Three Operating Principles of Major Gift Fundraising
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Three Operating Principles of Major Gift Fundraising There are certain operating principles that fuel how we think about and relate to donors. In this paper we’ll explore how these principles affect your major gift program, and how you can implement then into your daily practice. Operating Principle One: Treat Donors as Partners, Not Just Sources of Cash It’s no secret that major gifts fund development is a growing area within the world of fundraising. Why? Because more and more organizations are recognizing that they have a small percentage of donors giving (or with the potential for giving) the biggest gifts. By investing in a small group of highly motivated major donors, organizations can dramatically increase their return on investment (ROI) beyond what can be realized in direct response or other programs. Healthy, vigorous major gifts programs often bring in up to 60-80% of the giving realized by organizations. It’s hard to argue with a program that invests in 10-20% of the donor audience, and brings in 60-80% of the revenue in the long term. Beyond ROI, fund development success is also often measured by the investment required to raise one dollar of revenue. Whereas direct response programs that are healthy and in full force can often require a 62-65% investment, similar major gifts programs often require 20-22%. The long-term benefits to these programs, when run correctly, are nearly indisputable. Major gifts programs are based on a one-to-one approach. This means that more time and money is spent personally cultivating the relationships and the gifts for a smaller group of donors. This is different from the one-to-many direct mail approach where one bulk message is communicated to thousands of people. In major gifts programs each donor has an individual plan that is personally administered and managed by the major gifts staff. This is an important distinction because some organizations think they are pursuing major gifts by sending specific appeals to their biggest givers. In reality, such mailings are still direct mail programs because they involve sending one broad message to many people. True major gift strategies always involve personal, individualized communication. As such, the major gifts process is labor intensive. It takes a lot more time and effort to communicate individually with 100 people than it does to send them all a boilerplate letter. However, major gifts strategies, when correctly pursued, have proven extremely effective. One of the reasons is that the personal approach taps into the passion and emotion the donor feels for the organization. For example, in the Donor Loyalty Cycle below, the main reason we lose donor loyalty and they go away is that we don’t complete the cycle of telling them how they made a difference with their gift. We thank them and then are on to the next donor looking for a donation. Donors who are choosing to give large sums of money to your organization are also choosing not to give to other organizations. This means that when they choose to give to you, there is commitment, passion and loyalty tied to these gifts. The organization’s responsibility is to show loyalty back to the donor by explaining what the gift did in meaningful terms. History shows that if this emotion and investment is not reciprocated back to the donors, they will eventually invest their money elsewhere. So, how do we treat donors as partners rather than sources of cash? Ask yourself these following questions about your organization and how you and your colleagues work with the major gift donors: • Do you know what [specific donor] is passionate about and why they give to you? • When was the last time you invited one of your major donors to participate in one of your planning sessions? • Do you know the significant dates in your donor’s life? • Do you know their business? • Do you know their hobbies? • When was the last time you talked to one of your major donors at length that had nothing to do with asking for a gift? • When was the last time you surprised a donor and did something nice for them? • When was the last time you reported on a specific project they funded and had the project leader contact them to give them an update? • When was the last time you saw an article about one of your donors and commented on it to them? It is very easy to get caught up in sending out updates and letters asking for support to all donors in bulk. It is easy to say our donor gives just because they have for 15 years but not really ask the right questions and dig deeper to find out their interest and passion for your organization. It is easy to have other distractions in the organization like event planning, prospect hunting in the community, meetings, and more to pull you away from focusing on your individual donors and building a meaningful partnership with them. The Role of Money “What’s more important, Richard,” the major gift officer asked, “a relationship with my donor, or the money they can give?” Well, I couldn’t answer that question easily, because it’s both. The donor only gives money to your organization when she believes that you’re already working on a problem or issue she wants to help solve, and you are in some sense her “agent” to accomplish these things. And of course, you have to look at the amount of money that this specific donor can provide in relation to the other ways you could focus your time that might bring even more money to bear on this problem. Here are the principles involved, as I think of them: The donor-related principle is this: if you are properly serving the needs and passions of a donor and there is genuinely a match between those passions and interests and the needs of the organization, then the money will follow. The lack of money is usually symptomatic of there not being a match; the donor not feeling properly cared for, or; a financial circumstance that prevents them from giving as they did in the past or as they would like to do now. If there is not a match of donor needs to organization needs, then it is time to move on. If there is a match but the relationship is bruised because you have not properly served the donor, then you need to repair that. If there is a match but there is a mitigating financial circumstance, then you need to stick with the donor provided the criteria of principle below is met. The organization-related principle is this: You only have so much labor as a major gift officer (MGO). And stewardship requires that you use that labor wisely. The core objective of the job is to secure funds for program. Without the funds you cannot do what you are supposed to do. So stewardship and accountability requires that a MGO focus on those relationships that will generate the most funds for program and have the best return on investment (ROI). I truly believe donors understand this. They do not want us spending time ($) with them when that time spent does not benefit the organization financially. This principle is what drives the rigorous review of caseloads to see that a MGO is talking to the right donor. The right donor is defined as (a) One who has capacity to give, (b) One who wants to talk to us – i.e. is qualified, and (c) One whose passions and interests match the needs of the organization. Putting these two principles into one big “sort” results in making decisions that are a confluence of relationship and money. It is not always easy. And it is not always objective. But a lot of the data that informs the decision is available. Ultimately, we are the donors’ agents to accomplish their goals that are in alignment with our organizations. When we see our relationship with them in this light, it will make our path clearer. When Money Is Valued Over Relationship I've had some pretty serious struggles with money. Wanting it. Being controlled by it. And letting it blur my values and judgment. I will never forget the time I held on to money so tightly that I lost a relationship over it. I am too ashamed of that event to tell you the details. But it sticks in my heart and mind as one of the lowest points in my life. What is it about money that grabs us like it does? My wife, Karen, tells me it is about fear and security. You fear you will not have enough to be secure so you obsess about it. I can relate to that. I grew up in a very unsettled and resource poor situation. Over the years I have had to struggle with issues of security. Even when I had enough, I still worried. I am now almost over it, but there is still a monster under the bed. There is no doubt that money drives things in our personal as well as our professional lives. And in the non-profit world it is a delicate balance. Sometimes you’ll see a non-profit whose leaders have moved from away from a love of the people or causes they serve; they start focusing on getting and loving money OR the sources of money – and they’re headed towards failure. It may take some years but, believe me, the time will come.