JGA Blog

Though personal visits are the gold standard to engage and cultivate major gift donors, they can be costly and labor intensive if you are not seeing the right prospects. But how can you ensure you are connecting with the best prospects?

Your database holds the answer. Big data is a buzz word we’re hearing more and more about, particularly for its ability to organize large volumes of data to uncover hidden trends and its ability to make organizations more efficient through predictive analytics. This emerging trend involves utilizing historical data to find patterns and correlations to build assumptions and develop potential scenarios. So how do we take those concepts and put them into practice with our nonprofit organizations?

Building a systematic major gifts program can have a dramatic impact on your fundraising ROI (Return on Investment). Establishing a major gifts program that is systematic involves creating a purposeful, organized, and ongoing program for identifying and cultivating relationships with donors that leads to solicitation and stewardship of major gifts.

A successful major gifts program also entails focusing your efforts on those prospects who are likely to make the largest financial impact on your organization. A sharper focus on your top prospects will allow you to better steward your institution’s resources and work more effectively and efficiently.

We believe success in securing major gifts is so important for nonprofits, that Johnson, Grossnickle and Associates (JGA) partnered with the Chronicle of Philanthropy to provide a curated collection of Chronicle articles and JGA insights on major gift fundraising.

JGA is pleased to share with you news about the latest study on trends in high net worth philanthropy from U.S. Trust and the Indiana University Lilly Family School of Philanthropy. We were honored to host a webinar shortly after the release to discuss the report in detail with Dr. Una Osili, the report's author at the Lilly Family School of Philanthropy, and William Jarvis, with U.S. Trust, Bank of America's Private Wealth Management.

The 2018 U.S. Trust Study of High Net Worth Philanthropy, published by U.S. Trust in partnership with the Indiana University Lilly Family School of Philanthropy, finds that wealthy Americans continue to be generous with their time and money, increasing the amount they gave on average to charitable causes and organizations in 2017, including giving in the wake of natural disasters. The biennial study shows that 90 percent of high net worth (HNW) households gave to charity last year, and 48 percent volunteered time to nonprofit organizations and causes.

By Sarah Tedesco, Executive Vice President, DonorSearch

Major gift fundraising is an important part of any nonprofit’s long-term strategy. We all know the 80/20 rule: 80% of your nonprofit’s donations come from 20% of its supporters. For many organizations, this has now become the 90/20 rule. But, finding enough people with the capacity to give major gifts and a connection to your organization can complicate this ratio.

With smarter prospect research, your major gifts officer has a better chance of securing those all-important donations with maximum efficiency.

Prospect research is looking at publicly available information to determine who in your community might be willing and able to give major gifts to your nonprofit. Some commonly considered data points include both wealth indicators and previous philanthropic behavior.

So how can your team best combine the insights of prospect research with your major gifts fundraising strategy? Our five best tips are:

Like many others, I began my career in fundraising by attending the Principles and Techniques of Fundraising class at The Fund Raising School at Indiana University’s Lilly School of Philanthropy. As a new member of the development team at the Indiana University Foundation more than 20 years ago, I learned that, typically, an organization could anticipate that 80% of the dollars raised in a fundraising campaign would come from 20% of the campaign donors. The so-called 80/20 rule.

Much has changed in the last twenty years. Mirroring, or perhaps in response to, the changing landscape of wealth distribution in our society, fundraising campaigns have more significant dollar goals that rely on fewer and fewer donors in order to achieve success. Campaigns are now typically based upon the projection that 90% of the dollars will come from 10% of the campaign donors. In some corners of the nonprofit sector, notably higher education, successful campaigns may have 95% or more of the dollars contributed from as few as 5% of the campaign donors.

Fundraising success is increasingly a vital component of an organization’s ability to fulfill its mission.  Campaigns have increased in prevalence and frequency and often are dependent upon 90% of the dollars being contributed by 10% of the donors.  (In higher education, this can reach 95% of the dollars from 5% of the donors, a threshold nearly unheard of 15 years ago.) This leads many organizations to rely upon major gift fundraising at all times, rather than merely for special projects of need.

At the same time, it has become more common for boardmembers to have backgrounds in businesses that foster a sales culture and therefore look for data-driven accountability from the nonprofits they support.  How can we modernize our approach to goal-setting and accountability without sacrificing what makes philanthropy so different from sales transactions?

Did you know development programs that rely solely on transactional giving, like direct mail and special events, generally have a return of investment (ROI) of about 200 percent, while programs that are relationship-based and major gift focused can enjoy a much higher ROI of 500 percent or more?

That’s why it’s so important to have a diversified development program with a strong and systemized major and planned gifts component. Now is a good time to evaluate your major gift practices to make certain that you are being as effective as possible when you, your volunteers, development staff, and CEO are cultivating major gift prospects.

Major gift donors are crucial for the ongoing sustainability of your nonprofit’s mission. In fact, high net worth donors often provide as much as 94% of the funds for nonprofit campaign initiatives. So, it is important that we understand their giving patterns, preferences, and motivations.

The 2016 U.S. Trust® Study of High Net Worth Philanthropy released this week is the sixth edition of the biennial study, researched by the Indiana University Lilly Family School of Philanthropy and provides nonprofits with valuable insights on this important donor demographic. The report surveyed 1,435 U.S. households with a net worth of $1 million or more (excluding the value of their primary home) and/or an annual household income of $200,000 or more.

Donors don’t compartmentalize their philanthropy in the same way that an organization distributes staff responsibilities on an org chart. As organizations are cultivating their prospects and having conversations with them about potential gifts, the conversation needs to be holistic – integrating annual, planned and major gifts into the discussions when appropriate based on the donors’ needs.

Has your development operation fully integrated major and planned giving?

Looking for strategies to identify major gift donors? We’ve asked Bill Tedesco with DonorSearch to provide some insights and he shares that prospect research is a great place to start.