Not to be too obvious, but major gifts are, in fact, major. There may be mixed opinions in the community on the validity of the traditional donor pyramid, but despite its standing, if you are new to major gifts, the pyramid is a great way to explain how important they are.
From bottom to top, the pyramid is generally organized as follows:
- Occasional donors and event participants
- Annual and recurring donors
- Major gift donors
- Planned gift donors
Definition of Major Giving
Outside of massive bequests (lucrative planned gifts), major gifts are at the top of the pyramid and are relatively scarce because of that. Excluding planned gifts, major gifts are the largest donations your organization receives in a year. Usually, nonprofits have a dollar amount range that encompasses all major gifts.
As your major gift initiative improves and advances, the range will shift upward.
Determining Your Organization’s Major Gift Size
To determine the major gift size range at your nonprofit, you will need:
- An accurate and up-to-date database.
- Records of your top individual donors.
Once you have the first two points in order, it is time to learn what constitutes a major gift at your organization. Just follow the steps outlined below.
- Pull the 5-10 donors who have given the largest gifts to your organization.
- Examine the range of those gift sizes.
- Eliminate any outliers — if all the gifts are between $7,000 and $11,000, except for one at $25,000, eliminate the $25,000 gift from your list.
- Accounting for the remaining gifts, estimate a major gift minimum. Using the numbers from the previous step’s example, you might say $8,500.
- Go back to your database and test that number, $8,500 in our scenario. You will look for how many gifts of that amount or greater have been given to your organization in the past year.
- Decide if that frequency is in the major gift sweet spot. Remember, major gifts are scarce, but they are not so scarce as to be nonexistent. Make sure you do not set the major gift amount bar too high. If you are seeking major gifts, you have to have major gift opportunities. Conversely, if you search that dollar amount and there are too many donors giving that amount, you need to raise it.
Once you move your estimate from the theoretical to the concrete, you can adjust as needed. For instance, your number based on your data might be on the low side if you have never actively sought major gifts.
When you begin making the asks and securing the donations, if you notice that your fundraisers are converting nearly all of your prospects into donors, that dollar amount should be higher. To make the most of your major gift efforts on an ongoing basis, track metrics just like the conversion rate listed here.
Remember, you can’t compare major gift thresholds across organizations. There are far too many variables to do a side-by-side evaluation. To a small nonprofit, $5,000 is going to mean a whole lot more than it would to a much larger organization.
It is not the amount that matters. What matters is that you are seeking major gifts in the first place.
Identifying a Major Gift Donor
Before you can go through the major gift donor acquisition and retention processes you have to find your prospects. Most say that for every four or five qualified prospects, your fundraisers will be able to secure one major gift. If you want to be able build that qualified prospect list, you will have to know what to look for.
Just as you have to learn what constitutes a major gift at your nonprofit, you also have to know what constitutes a major gift donor.
Most are inclined to rank one identifiable trait far ahead of the rest when searching for major giving candidates — wealth.
Yes, wealth is important, but major giving does not start and end with wealth. Wealth is half of the equation.
Someone donating a major gift to your nonprofit:
- Has to possess a connection to your mission and your work — This tie can manifest in many ways. The major gift donor might be a long-time supporter, someone who has given multiple smaller gifts over the years. The donor could also be a person who has been directly affected by your organization, like a graduate of a university. The major gift prospect could even be a member of your community who has a vested interest in your cause, like an environmental issue or the arts. It is difficult to predict what will bond a prospect to your nonprofit, but you should be able to identify those bonding factors in your candidates as you search for qualified prospects.
- Has to have the means to donate a gift at your nonprofit’s major giving level — This second half is the wealth component. A qualifier for major giving, to some extent, is the financial capacity to donate such a large gift. The relevance of your prospects’ financial situations is going to change according to how high the dollar amount is set for major gifts at your nonprofit. For example, if your nonprofit is just starting off and has a small operating budget, major gifts at your organization might be set around $1,500. The pool of prospects for that dollar mark is much deeper than for a $50,000 major gift threshold at another organization. It is all relative.
Your major gift prospects are going to be incredibly valuable no matter how much you expect them to give. Your cultivation, solicitation, and stewardship of them should reflect that. Personalized, attentive, and professional handling of major gift prospects is the surest way to big fundraising gains.
Now that you know what constitutes a major gift and what constitutes a major gift donor, it is time to go out there and get to work!