Adrian Sargeant explains why being in major gifts fundraising for the long haul is not only essential but – when well stewarded – can lead to high levels of success.
What does it take to achieve success in major gifts fundraising? Our team at the Centre for Sustainable Philanthropy in the UK has just completed a new research project designed to answer exactly that question. The project was commissioned by leading US fundraiser Amy Eisenstein and was focused on smaller organisations comprising nonprofits with a turnover of $10 million or less. We interviewed fundraising leaders and conducted a large scale survey of 662 organisations that met our income criteria.
Expectation management of major gifts fundraising
We began by identifying what our sample regarded as a major gift and, as one might expect, there was considerable variability. The mean gift was $25,000, the median was $5,000 and the mode (the most frequently cited value) was $1,000.
While our sector tends to track and celebrate gifts of six figures or more, the reality for the organisations in our sample was rather different. Organisational leadership must therefore manage its expectations about what can realistically be achieved through a decision to invest in soliciting ‘major gifts’.
It was also clear that expectations must be managed in respect of the return on investment that this form of fundraising might generate, particularly in the short term. Leading fundraising consultants have long advocated that organisations need to be in major gifts for the long haul as it takes considerable time to identify appropriate prospects, cultivate relationships with them and then wait for the right project to appear that would be genuinely meaningful for a specific individual.
Pushing fundraisers to achieve early results can result in lower value gifts than would otherwise have been the case – and significant levels of donor dissatisfaction. Organisations prepared to wait must recognise, however, that their short-term financial performance will be impacted by that decision. While staff focus on developing these relationships, they will not have the time to be engaged in other, more immediately profitable forms of fundraising.
The eventual returns are excellent
The process of relationship building takes considerable time and resources, and in our study we show that every additional new donor in the acquisition pipeline is associated with a fall in revenue of approximately $300. That may not sound like a huge sum, but against the gift values we cited earlier it is highly significant.
Of course, the beauty of taking the time to build relationships and understand the projects that will be intrinsically and deeply motivational for supporters is that the eventual returns are excellent and typically of the order of $10 for every $1 of investment.
Major donors, if properly stewarded, will rarely make just the one gift and experience tells us that their first is rarely their largest. In our study we show that each additional donor being stewarded after their first gift is associated with an additional $200,200 in income. So while major gift fundraising should rightly be seen as an investment, the ultimate returns it can generate make the investment very attractive indeed.
As Table 1 on the right shows, small organisations with donated income of under $1 million had an average of two members of staff engaged in some way with major gifts, but when we analysed the time spent by these individuals, in aggregate it equated with only 30% of one full-time role. When looking at organisations earning $5 million to $10 million, around three members of the team were involved in major gift fundraising, but even then the time spent equated to a little under one full-time equivalent (FTE).
Boards need to play an active role
The leading professionals we interviewed all stressed how important it was that board members play an active role in supporting their major gift teams. It was not suggested that they need to necessarily participate in asking others to support the organisation; rather, it was suggested they facilitate the process by being prepared to act as ambassadors, meet with donors and help
to engage them with the organisation.
Our survey results were therefore disappointing. We asked respondents the extent to which they agreed or disagreed with a series of attitudinal statements where 1 = strongly disagree and 10 = strongly agree. The results reported in Table 2 on the right indicate that most boards do not play an active role in fundraising and the various departments of organisations do not work together as well as they might to facilitate and ensure fundraising success.
This matters because we found that many of these factors were highly correlated with the level of fundraising success achieved, particularly for the larger organisations.
Investment in staff and IT drives performance
Our survey also identified that boards need to adequately invest in their fundraising teams. Individuals who stay longer in their jobs raise significantly more gifts. Given that turnover rates in the fundraising profession as a whole are high, this represents a significant challenge, particularly in smaller organisations where salaries may not be competitive. It is therefore essential that nonprofits develop a plan to retain and develop the commitment of their pivotal fundraising staff.
Key here is the role of training and development. We found a strong correlation between the range of educational and training opportunities afforded to staff and overall fundraising performance. Each additional form of staff training or education is associated with an increase of $37,000 in income.
While many nonprofits will not invest in staff development because they fear individuals will leave and the monies will be wasted, our results highlight how wrongheaded this approach is. Formal education and certification opportunities appeared to have the strongest relationship with fundraising success.
While attendance at local events/conferences can be a helpful component of a staff development program, we would recommend that nonprofits also consider providing support for more formal forms of study (such as a certificate or diploma in fundraising and/or a certification such as Certified Fund Raising Executive (CFRE)).
Finally, we found that having appropriate IT systems in place is another highly relevant factor driving performance. We established that this was linked to success in the number of major gifts received.
An investment in database technology facilitates the identification of prospects and the process of stewardship that may be employed with existing supporters. It can also play a role in creating an ‘institutional memory’ to help to safeguard the nonprofit organisation against the loss of any of their key personnel.
Thinking long term makes the difference in major gifts fundraising
In aggregate, our results offer a great deal of insight into how boards, even at smaller nonprofits, can play a key role in driving the success of a major gifts fundraising program.
Fundamentally, board members need to understand the critical role that they personally can play in the process by developing a culture of donor centricity, and should give active consideration to how they will interface and connect with donors. They also need to actively consider how to manage the factors now known to drive success, reorienting the organisation around longer-term measures of performance, and giving adequate consideration to key investments, both in their team and in the technology that will support staff members.
I would like to thank the sponsors of this research project. These are Bloomerang, Donor Search and the Support Center for Nonprofit Management. For a copy of the full report, including the literature review, simply head to the Mastering Major Gifts website at masteringmajorgifts.com.
Adrian is a world-leading researcher, author, thinker and teacher of fundraising practice. He is Chair in Fundraising at the UK’s Plymouth University and was the first Hartsook Chair in Fundraising at Indiana University’s Lilly Family School of Philanthropy in the US.