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1 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

2 Our Study Major gift philanthropy plays a highly significant role in the United States nonprofit sector and in many other countries around the world. In 2013, nearly $17 billion was given in million-dollar (or above) donations in the United States the highest figure in five years, according to a 2014 report released by Coutts. While these figures are impressive, the majority of research work in this sector tends to focus on highly publicized giving by the ultra-wealthy to, in most cases, larger nonprofits. In many countries, for example, gifts of over $1 million are now recorded and analyzed to provide insight into the patterns of such giving. Coutts has led the charge in such work. Meanwhile, academic interest has largely 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 gifts of this kind are solicited and the critical factors that should be managed in order to achieve superior performance. Some guidance is available from the excellent and burgeoning professional literature on major gift fundraising, but this is all too often based on individual experiences that may or may not be representative of the sector as a whole. As a consequence, it can be difficult to generalize their conclusions and recommendations. In this report, we draw together for the first time the existing literature to identify what the critical success factors might be in the context of major gift fundraising and, in particular, what they might be in smaller organizations reporting an income of $10 million or less. We then supplement this data with 10 qualitative interviews of leading fundraisers or consultants with experience at smaller fundraising organizations and employ the resultant data to conduct a survey of such nonprofits to identify their experience with major gifts and offer suggestions for how income from this source might best be developed. 95 % of registered charities in the U.S. raise $10 million or less annually Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 2

3 We Asked: Can small and mid-sized nonprofit organizations really raise major gifts? And, if so, what does it take for them to be truly successful? Respondent Demographics CATEGORY % A total of 662 completed questionnaires, from organizations that generated income of under $10 million, were received. Both the extended literature review and the detail of our empirical results are available in the full report. Human Services Education Arts and Culture Survey Respondents Health Services Medical Research 10.5 FREQUENCY % Nature Environmental Protection 4.6 $5m - $10m Religious and Spiritual 4.3 $1m - $4.9m Public Society - Advocacy Group 2.8 Under $1m Animal Rights Animal Welfare 2.5 Sports and Recreation 2.5 International Development // Emergency Relief 1.2 Human Rights 1.1 Other 14.4 Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 3

4 Mean Contribution of Each Form of Fundraising to Total Donated Income Category of Fundraising & Mean % * 18.8 % Fundraising Events 18.7% Direct Response Fundraising 18% Grants from Foundations 13.9% Major Gift Fundraising 4.6% Digital Fundraising (internet, , social media) 3.2% Bequests and Planned Giving 1.8% United Way 5.2% 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

5 Key Findings Among the key findings to emerge from the study are the following: For survey respondents involved in raising major gifts, the mean donation was $24,555, the median was $5,000, and the modal gift was $1,000. Major Gifts Defined 25k 10k 5k 2k 1k Number of FTE s Employed in Fundraising CATEGORY $5m - $10m $1m - $4.9m Under $1m MEAN FTES Our focal organizations were found to have 5 volunteers engaged (at least in part) in a fundraising role. The time committed in aggregate was found to equate to around only one third of a full-time role. Number of Volunteers Engaged to Work on Major Gifts Mean Median Modal Small organizations, with donated income under $1 million, have an average of two staff members (Executive Director and 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 donated income between $5 million and $10 million, have an average of three staff members partially engaged in major gifts, in this case totalling just under one FTE. $5m - $10m $1 - $4.9m Under $1m Mean Mean Total FTEs 6 Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 5

6 In most organizations, the dollar value beyond which a gift would be considered a major gift is set by the Director of Development employing his/her professional judgement. Calculations based on the typical gift level received are rare. On average, organizations were cultivating a mean of 24 donors for a first gift. Perhaps unsurprisingly, smaller organizations were cultivating significantly lower numbers of potential donors than the larger organizations in our sample. The mean number of donors being stewarded 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 stewarding a mean of only 17 donors. Mean Cultivated for 1st Gift and Mean Stewarded for 2nd and Subsequent Gift $5m - $10m $1 - $4.9m Under $1m Mean Cultivated for 1st Gift Mean Stewarded 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

7 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 commitment 41.3 Attendance at local conferences 47.4 Gifts size or average gift size 39.1 Mentoring by a member of your organization s team 25.3 Success rate in solicitations 31.7 Attendance at a major conference (e.g. AFP International) 23.7 Number of meetings attended with prospects 31.7 Mentoring by an external Donor satisfaction with the quality of service we provide 28.5 consultant or fundraiser at another organization 22.4 them with Number of solicitations made 27.6 Support to certify as CFRE, ACFRE or FAHP 11.2 Donor satisfaction with the impact of their gift on the cause 27.2 Support to study a formal course on fundraising (e.g. from a local university) 10.6 Return on investment (in past year) 17.6 Number of personalized gift proposals made 17.6 Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 7

8 There is a strong correlation between the range of training and educational opportunities afforded to staff and overall fundraising performance. Each additional form of training/education is associated with an increase of $37,000 in income. 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. Individuals who have been in their jobs for longer periods are more successful at generating major gifts. The quality of the IT systems in place to support fundraisers is a key factor in driving the number of major gifts received. 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, $1,024,400 $406,997 $1m - $4.9m $406, $354,768 $155,569 Under $1m $93, $69,964 $45,030 Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 8

9 Recommendations As a consequence of our analysis, we draw the following conclusions to improve the performance of major gift fundraising in our focal organizations (i.e. nonprofits with a budget of less than $10 million). 1. Donor Retention New donor acquisition is important, however it is imperative that organizations focus on the retention of existing donors. The latter appears to generate a markedly higher level of return. Nonprofits focusing on new donor cultivation must expect that their short term performance will be impacted as staff time and other resources are diverted from the more profitable stewardship and renewal. 3. Tenure Individuals who stay longer on the job raise greater sums. Given that turnover rates in the profession of fundraising are high, this represents a significant challenge, particularly in smaller organizations where salaries may not be competitive. It is therefore essential that nonprofits develop a plan to retain and develop the commitment of key fundraising staff. 4. Training Allied to this latter point, nonprofits should also actively consider investment in the training and development of their fundraising personnel. While many nonprofits will not invest in staff development because they fear individuals will leave and the monies will be wasted, our results highlight the short-sighted nature of this approach. 2. Prospect Research We were able to quantify the negative impact of focussing on new donor acquisition and our results therefore suggest that the pipeline should be carefully evaluated to ensure a focus only on those individuals most likely to offer a contribution. The need for good quality prospect research to assist in this kind of donor evaluation is therefore highlighted. 5. Education 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 CFRE. Continued on the next page Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 9

10 Recommendations 6. Donor Centered Culture Developing a donor centric approach also seems key to success, particularly in the longer term and certainly for larger nonprofits. This requires a marked change in culture as only low levels of donor centricity were reported in our study. Giving consideration to issues such as the creation of gift opportunities at every level is important as is the creation of meaningful engagement opportunities that help build donor commitment. Our results indicate that even small nonprofits should begin to build a culture supportive of major gifts and actively plan for institutional readiness. 7. IT Systems Having appropriate IT systems in place is another highly relevant factor driving performance. We found 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 also can play a role in creating an institutional memory to safeguard the nonprofit against the loss of key personnel. 8. Volunteer Engagement The level of volunteer engagement in fundraising was surprisingly low. We would recommend that even smaller nonprofits look for meaningful ways to engage volunteers in the processes of donor cultivation, solicitation and stewardship. Extant research has highlighted how critical volunteer participation is for instilling trust and confidence on the part of potential donors. Many derive great value from interacting with individuals they see as peers or leaders in the local community. 9. Board Engagement The level of board engagement was also disappointingly low. Given the amounts raised by organizations successful in the domain of major gifts, even in small organizations, it would seem worthwhile educating boards about what can be achieved in this form of fundraising and the role that they can play in optimizing its potential. Continued on the next page Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 10

11 Recommendations 10. Metrics The focus on short term fundraising metrics was disappointing. The process of major gift fundraising is almost, by definition, longer term. Rather than focus solely on dollars raised, we would encourage boards to focus on variables likely to drive future success, such as donor engagement, satisfaction and commitment. To be truly impactful, these metrics should form part of the formal system of appraisal utilized with members of the fundraising team. It may be that some of the factors we find insignificant in organizations of our focal size become significant when larger donor constituencies are required. Indeed, we found some evidence that the notion of donor centricity was taken more seriously by the larger organizations in our sample. We split the file equally, isolating better performing organizations (by major gift revenue) from organizations with lower patterns of performance and found that the former scored significantly more highly on donor centricity. It may also be that issues of culture have a longer term impact on the major gift function and are not a good indicator of past giving. Boost donor centricity today, for example, and the gifts associated with that action may not be made for a further months. There may thus be a lagged effect. There is some support for this in the market orientation literature where that construct too has been linked with longer term success. We hope this research has been useful and will help inform your decisions as you move ahead with raising major gifts. For future study results and information, please leave your address at For additional information, go to the Mastering Major Gifts website at Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 11

12 Bios Dr. Adrian Sargeant Dr. Adrian Sargeant is the Director of the Centre for Sustainable Philanthropy at the University of Plymouth and Adjunct Professor of Fundraising at Indiana University, Bloomington. He also is a Visiting Professor of Fundraising at Avila University in Kansas City and at the Australian Centre for Philanthropy and Nonprofit Studies at Queensland University of Technology in Brisbane, Australia. He is widely regarded as one of the world s leading fundraising academics and was named to the prestigious Nonprofit Times, Power and Influence list in He can be found at and followed on Twitter Amy Eisenstein MPA, ACFRE Amy Eisenstein is an author, speaker, and board retreat facilitator. Her published books include Major Gift Fundraising for Small Shops; Raising More with Less; and 50 A$ks in 50 Weeks. She became an AFP certified Master Trainer in 2009, and is a frequent keynote speaker at nonprofit conferences. Amy currently serves as the president of the board of the Association of Fundraising Professionals New Jersey Chapter. She became a Certified Fundraising Executive (CFRE) in 2004 and received her advanced certification, ACFRE, in Sign up for free fundraising tips and videos on Amy s website at Dr. Rita Kottasz Dr. Rita Kottasz currently works as a research consultant on behalf of the Centre for Sustainable Philanthropy at the University of Plymouth and is also employed as a marketing lecturer at Kingston University, London. Previously, Rita was a Reader in Marketing at London Metropolitan Business School, where she taught on a range of undergraduate and postgraduate marketing courses. Her main research interests are in the areas of arts and nonprofit marketing, notably issues to do with fundraising, donor behaviour and the development of charity marketing campaigns. Her work has been published in international journals, including the International Journal of Nonprofit and Voluntary Sector Marketing, the Journal of Marketing Management and the International Journal of Arts Management. Major Gift Fundraising: Unlocking the Potential for Your Nonprofit // PG. 12

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