If your fundraising plan doesn’t include a strategy for finding major donors and asking them for a donation, you’re missing out on some big gifts for your small nonprofit.
Larger gifts equal more net revenue which means you can do more good.
It’s the old 80/20 rule at work: according to Donor Search, studies have shown that 88% of all funds come from 12% of donors.
Ok, it’s an 88/12 rule instead of an 80/20 rule, but whatever.
If you spent most of your time on the top 12% of your donors, you’d raise more money and in less time than dinking around with little nickel-and-dime fundraisers.
So, let’s get you some big gifts from major donors, ok?
There are 2 big reasons why people don’t work on major gifts: they aren’t comfortable asking for money in person and they don’t know who to ask.
Let’s take a look at where you can find major donors for your small nonprofit so you can get those big donations that help you grow quickly.
But first, let’s start with some surprising benefits of working on major donors.
Reasons why you should focus on major donors
There are 4 big reasons why you should spend time getting comfortable working with major donors.
1. Major donors can make a decision quickly (there’s no committee to convene), they don’t normally require any paperwork, and they don’t need approval to say “yes” except maybe from their spouse. So, when you have an emergency or a fantastic opportunity, major donors can fund it FAST for you!
2. Major donors are the BEST source of funding for specific projects. Maybe your food bank is working on a special program to send meals home for children on free and reduced lunch over the holidays. A major donor who is moved by this particular project might fund the whole thing (that’s happened to me before) and the nice thing is that there are no hoops to jump through like with grants or corporate sponsors.
3. Major gifts allow you to stop hosting all those little fundraisers that barely generate any money. Think about it: you could spend dozens of hours planning and hosting a fundraising event and make a couple hundred dollars or… spend that same amount of time growing a major donor relationship and get a $10,000 check plus kindle an important relationship for the future.
4. Knowing you have major gifts coming in can ease the stress of finding money and allow you to get down to work, focusing on your services and programs. Major donors are also more likely to provide unrestricted funding than grants or other sources of revenue.
What defines a major gift?
The definition of a major gift changes from organization to organization but generally starts at $500.
The women’s shelter that just opened in your town might count major gifts as $1,000 or more. The endowment fund of an Ivy League school may think anything over a million dollars is a major gift. It all depends on your nonprofit and how much your top donors are giving.
To calculate what a major gift is for your organization, look at your top ten individual donors and see what they gave in the past year. If most of them gave between $3,000 and $6,000, you might consider $4,000 as the threshold for a major gift. That’s the level of giving you’re looking for in a new major donor.
If your top 10 donors all gave at least $1,000 last year, then use $1,000 as your major gift threshold.
The beauty of it is that you get to decide what works for you. And if you need to raise the threshold in a couple of years, you can.
Where to find major donor prospects
Ok, so where do you find major donors, especially if you’re new and you don’t have a big donor base yet?
The bad news is that there’s not a list of rich people somewhere that you can access and just get the names.
In fact, targeting people based on their wealth is just a bad idea.
Even if you did know exactly who the wealthy people are, it doesn’t mean they’re going to give you money. People have their favorite causes, and if your cause isn’t one of their favorites, you’re not going to get a gift.
It’s not about how much money they have but about how much they care about the work your nonprofit does in changing lives.
They give because they trust that you can make a difference in the world. They give because they feel connected to your mission.
So, instead of focusing on their ability to give, look for a strong connection. Your best prospects might be closer than you think.
Start your search for major donors in your personal circle. Think about people you already know who can make a big gift and start with them. This is particularly important if you’re the founder of your nonprofit or if your programs aren’t yet up and running. People will give based on their relationship with you and the trust they have in you and your vision. Make a list of people in your social circle, former coworkers, family members, etc., even if you aren’t sure if they could give a big gift or not. You won’t lose anything by cultivating them, so add them to your list anyway.
Identify prospects from your organization’s inner circle. The most likely prospects for major gifts already have a link to your organization. So, look around at Board members, staff, and volunteers who might be good prospects for major gifts. Sometimes people using your programs and services are major donor prospects, so don’t overlook them.
Ask “who do you know?” Ask people in your own personal inner circle and in your nonprofit’s inner circle who they know who might be interested in the work your nonprofit does. You’re not necessarily looking for wealthy people. Remember, people give because they care about your work, so start looking for interest before you sneak a peek into their wallet to try to guess how much they can give. An introduction by a friend or Board member or volunteer can be the connection you need to meet your next major supporter.
Look through your current donors. You may have current donors who have the capacity and willingness to donate even more than they already are…but nobody has ever thought to ask them to do so. To identify potential major donors in your database, look at several factors. First look at their total giving over the past year. It’s important to look for cumulative giving and not just one-time gifts because someone who donated $1,000 once and someone else who made three gifts of $500 are both valuable but only one will show up if you search your data for those who have made a single gift of $1,000 or more. Your top donors are telling you with their donation that they care about the work your nonprofit does! Also look at the number of gifts and the number of years they’ve been giving. Regular, consistent giving tells you the donor is invested in your cause and it’s worth the time to visit with them in person.
Identify major donors who support similar causes. You may run into philanthropists at parties, events, or through your current connections. Don’t avoid conversations because you don’t want to “steal” them away from another nonprofit. Simply give them the chance to get to know your nonprofit and they’ll make the decision whether or not to give. People who donate to a specific type of nonprofit are actually more likely to donate to a similar nonprofit than those who don’t donate at all.
Leverage your fundraising events. The right fundraising event, when done well, can be a great way to raise money AND make new contacts. Non-fundraising events can be productive, too. At every event you hold, whether it’s a fundraising event or some other kind of event like a volunteer orientation, program event, etc., make a point to “work the room” to meet as many people as possible. You never know when you’ll meet your next big donor!
Plan a friendraising event. Plan an event specifically for your Board members, staff, and volunteers to invite potential donors, especially those they think might have the ability to be major donors. An open house or cocktail party can be a great, low-pressure opportunity to get to know people and find out what their interest is in your nonprofit’s mission.
Use a wealth-screening tool. You may have donors in your current donor family who are capable of making a large gift but haven’t chosen to do that yet for whatever reason. A wealth-screening tool can tell you who among your donors has the means to make a larger gift. Donor management softwares like Kindful and Bloomerang have these wealth-screening tools built in.
How much of your budget should be made up of major donors?
Setting up a major gifts effort takes time and planning.
People give big when they feel strongly about a cause and want to help make a difference. That means you’ll need to invest time and attention in your top donors. The amount of time you’ll need to spend is directly proportional to the amount of money you plan to ask for. In other words, if you’re planning to ask for $100,000 you’ll probably need to have several face-to-fact visits with that donor.
The nice part about a consistent major gifts effort is that it can create a healthy revenue stream for your small nonprofit.
If you have a handful of donors who love your work and you spend time regularly keeping them engaged, then at some point during the year, you can ask for a larger-than-normal donation and probably get it.
While major gifts are great, there is a downside: if your nonprofit relies on the generosity of one major donor and that donor goes away, you have a big, big problem. Or worse, if that donor decides to throw her weight around to get her way, you may have to decide if you’re willing to compromise the quality or integrity of your operations to satisfy that donor.
Remember this: no one donor, grant, or event should make up more than 25% of your total income. It just isn’t safe.
But as a GROUP (let’s say your top 10 major donors), plan for the total donations to be about 20% of your total budget.
Tips for finding major donors
Finding major donors can seem a bit daunting if you’ve never done this kind of work before.
Remember that no one starts out being good at something new. The more you do it, the better you’ll get.
Here are a few tips to help you on your way.
- Never assume what someone’s capacity to give is. Until you know different, treat everyone as if they’re capable of making a game-changing gift. Don’t assume they have no money based on the way they dress or the car they drive. If you don’t believe me, go read “The Millionaire Next Door.”
- Designate a major gifts person. You may find that making one staff member or Board member responsible for identifying and cultivating major donors helps provide focus. Of course, if your organization is small, that person may have other responsibilities, but having one person consistently following up with prospective and current major donors helps make sure nothing slips through the cracks. Remember, if you’re that one person and you’re already wearing 100 other hats, time spent focusing on major gifts is THE most productive time spent raising money. It’s worth carving out time for.
- Hire a fundraising consultant to help you. If you’re just not sure how to find major donors or how to build relationships with them, or if you’re feeling too shy or uncomfortable to talk to major donor prospects, there are consultants who can help you build your skill and your confidence. There’s so much potential for a huge return on investment, that spending money hiring the right coach can pay off big in the long run both in the amount of money you can raise and in growing your skill so you can keep cultivating major donors from now on.
The Bottom Line
People with the capacity to give big gifts to your small nonprofit are out there…waiting for you to find them and ask them to give.
They already love your cause and are ready to help.
All you have to do is work through the process of finding them.