November 20, 2017
 
Bigger Annual Fund Gifts for Smaller Nonprofits

By Diane Remin

Diane Remin
Since 10% of donors typically account for 90% of the revenues of nonprofits, and since your donors love what your organization is doing and want to be more involved, why not give them the opportunity?

What is a major gift program? It is a conscious effort to identify, get to know, and eventually ask qualified donors for sizably larger gifts. The gifts are solicited during an in-person visit when passion and financial capacity align.

What size gifts are we talking about? Depending on your donor base, major gifts for smaller nonprofits are likely to fall into the $10,000 to $100,000 range. Gift levels do not have to be in the stratosphere to have significant impact. A major gift may be $5,000 per year for five years for a total of $25,000. If your operating budget is $800,000, then 10 of these donors produce $50,000 annually, or 6% of your budget!

What do you need to launch a major at program?
  1. Existing individual donors: If you have 10 donors or more contributing $1,000/year, you’re ready to go.

  2. A special group for major donors to join: name, giving levels, and donor recognition plan. Tip: Create a name and giving levels that reflect your organization instead of the ubiquitous Leadership Giving Circle.

  3. Information about the prospective donors (prospect research): Free-lance prospect researchers produce donor profiles for under $200/profile. Start with a handful and do the solicitations – and then go back for more. Tip: Be sure to tell the researcher you are using the information for annual fund gifts, not for capital campaigns. You’ll want to focus on patterns of giving to other organizations more than net worth. Research Note: If you are wondering who in your donor database might have major gift capacity, you can do what is called a “wealth screening.”

  4. The compelling story you are going to tell your donors about why they should support you. Donors give from the heart and want to know what impact their gift will have. This document is also known as the Case for Support or Case Statement. I recommend Tom Ahern’s book Seeing Through the Donor’s Eyes, as well as his website. If you cannot get the case written in-house, find someone who will write it for $2,500. This is not a capital campaign. Production costs should be nominal. Tip: Print a dozen and more if you need them. You may want to make modifications.

  5. Training to set-up the visit with the donor. Would you ever guess that this is the most challenging part of the entire process? It is. That said, once the visit is set, you are more than 70% of the way to a gift. There are books. There are trainings. There is Google. Check-out Jerold Panas at www.jeroldpanas.com, a guru in the major gift field.

  6. Willingness to pick up the phone. You need to pick up the phone and arrange the visit.

  7. Training to make the “ask” and respond to objections. See (5) above.

  8. A system to record notes and track progress – even if you do it in Word.

  9. Passion/enthusiasm about your organization – most important of all!
So, how much does all of this cost?

Prospect research: Let’s start with 5 profiles for $875 Case for Support: $0 (in-house) - $2,500 budget cap (is it possible to spend $10,000 – yes – but don’t)
Books, materials, and training: $1,000
Travel and meals: $500 (assumes a local donor base)

Direct Expenses: $4,875

Time based on $75/hour ($150,000/year)
20 hours of prep = $1,500
4 hours per cultivation visit (includes travel) = 20 hours = $1,500
Note: Some donors you may know so well you can go right to the “ask.” Others may require multiple visits. Many smaller nonprofits know this first set of donors pretty well.
4 hours per ask visit (includes travel) = 20 hours = $1,500
1 hour strategy and record keeping = 5 hours = $375

Time Value: $4,875

Total Estimated Cost: $9,750
Note: Costs will increase with a national donor base.

Here are conservative projections from five asks (although results may vary wildly depending on your donors):

2 @ $5,000/year for 5 years: $50,000
1 @ @2,500/year for 5 years: $12,500
2 not right now

Total Projected Gifts: $62,500

Return on Investment (ROI): 540%

What are you doing that has a better return? You may also discover that getting to know your donors is a wonderful thing.

Diane Remin is the Founder and President of MajorDonors.com, which gives small-to-mid-sized nonprofits everything they need to launch a major gift program. Email her at diane@majordonors.com. 2011 RemRol Computer Services, Inc. dba Major Donors.com. All rights reserved.

December 2011


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