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MAJOR GIFT FUNDRAISING: Unlocking the Potential for Your Nonprofit

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MAJOR GIFT FUNDRAISING: Unlocking the Potential for Your Nonprofit MAJOR GIFT FUNDRAISING: Unlocking the Potential for Your Nonprofit By Dr. Adrian Sargeant, Amy Eisenstein, ACFRE, and Dr. Rita Kottasz This project was made possible by the following sponsors: For a copy of the full report, including the literature review, visit the Mastering Major Gifts website at www.masteringmajorgifts.com/report/. Our Study Major gift philanthropy plays a highly on individual experiences that may or may not significant role in the United States’ be representative of the sector as a whole. As nonprofit sector and in many other a consequence, it can be difficult to generalize countries around the world. In 2013, their conclusions and recommendations. nearly $17 billion was given in million-dollar (or above) donations in the United States — the In this report, we draw together — for the highest figure in five years, according to a 2014 first time — the existing literature to identify report released by Coutts. what the critical success factors might be in the context of major gift fundraising and, in While these figures are impressive, the particular, what they might be in smaller majority of research work in this sector tends organizations reporting an income of $10 to focus on highly publicized giving by the million or less. We then supplement this data ultra-wealthy to, in most cases, larger with 10 qualitative interviews of leading nonprofits. In many countries, for example, fundraisers or consultants with experience at gifts of over $1 million are now recorded and smaller fundraising organizations and analyzed to provide insight into the patterns employ the resultant data to conduct a survey of such giving. Coutts has led the charge in of such nonprofits to identify their experience such work. with major gifts and offer suggestions for how income from this source might best be Meanwhile, academic interest has largely developed. been targeted at identifying the motives of high value supporters for their giving and determining how, if at all, their motives might vary from lower value supporters. Relatively % little academic interest has focused on how 95 gifts of this kind are solicited and the critical of registered charities in factors that should be managed in order to the U.S. raise $10 million achieve superior performance. Some or less annually guidance is available from the excellent and burgeoning professional literature on major gift fundraising, but this is all too often based Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 2 We Asked: Can small and mid-sized nonprofit Respondent Demographics organizations really raise major gifts? And, if so, what does it take for them to be truly CATEGORY % successful? Human Services 27.8 A total of 662 completed questionnaires, from organizations that generated income of under $10 million, were received. Both the extended Education 17.9 literature review and the detail of our empirical results are available in the full report. Arts and Culture 10.5 Health Services | Medical Survey Respondents 10.5 Research FREQUENCY % Nature | Environmental Protection 4.6 $5m - $10m 93 14.0 Religious and Spiritual 4.3 $1m - $4.9m 233 35.2 Public Society - Advocacy Group 2.8 Under $1m 336 50.8 Animal Rights | Animal Welfare 2.5 Sports and Recreation 2.5 International Development // 1.2 Emergency Relief Human Rights 1.1 Other 14.4 Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 3 Mean Contribution of Each Form of Fundraising to Total Donated Income Category of Fundraising & Mean %* 18.8% 4.6% Fundraising Digital Events Fundraising (internet, email, 18.7% social media) Direct Response 3.2% Fundraising Bequests and Planned Giving 18% Grants from 1.8% Foundations United Way 13.9% Major Gift 5.2% Fundraising Other 8.5% Grants from Government 7.3% Corporate Fundraising *Will not sum to 100% as mean percentages for each item are cited. Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 4 Key Findings Number of FTE’s Employed in Among the key findings to emerge from the Fundraising study are the following: CATEGORY MEAN FTES • For survey respondents involved in raising major gifts, the mean donation was $24,555, the median was $5,000, and the modal gift $5m - $10m 5.5 was $1,000. $1m - $4.9m 2.8 Major Gifts Defined Under $1m 1.2 25k • Our focal organizations were found to have 10k 5 volunteers engaged (at least in part) in a fundraising role. The time committed in aggregate was found to equate to around 5k only one third of a full-time role. 2k Number of Volunteers Engaged 1k to Work on Major Gifts 5.3 $5m - $10m Mean Median Modal 0.4 4.5 $1 - $4.9m 0.3 • Small organizations, with donated income 4.6 under $1 million, have an average of two Under $1m staff members (Executive Director and 0.3 Director of Development, for example) partially engaged in major gifts. However, the time spent totals only 30 percent of a full-time role. Large organizations, with 0 1.5 3 4.5 6 donated income between $5 million and $10 million, have an average of three staff Mean Mean Total FTEs members partially engaged in major gifts, in this case totalling just under one FTE. Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 5 • In most organizations, the dollar value Mean Cultivated for 1st Gift and beyond which a gift would be considered a major gift is set by the Director of Development Mean Stewarded for 2nd and employing his/her professional judgement. Subsequent Gift Calculations based on the typical gift level received are rare. 30.7 $5m - $10m 52.5 • On average, organizations were cultivating 33.2 a mean of 24 donors for a first gift. Perhaps $1 - $4.9m unsurprisingly, smaller organizations were 45.0 cultivating significantly lower numbers of 14 Under $1m potential donors than the larger organizations 17 in our sample. • The mean number of donors being stewarded 0 15 30 45 60 towards a second or subsequent gift was 34, but again there were marked differences by the size of the nonprofit. Small organizations with a turnover of less than $1 million were Mean Cultivated Mean Stewarded stewarding a mean of only 17 donors. for 1st Gift for 2nd and Subsequent Gift • A focus on soliciting first time gifts (i.e. building the pipeline) has shown to impact negatively on performance, at least in the shortterm. The importance of focusing only on the genuinely best prospects is therefore highlighted. • Short-term metrics to assess the performance of major gift fundraising activity (e.g.dollars raised, numbers of new gifts, gift size etc.) predominate. Relatively few organizations track the drivers of longer term value such as donor satisfaction or commitment. Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 6 Major Gift Fundraising Metrics Fundraising Staff Development METRIC % DEVELOPMENT ACTIVITY % Dollars raised in revenue 83.0 Online training tools/webinars 56.4 Number of new gifts 52.9 Ad hoc or occasional training 54.5 Donor engagement or Attendance at local conferences 47.4 41.3 commitment Mentoring by a member of your 25.3 Gifts size or average gift size 39.1 organization’s team Success rate in solicitations 31.7 Attendance at a major conference 23.7 (e.g. AFP International) Number of meetings attended 31.7 with prospects Mentoring by an external consultant or fundraiser at 22.4 Donor satisfaction with the another organization quality of service we provide 28.5 them with Support to certify as CFRE, 11.2 ACFRE or FAHP Number of solicitations made 27.6 Support to study a formal course Donor satisfaction with the on fundraising (e.g. from a local 10.6 27.2 impact of their gift on the cause university) Return on investment 17.6 (in past year) Number of personalized gift 17.6 proposals made Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 7 • There is a strong correlation between the • Individuals who have been in their jobs range of training and educational for longer periods are more successful at opportunities afforded to staff and overall generating major gifts. fundraising performance. Each additional form of training/education is associated with • The quality of the IT systems in place to an increase of $37,000 in income. support fundraisers is a key factor in driving the number of major gifts received. • Most boards do not play an active role in fundraising and the various departments of organizations do not work together as well as they might to facilitate and ensure fundraising success. Per Staff Member MEAN MEAN MEAN NET MEAN NET TOTAL OF NUMBER REVENUE REVENUE MAJOR GIFT OF GIFTS PER STAFF REVENUE MEMBER $5m - $10m $1,183,718 146 $1,024,400 $406,997 $1m - $4.9m $406,792 43 $354,768 $155,569 Under $1m $93,934 25 $69,964 $45,030 Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 8 Recommendations 3. Tenure Individuals who stay longer on the job raise As a consequence of our analysis, we draw greater sums. Given that turnover rates in the the following conclusions to improve the profession of fundraising are high, this represents performance of major gift fundraising in our a significant challenge, particularly in smaller focal organizations (i.e. nonprofits with a organizations where salaries may not be budget of less than $10 million). competitive. It is therefore essential that nonprofits develop a plan to retain and develop the commitment of key fundraising staff. 1. Donor Retention New donor acquisition is important, however 4. Training it is imperative that organizations focus on Allied to this latter point, nonprofits should the retention of existing donors.
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