Major Gift Fundraising
Major Gift Fundraising
In this chapter we explored the topic of major giving, looking the motives of major givers and various typologies of motivation. We then outlined a process for major donor recruitment and development/stewardship.
Characteristics of Major Donors
Major donors are individuals who make sizeable personal contributions. Major gifts are, broadly speaking, those that are large relative to the majority of the gifts the organization receives. The definition of a major gift thus varies from one organization to another, for some it may mean a gift of $10,000, for others a gift of $10million. As a general rule of thumb Heetland (1993) argues that major donors are generally a nonprofits best 100 or so prospects. We concur, although there are always exceptions. The major educational and health institutions have substantially larger major gift programs and teams of dedicated fundraisers.
As to the individuals who offer major gifts, the best web-based resource on this topic is hosted by the Center on Wealth and Philanthropy at Boston College. They offer a range of publications on the topic.
Readers in the UK may find the Coutts Million Pound Donor Report offers considerable value. Authored by researcher Beth Breeze (and others) it is the first study to focus exclusively on UK charitable donations worth £1 million or more. It aims to capture and track trends in major giving, including the size of donations above a million pounds, the type of donors making gifts of this size and the causes that are benefiting.
Motives of Major Donors
Again those users interested in what motivates the wealthy to give will find the Center on Wealth and Philanthropy at Boston College a good starting point. They provide access to a wide range of reading on this topic.
Director, Paul Schervish states that:
‘What motivates the wealthy is very much what motivates someone at any point along the economic spectrum. Identify any motive that might inspire concern – from heartfelt empathy to self-promotion, from religious obligation to business networking, from passion to prestige, from political philosophy to tax incentives – and some millionaires will make it the cornerstone of their giving.’ (Schervish 1997)
Those who hold great wealth and direct it to social purposes also invariably want to shape rather than just support a charitable cause. This ability is what Schervish terms ‘hyperagency,’ a distinctive characteristic of major giving, since such donors are capable of establishing the institutional framework in which they and others live. Hyperagency does not mean that all wealthy major givers achieve major innovative philanthropic interventions, but they are more likely to than lower value givers. Some become proactive producers of philanthropy rather than passive supporters of existing projects or causes. When a wealthy contributor provides a sizeable enough gift the whole agenda of a nonprofit may be changed and the giver can thus become the architect and driver of the work.
In respect of other motives, Schervish and Havens (2001/2) and Schervish (2005) introduce a number of what they refer to as vectors. These gentlemen lead their field and their site is well worth a look.
In addition, the Council on Foundations maintains a list of publications on donor motivation.
There is also the excellent Bank of America study which is designed to identify key trends in major giving.The study is the result of randomly surveying over 20,000 households in high net-worth neighborhoods across the country. It reflects the responses of nearly 700 respondents with household income greater than $200,000 and/or net-worth of at least $1,000,000 excluding primary residence.
The study gathered data about the motives of these individuals for supporting the sector. These include motives such as reciprocity, giving back and wanting to make a difference in meeting critical needs. It is also interesting to note that almost two-thirds of their respondents gave because they were asked to do so.
In 2008 a further iteration of the study also examined the reasons why donors indicated they had stopped supporting organizations. ‘No longer felt personally connected’, ‘decided to support other causes’ and ‘too frequent solicitation’ were cited as the top reasons for the termination of support. It is important to note the array of service quality issues that in aggregate also account for a substantive proportion of termination behavior.
In the UK, researcher and consultant Theresa Lloyd conducted a study of the motives of 100 wealthy people. Her book, in which she explores the findings, is referenced below, but a helpful summary may also be downloaded free of charge here.
Finally, in what has now become a fundraising classic, Russ Alan Prince and Karen Maru File, outline their Seven Faces of Philanthropy. Their work segments wealthy donors into one of seven motivational types:
- The Communitarians – This is the largest segment (26%). Communitarians give because it makes sense to do so. They believe in actively supporting local nonprofits as a way to help their own communities prosper.
- The Devout – (21%) This group is motivated to give for religious reasons, and channel almost all of their giving to religious organizations.
- The Investor – (15%) Investors organize their giving to take advantage of tax and estate benefits. They are most likely to support ‘umbrella’ nonprofits and donate to a wide range of causes.
- The Socialite – (11%) Members of local social networks who find social functions benefiting nonprofits an especially appealing way to help make a better world and have a good time doing it. They tend to support the arts, education and religious groups.
- The Altruist – (9%) Altruists embody the perception of the selfless donor – the donor who gives out of generosity and empathy to urgent causes and often modestly wishes to remain anonymous. Altruists tend to give to social causes and tend not to want active roles in the groups they support.
- The Repayer – (10%) A typical Repayer has personally benefited from some institution… and now supports that institution from a feeling of loyalty or obligation.
- The Dynast – (8%) For these donors doing good is a family tradition. Giving is something their family has stood for and they believe it is expected on them to support nonprofits.
- The Communitarians 26%
- The Devout 21%
- The Investor 15%
- The Socialite 11%
- The Altruist 9%
- The Repayer 10%
- The Dynast 8%
Conducting Prospect Research
There are three primary routes to identifying potential major gift prospects. The first is to draw prospects from a nonprofit’s existing supporter base, the argument being that many major donors will begin their association with the cause through lower value giving.
The second approach (often used simultaneously) begins with the careful identification of peer networks. Existing staff, volunteers and particularly Board members, can be asked to suggest individuals that the organization might approach. Indeed, major gift fundraising is unique in the degree to which the involvement of senior staff, high-level volunteers and executive board members is required at every stage of the process. All can help in researching and providing links to high-level prospects, and in the solicitation and cultivation of these individuals over time.
The third approach is the least cost-effective, because the individuals identified have had no prior link to the organization. It involves a fundraiser in independently identifying members of the community that might have an interest in the work of the nonprofit. Perhaps, although they have not given previously, an analysis of the other organizations they are known to support suggests that they may have an interest in one or more of a nonprofit’s programs. Prospect research can be conducted in the local/national press, online or on specialized databases. A number of the most useful , presented in alphabetical order are listed below:
Dun and Bradstreet offers a wide range of data services. It is possible to use their services to identify top executives, their salaries, career histories and overall worth.
Intelius is a subscription service allows you to profile a specific individual in detail. It provides home value & property ownership, address history, phone numbers, relatives & associates, neighbors, marriage/divorce records and more.
KnowX is the Web version of Information America, one of the world’s largest services addressing the relationships between corporations and people and their assets. The company’s information products and services are used to obtain background data about businesses, locate assets and people, and retrieve government records.
There are a number of indicators that can suggest the presence of wealth in a household and help uncover information on individuals who may be hiding public wealth and assets. One example is the presence of luxury items such as luxury automobiles, yachts, and private planes. Larkspur has compiled this type of information from more than 70 different data sources to isolate 8 million high net-worth individuals nationwide and offer the most robust affluence data available to nonprofits today.
Legacy.com offers a 30-day obituary file combining online obituary sections of newspapers nationwide.
This database provides detailed biographical information that is self reported by more than one million individuals. It is possible to compare the content of their database with a fundraising database to flag potentially wealthy individuals. The data uncovers family, educational, career, interest and activity information.
NOZA, has developed the world’s largest searchable database of charitable donations available for use by nonprofit organizations. NOZA has collected data on millions of public donations. This data is licensed from DonorTrends and available from Target Analytics through batch WealthPoint® searches.
This is a useful resource that provides estimates of home values by neighborhood or block by looking at the value of recent sales.
Salary.com allows the researcher to find average incomes by job title and geographic location. Base pay and bonus information is provided.
Town & Country magazine is a frequently used prospect research source that chronicles the “lifestyles of the rich and famous.” Each issue of Town & Country includes several hundred personal name references, with stories from US and international cities. Back issues of Town & Country can be found in many public libraries. Waltman Associates publishes a helpful index to the content – click here
This is in essence a search engine that specializes in pulling together a wealth of biographical information on an individual. A very useful starting point in prospect research
There are also a number of major consulting firms with prospect research and screening tools. These are typically solutions based on data received from a number of different sources of financial data such as Thomson – Reuters and Dun and Bradstreet.
- Bentz Whaley Flessner
- Campbell & Company
- Grenzebach Glier & Associates
- Marts & Lundy
- Prospect Information Network
Finally, it is worth noting that there is a professional association dedicated to the profession of prospect research. The home page for the Association of Professional Researchers for Advancement (formerly the American Prospect Research Association) can be found here.
Gift Range Charts
In developing an initial strategy there are two primary considerations. The first is deciding what levels of gift (and how many) the organization might solicit and the second is prioritizing the list of prospects from the screening process for cultivation and development. In respect of the former many major gift fundraisers in the United States utilize gift range charts. These are statistical representations of patterns of giving generated through past experience of major giving campaigns and guide the fundraiser in terms of the numbers of gifts required of particular dollar levels if the campaign target is to be reached.
To prepare a gift range chart the following rules are applied:
- The first two gifts of the campaign are set to equal 10% of the goal (i.e. 5% each)
- The next four gifts are set to provide a further 10% of the goal.
The remainder of the chart will be developed flexibly taking account of the past experience of the nonprofit in running such campaigns. The figures given in the example are not untypical and serve to illustrate that it would generally be expected that 60% of the total would be provided by 10% of the donors and that 80% of the goal would be provided by 20% of the donors. This pattern of performance is very common.
When developing the gift range chart it should be noted that the ratio of prospects to gifts tends to fall as one moves down the pyramid. It is typically necessary to identify five prospects to give at the highest level, to ultimately acquire one donor. At lower ends of the pyramid it will typically be necessary to name only two prospects to provide the requisite gifts, assuming of course that they are solicited in person (direct mail response rates are much lower).
The construction of a gift range chart should allow the fundraiser to ensure that an adequate number of qualified prospects are available to meet the goal and that the overall financial goal is realistic. One of the most common causes of failure in major gift fundraising is the lack of adequate prospects and the gift range chart can provide a useful summary of how many might be needed.
Blackbaud offer a free gift range calculator on their website.
The example gift range charts shown above can be found here.
Major Gift Solicitation
In theory a fundraiser should never fail in a major gift solicitation. They should know that they are talking to the right person, that the prospect has necessary resources to meet the objective and that they care about the project for which the funding is being sought. They should also be confident that their organization has the capacity to deliver the promised benefits to the issues or projects the donor cares about. Asking for support should flow naturally from such a scenario.
Identifying the right person to make the ask is essential. A team of people may be involved in the close but nominating an individual is key. It is also important to give adequate consideration to the environment. Taking the donor out for a meal will rarely be the right thing to do. Restaurants can be noisy and the timing of the service unpredictable. Many a solicitation has been ruined by an untimely request for a food order, or the delivery of drinks. It is far better to pick an environment where distractions can be controlled and where attention can be focused on the solicitation. This might be an office, a home or a room in a facility that the donor is visiting.
Finally, the solicitation team also has to think through timing. Will the solicitation take place at the end of a visit to the nonprofit’s offices, after meeting with a particular person, or after seeing a particular program? Timing will usually be under the control of the nonprofit, but not always so. Sometimes the donor herself will provide a signal that the deal may now be closed.
There are many good web resources on this topic. We like:
Donor Recognition and Stewardship
A successful solicitation must be immediately followed through in writing. The organization should also plan to thank the donor for their support and Panas (1984) recommends that it do this a minimum of seven times. Opportunities to thank include:
- In person at the close of the solicitation
- In a follow-up phone call from the CEO the following day
- In an informal note from the fundraiser
- In a formal letter from the Chair of the Board
- In press releases issued by the nonprofit
- By extending private invitations to events and other meetings
- By setting up a private presentation for the donor of the work being conducted
- By offering (where appropriate) naming opportunities.
- By offering a small gift or token of appreciation. This should not be high value, but it should be high quality and related in some way to the mission of the nonprofit.
Stewardship is a key concept in fundraising – the idea that, as best practice, fundraisers should become responsible guardians of donor assets that are held in trust for the public good. Stewardship is the means by which an institution exercises ethical accountability for the use of contributed resources (Tempel 2001). Stemming from Judeo-Christian tradition, stewardship implies a deep burden of trust, responsibility and accountability for the proper management and administration of the resources under the steward’s care (Jeavons 1997). Within the context of contemporary nonprofit governance and management, the role of steward and its corresponding obligation of stewardship applies to any person in a position to manage or account for financial resources: i.e. board members, the Chief Executive Officer, the Chief Financial Officer and senior fundraising staff.
In practical terms, stewardship of major givers could include the provision of regular feedback on how the gift has been used and on the effect it has had, a regular program of communications such as annual reports and newsletters, plus invitations to participate in a range of events both large scale and private. The key to successful stewardship as in all aspects of fundraising is to follow the needs and interests of the donor. Some individuals have a higher need for continuing contact and feedback than others (Igraham-Walker 2006) .
Additional resources on this important topic include:
- Supporting Advancement.com
- Berkeley Campaign Stewardship
- Public Broadcasting Major Giving Initiative
- Urban Alliance’s Donor Stewardship Policy
- New Coutts report on million pound donors in the UK
- Center on Philanthropy (2014) Study of High Net Worth Philanthropy
- Madden, K., and Scaife, W. (2008). Good times and Philanthropy: Giving by Australia’s Affluent. Brisbane: Australian Centre for Philanthropy and Nonprofit Studies, Queensland University of Technology.
- Madden, K., & Scaife, W. (2008). Looking for the Value-Add: Private Advice Needs of High-Net-Worth Australians, Working Paper No. CPNS 44. Brisbane: Australian Centre for Philanthropy and Nonprofit Studies, Queensland University of Technology.
- Madden, K. (2009). Is Philanthropy Relevant? A Study of Professional Advisers in Australia, Working Paper No. CPNS 43. Brisbane: The Australian Centre for Philanthropy and Nonprofit Studies, Queensland University of Technology.
- Center on Philanthropy (2006) Bank of America Study of High Net Worth Philanthropy (Initial Report), Center on Philanthropy, Indianapolis, Indiana.
- Center on Philanthropy (2009) The 2008 Study of High Net Worth Philanthropy: Issues Driving charitable Activities Amongst Affluent Households, Center on Philanthropy, Indianapolis, Indiana.
- Dove K.E. (2002) Conducting a Successful Major Gifts and Planned Giving Program: A Comprehensive Guide and Resource, Jossey Bass, San Francisco
- Fredricks, L. (2001) Developing Major Gifts, Aspen Publications, New York, N.Y.
- Hart T., Greenfield J.M., Gignac P.M. and Carnie C (2006) Major Gifts: Finding Big Gifts in Your Database and Online, Wiley, San Francisco.
- Hartsook R.F. (1999) How To Get Million Dollar Gifts and Have More Donors Thank You, ASR Philanthropic Publishing, Wichita, KS.
- Ingraham-Walker J (2006) Nonprofit Essentials: Major Gifts, AFP/Wiley Fund Development Series, Wiley, San Francisco.
- Irwin-Wells, S. (2002) Planning and Implementing Your Major Gifts Campaign, New York, N.Y. Jossey-Bass Inc.
- Panas J (1984) Megagifts: Who Gives Them, Who Gets Them, Bonus Books Inc, Chicago, Ill.
- Prince, R.A and File, K.M (1994) ‘ The Seven Faces of Philanthropy: A New Approach to Cultivating Major Donors’ Jossey Bass
- Sprinkel-Grace Kay (2005) Beyond Fundraising: New Strategies for Nonprofit Innovation and Investment, AFP Fund Development Series (2nd Edtn), Wiley, San Francisco.
- Jeavons, T. H. (1977) ‘Stewards for Whom? Problems with Stewardship as a Model for Fundraising’, New Directions for Philanthropic Fundraising, 17, Fall pp35-42.
- Reuther, V. (1998) ‘Debunking the Myth of Bill Gates; Finding Major Donors’, Nonprofit World March/April p46
- Schervish, P.G. and Havens, J.J. (1995) ‘Wherewithal and Beneficence: Charitable Giving by Income and Wealth’, New Directions for Philanthropic Fundraising, 8, Summer, p67-82 New York, N.Y. Jossey Bass Inc.
- Schervish, P.G. (1997)‘Inclination, Obligation and Association: What We Know and What We Need to Learn about Donor Motivation’ in D F Burlingame (ed.) ‘Critical issues in Fund Raising’, Wiley NY p67-71
- Schervish P.G., O’Herlihy M.A. and Havens J.J. (2001) Agent Animated Wealth and Philanthropy: The Dynamics of Accumulation and Allocation Among High Tec Donors, Chesnut Hill MA: Center on Wealth and Philanthropy, Boston College.
- Schervish P G. and Havens J.J. (2001) ‘The New Physics of Philanthropy: The Supply Side Vectors of Charitable Giving – Part 1: The Material Side of the Supply Side,’ The CASE International Journal of educational Advancement, 2(2), 95-113.
- Schervish P.G. and Havens J.J. (2002) ‘ The New Physics of Philanthropy: The Supply Side Vectors of Charitable Giving – Part 2: The Spiritual Side of the Supply Side,’ The CASE International Journal of educational Advancement, 2(3), 221-241.
- Schervish P.G (2005) ‘Today’s Wealth Holder and Tomorrow’s Giving: The New Dynamics of Wealth and Philanthropy,’ The Journal of Gift Planning, 9(3), 15-37.
- Tempel, E. (2001) ‘The Ethics of Major Giving’ in Developing Leadership for Major Gifts, The Fund raising School, Indiana University Center on Philanthropy, Indianapolis, IN p34
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