5 Reasons You Need a Major Gifts Program

A robust major gifts program serves as the bedrock for any strong development operation.

While the definition of a major gift differs depending on the organization and its budget, generally you secure them through a personal – as in face-to-face – meeting with a prospect since the amount exceeds what most donors give through the mail or online. That dollar amount can vary from $500 or less for a smaller organization to $5,000 or more for a larger one. Regardless of your definition and dollar amount, a major gift program provides you the structure to prioritize, focus, and begin to strategically ask for a larger number of higher value gifts from individuals.

In short, if you want to grow your revenue, invest in major giving. You cannot afford not to. Why?

1. Major gift solicitations provide the most cost-effective way to raise money. On average, it costs $1.25 to $1.50 to secure each $1 in revenue from a new donor through direct mail and other broad-based solicitation methods. That number drops to 25¢ to renew that donor in subsequent years. But it costs only 5-10¢ to raise each dollar from a major donor. Even this non-math major can see the value of investing in major donors from a purely economic standpoint.

2. Best practice in fund development suggests that regardless of your goal, 90% of your philanthropic revenue should come from 10% of your donors. Those top donors serve as your major donor pool; you should spend 90% of your fundraising time and resources on them.
   
   Think of it this way, how many $200 gifts do you need to fund your $100,000 operation? Conversely, how many $10,000 gifts do you need? While more $200 donors exist than $10,000 donors, it takes a lot more time and effort to find them, educate them about your good work, ask for their support, thank them, and tell them what a difference they make for your clients. And then you have to do it again next year. I would much rather focus my time on 10 donors than 500.
   
   That does not mean that you ONLY focus on 10 donors; it means you spend 90% of your time with them while finding and integrating others who can make a major gift to your organization and building your pipeline by securing more $200 gifts and asking those people to make larger gifts each year until they become major donors.

3. Most charitable donations come from people, not corporations or foundations. Giving USA finds that individuals make approximately two-thirds of all philanthropic gifts in the United States, a percentage that has held fairly steady over time. When we add family foundations, donor-advised funds, and other avenues through which people can give, that percentage increases to more than 75%. Focusing on giving from organizations – corporations or private foundations – only taps into a quarter of the giving potential of the country, limiting your growth potential.

4. Giving from individuals represents the most reliable and flexible way to secure philanthropic dollars. Diversification means security. When you rely on a small number of donors for a significant portion of your revenue, you risk taking a significant hit to your bottom line if any one donor changes their priorities. Think of it this way: if you have a $100,000 budget and one donor (individual, foundation, or corporation) gives you $50,000 a year, they hold the safety and security of your organization in their hands. If they change their priorities, you fall out of favor, or they die or disband, it puts your financial future in jeapordy. A strong major gift program spreads that risk across a larger number of donors. It may hurt to lose a $5,000 gift in a $100,000 budget, but you should have the ability to recover – especially if you have a strong pipeline of future donors and relationships with current donors.

5. It provides a pipeline and foundation on which to build a planned or deferred giving program for possible transformative gifts. A donor arranges a planned gift now, and the organization sees its full benefits at a future date, often upon the donor’s death. Common deferred gift arrangements include bequests, gifts of life insurance or IRA roll-overs, and annuities. These larger gifts only come after the donor has a long, trusting relationship with an organization, a relationship that develops over decades, not months or even years. These types of relationships develop through personal relationships and an increasing investment by the donor over their lifetime. Mail does not develop relationships; it serves as a means for a transaction, so if you want a planned giving program, start by building major donor relationships.

When you correctly identify, cultivate, and solicit individuals with an interest in your organization and the capacity to make a major gift to it, you can raise significant revenue. However, its success relies on dedicated time and effort from your development staff, Executive Director, board members, and other volunteers to conduct one-on-one meetings with major gift prospects and donors to engage them in your mission and ask them for a gift to support it. Even reaching out to 2 major gift prospect each month will get your started and soon you will wonder why and how you ever raised money another way.