From the author of “Opening the Door to Major Gifts: Mastering the Discovery Call” (Charity Channel Press, 2013).
Before you can begin identifying/qualifying prospective major donors, you must first gain buy-in from your organization’s leadership. If this is your first foray in pursuit of major gifts, your board and CEO must be sold on the concept. Given that a first visit very rarely results in an investment, a great deal of patience will be required. You are not likely to see much incoming revenue from initial efforts.
When budgets are tighter than ever, how do you justify such an investment? Why should your nonprofit spend its limited reserves on a fledgling major gifts effort when it could instead roll out a another direct mail solicitation or special event that will provide a modest, but reliable, source of income? Can you provide proof that investment in major gifts is wise?
There are two good measurements that you can employ to make an evidence-based argument for major gifts. First, cultivation of individual donors is almost always the most cost effective way to raise money. Industry standards indicate that it may cost up to 50 cents (or more) to raise a dollar through a special event, primarily due to the labor intensive nature of the venture. While special events are great for relationship building, they typically are one of least efficient fundraising methods. Direct mail costs can vary widely, but between 25 to 40 cents to raise of dollar are typical standards.
Compare these numbers to major gifts work. Organizations with ongoing major gifts program typically spend only 10-15 cents to raise a dollar. This is because the larger gifts resulting from a focused effort will inevitably your cost to raise a dollar (CTRAD).
If you are not currently pursuing major gifts, you can use your organization’s CTRAD to justify an effort. Take a look at your most recently concluded fiscal year. Take the total amount of funds raised for the year and divide it by the amount spent on fundraising activities. If your ratio is lower than six dollars (anywhere between one and six dollars) for every one dollar spent, chances are very good that you are not devoting enough resources toward developing the relationships that will eventually result in major philanthropic investments.
You can do the same thing with each individual fundraising method. If you work for an organization that sponsors several special events each year, it may be a good time for a close examination. Let’s say your charity holds a major golf outing each year. How much money do you raise from the outing, and how much does it cost? Be sure to include the costs of staff time in the overall equation. Would it make sense to forgo the golf outing and instead focus more on major gifts?
Deciding on your fundraising strategy employing the proper tools/methods is serious business. Make sure you do your homework to come up with the best (and most efficient) “mix” for your nonprofit. It’ll be well worth the time invested.