contribute mightily to resource development success without ever actually asking for a gift. The “six degrees of separation” theory reminds us that everyone on the planet is separated by no more than six personal relationships. (In some communities, it’s more like two degrees of separation.) Think about it. You and members of your organization are no more than six relationships away from any donor prospect in the world. The collective reach of personal and professional networks is enormous.

Cultivation: Clearing the path to “yes.”

Think of the process that culminates in a gift as a continuum that begins with “Hello, nice to meet you” and concludes with “Thank you for your gift of $10,000” (or whatever the amount is, such as $1 million). The stage must be properly set. Experts note that about 90 percent of our work precedes the solicitation.

If in real estate, it’s location, location, location, in fundraising — especially major gift work — it’s cultivation, cultivation, cultivation. Cultivation is about forging a personal and emotional bond.

So, our work isn’t that complicated. It’s to grow an appreciation of the mission our organization serves. More specifically, conveying what needs our organization addresses that aren’t being addressed by any other organization.

Cultivation can take a variety of forms. The initial activities need to discover interests, values, and priorities. As the relationship develops, it’s fitting that we introduce prospects to our organization’s leadership, get them on-site so they see our facilities and programs close-up, and see for themselves how we touch and improve lives. (We’ve recently learned that virtual tours can suffice.)

A simple cultivation plan should be developed outlining steps that will introduce the donor prospect to the mission so when he/she is asked for the gift, the answer will be favorable and at the level requested. The larger the amount being requested, the more time that needs to be committed to cultivation.

We need to methodically connect with the heart and head and find a genuine fit with the prospect. Fundraising demands the talents of asking the right questions and being an active listener. Ask probing questions and listen closely, and the donor will tell you when, how much and for what to ask for.

Solicitation: Ensuring that “the ask” is an enjoyable experience for all involved. If the discovery and cultivation phases have been done properly, the time is ready to ask for the gift.

Many board members and volunteers might be uncomfortable asking for the gift. That shouldn’t be an impediment. Other board members and especially staff can step up and handle that task. It’s important that the board member or volunteer who has the relationship with the prospect be present for the solicitation.

Note that fancy printed materials rarely influence major gift donors to say “yes.” In fact, handing out the proposal should be delayed until the request has been made and be left behind to speak for the organization and project when you are no longer present.

So, what does make the difference? The passion of the solicitor. Appeals must be first-class, but success hinges much more on the ability to secure appointments, then making the best possible use of that time. Stewardship: The right and smart thing to do.

Stewardship is an extension of cultivation, coming after the gift has been received. Thanking donors for their gifts is both the right and smart thing to do. It’s a proven way to get donors to do what we want them to do next — give again, give again sooner, and give more.

A smart guide is The Rule of 7X. Every gift should be acknowledged and the donor thanked seven distinct times during the year. This might take different forms — a letter, a phone call, a private lunch, a public event involving many donors, an article in a publication, a story on the website, and so on.

The goal is establishing a life-long relationship that draws donor prospects closer and closer to your organization, its mission, the staff, board and volunteers, and the beneficiaries of their gifts.

For as long as we can remember, face-to-face meetings have been the gold standard in fundraising, especially when pursuing major gifts. The fundraising environment was turned upside down in 2020 by the realities of COVID-19 and social distancing. Fortunately, we discovered that virtual fundraising such as videoconferencing can work in the discovery, cultivation, solicitation and stewardship of donors and donor prospects. Virtual fundraising has even demonstrated concrete results in securing leadership gifts of seven and eight figures. Hopefully, with the advent of the nation being fully vaccinated, social distancing requirements can be relaxed, and face-to-face interaction can be restored in the not-too-distant future. But whether it’s an in-person, virtual, or hybrid approach, major gifts initiatives will produce exciting results for the non-profits that embrace the art and science of fundraising.

Aiming High: First Million-Dollar Gift

I have been there on numerous exuberant occasions when a small or mid-size nonprofit brought in its first million-dollar gift. This is nothing less than a game-changer. The gift rises above transactional to transformational status. It means much more than an infusion of cherished capital to fuel the expansion of good works. The non-profit enters coveted fresh territory in which it is widely viewed as a good place for leadership donors to invest seven-figure gifts.

Is it possible for a small or mid-size nonprofit to obtain its first million-dollar gift? You bet it is! By applying best practices and persistence, new organizations climb this beautiful hill every day of the year.

There’s never been a better time for a non-profit to make securing its first or next million-dollar gift a top priority. The stock market remains the best predictor of philanthropy, and it has soared to historic levels. Plus, the tax incentives are extremely attractive.

Let’s consider 10 proactive steps that your non-profit can take to acquire its first million-dollar gift.

  1. Your organization’s mission and projects are distinctive and evoke a “Wow!” response.

    With about 1.5 million non-profits in the U.S., donors are forced to make difficult choices – not between the good and the bad, but between the good and the good. Your case for support must demonstrate impact that other organizations don’t. Bring your board, staff, key donors, and friends together for an open-ended and frank discussion of what differentiates your organization from all the other worthy causes, particularly those that share the same mission space. Be completely honest and address both strengths and weaknesses. Don’t expect the final draft to come together overnight. This is worth the investment of considerable time and commitment painstaking honesty in your cumulative best thinking. Simply put: What claims can you all make that all those others can’t? This should address both your organization in general and, more narrowly, your fundraising priorities. This discussion can also expedite preparation of your case for support.

  2. Your organization demonstrates its powerful internal commitment through investment in money, personnel, and facilities.

    There’s an overused cliché, but it applies here: You must have skin in the game. The measures of this commitment can and should take many different forms covering capital infrastructure and especially the time of management, staff, volunteers, and all those who share a commitment to the realization of your mission becoming more robust. There’s a tendency to underestimate this total. Don’t make that mistake. Your list should be exhaustive.

  3. You give donors the ability to stretch their gifts through multi-year pledges and other ways.

    Gifts of this magnitude are seldom paid as a lump sum but paid over a three- to five-year pledge. Incidentally, many million-dollar donors like the appeal of challenge gifts that amplify their impact by triggering the generosity of others.

    The donor and you sit on the same side of the table. You share a common passion for the vision of making the mission of the organization or the goal of the project to achieve its greatest potential.

    Here are other tactics to consider:

    Make monthly giving easy and visible. Erica Waasdorp, who I like to call The First Lady of Monthly Giving, highlights enormous returns on minimal investment — more giving, higher retention, doors opening to major and planned gifts, to name just a few.

    Also, make sure Donor Advised Funds (DAFs) are visible on your website, in your marketing materials, and especially during solicitations. This is the most dynamic component of American philanthropy. Fidelity Charitable donors alone recommended grants totaling more than $9.1 billion benefiting 170,000 charities during 2020.

    Another proven tactic is to bundle together gifts from family members and close friends. This makes perfect sense when the purpose of the gift has strong appeal across generations. It opens the door to keep on building the size of an endowment or other project over time. And it also provides a wonderful way to bring families closer together through shared philanthropic aspirations.

  4. You embrace creative funding models, such as the blending of current and deferred dollars.

    Planned giving has become more popular than ever. The most popular forms are charitable bequests, retirement plans, and insurance policies. Such planned gifts can empower donors to double (or more) their philanthropic investment. Legacy gifts provide powerful tools to significantly increase the gift while postponing any out-of-pocket expenditure. Typically, a donor can give several times as much from their estate than they can from income and current wealth position.

  5. Consider the enormous potential gifts of stock and equities.

    In this historically robust market, many of your donors are likely holding enormously appreciated assets. Donating these stocks to their favorite non-profits can help them avoid costly capital gains taxes. Returning to Willie Sutton’s logic “because that’s where the money is,” approximately 97% to 99% of all wealth in the U.S. is held in assets like stocks and real estate — not cash — so donors are able to give more with these gifts. You would be surprised to learn who is holding multi-million-dollar stock portfolios. This includes next door neighbors who appear to be leading very modest lifestyles.

  6. You build million-dollar gift pipelines.

    Donors rarely start out by donating $1 million to a non-profit. They make much more modest gifts and watch how effectively those dollars are put to work, and how they are stewarded by the organization. Non-profits which receive seven-figure gifts are expert at acknowledging, thanking, and communicating impact on gifts of all sizes. In other words, they steward a $10,000 donor like a million-dollar donor.

  7. You hold up a virtual marquee sign reminding donors that, while numerous million-dollar gifts can be made to worthy causes, there is only one first million-dollar gift.

    Donors of first million-dollar gifts will forever be held up as heroes by the non-profits they support at historic levels. Smaller and mid-size non-profits enjoy the advantage of offering first million-dollar hero status to more donors and prospects. Imagine what a legacy it is to be the first donor to contribute $1 million to an important non-profit or cause.

  8. You don’t rush to judgments on giving capacity.

    The groundbreaking book, The Millionaire Next Door, by Thomas J. Stanley and Willaim D. Danko, reminds us that people of wealth don’t all live on Park Avenue or Rodeo Drive. And they seldom lead showy lifestyles. They achieve their wealth by consciously living below, not above, their means. There could be many of these millionaires in your databases who have been consistently donating modest gifts. As mentioned earlier, historic rises in the stock market have produced more millionaires than ever before. Consider this reality: The U.S. now boasts about 1,000 billionaires and 22 million millionaires — something our grandparents and parents could never dream of coming to fruition. Wealth has exploded exponentially at the same time the pandemic has multiplied human service, health, educational and numerous other needs met by the non-profit sector.

  9. You overprepare for million-dollar solicitations.

    This is no place for winging it. Those involved in making the ask — whether virtually or in person — must prepare like they’re going into surgery. You typically want to move to the ask early in the meeting to allow sufficient time to respond to questions and concerns. Always remain absolutely silent after the ask is made and wait for the prospect to respond. A decision may not be made during the initial meeting. Be meticulous in following up on research that must be conducted, questions to be answered and, most importantly, setting a specific date to get back together to bring the solicitation to closure. Like everything else that is important in life, major gifts — especially million-dollar gifts — are earned. Here’s encouraging news: Every million-dollar solicitation — successful or not — will place you in a much stronger position the next time you reach for the stars in asking.

  10. Everything starts and ends with your organization’s leadership.

    Your CEO, executive director, board chair, board development chair and others must be intimately engaged in the discovery, cultivation, solicitation, and stewardship of first and next million-dollar gifts. Delegating this huge responsibility solely to the development director dooms the outcome to failure. And every professional and volunteer non-profit leader must make a stretch commitment to the organization and new projects if they are to have any credibility soliciting those outside the organization.

There is no more cost-effective way to develop resources than through major gifts — much more so than special events. The core ingredients of success are the passion of the non-profit’s leadership and their commitment to develop and sustain relationships that mature into genuine friendships.

I once heard a relationship defined as something you have until something better comes along. Earning major gifts and the ultimate reward of first and next million-dollar gifts demands the steady nurturing of friendships that last a lifetime and culminate in transformative gifts of time and money. You realize that your organization is worthy of million-dollar gifts. Now, your job is to work both hard and smart to earn them.


About the author:

Jim Eskin

Jim Eskin’s leadership roles span more than 30 years in fundraising, public affairs, and communications in the San Antonio area. During his career, he established records for gifts from individuals at three South Texas institutions of higher learning. He enjoys training non-profit boards on fundraising best practices and overcoming the fear of asking for gifts. His consulting practice, Eskin Fundraising Training, builds on the success of his 150 fundraising workshops and webinars and provides the training, coaching, and support services that non-profits need to compete for and secure private gifts. He has authored more than 100 guest columns that have appeared in daily newspapers, business journals and blogs across the country, and publishes Stratagems, a monthly e-newsletter exploring timely issues and trends in philanthropy. Sign up here for a free subscription. He is author of 10 Simple Fundraising Lessons, which can be purchased here.

CHOOSE YOUR EVENT BELOW:


TEXAS NONPROFITS
Jul 13 2022 - Jul 14 2022
9am-4pm
Live Virtual Online Event
($148 One - $298 Unlimited)

Register Now!

MISSOURI NONPROFITS
Aug 09 2022 - Aug 10 2022
9am-4pm
Live Virtual Online Event
($148 One - $298 Unlimited)

Register Now!

CAROLINA NONPROFITS
Oct 12 2022 - Oct 13 2022
9am-4pm
Live Online Virtual Event
($148 One - $298 Unlimited)

Register Now!

TENNESSEE NONPROFITS
Oct 25 2022 - Oct 26 2022
9am-4pm
Live Virtual Online Event
($148 One - $298 Unlimited)

Register Now!

FAITH & FUNDRAISING (DALLAS)
Nov 16 2022 - Nov 17 2022
9am-4pm
Southwestern Assemblies of God University
($148 One - $298 Unlimited)

Register Now!

WEST COAST NONPROFITS
Dec 07 2022 - Dec 08 2022
9am-4pm
Live Virtual Online Event
($148 One - $298 Unlimited)

Register Now!

UNITED WAY MAJOR GIFTS RAMP-UP
Mar 01 2023 - Mar 02 2023
9am-4pm
Live Virtual Online Event
($148 One - $298 Unlimited)

Register Now!