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As a nonprofit organization professional, you understand the prominent role major gifts play in your organization’s ability to further its purpose. Major gifts are the largest single donations an organization receives, alongside planned gifts. A vital resource for nonprofits of all sizes and in all verticals, major gifts help fund the projects and programs that impact your community.
In this guide, we'll walk through the basics and benefits of major gifts as well as the best strategies for soliciting them. Let’s get started.
What is major giving?
From a donor's perspective, major giving is the act of making a significant donation to a nonprofit. However, on the nonprofit side, it’s a bit more complicated than just depositing a sizable check. Major gift fundraising encompasses the stewardship, solicitation, and cultivation processes of donating.
Aside from bequests and other planned gifts, major gifts sit at the top of the traditional donor pyramid and tend to be relatively scarce. Excluding these planned gifts, major gifts are the largest donations your organization receives in any given year.
Types of major gifts
In action, major gifts are incredibly varied and can take a wide range of forms. There are five main types of major gifts:
- Stocks, including publicly-traded stocks, mutual funds, bonds, and privately-held stocks, can all be gifted to nonprofits. When donating stocks, donors don’t pay capital gains tax and can also receive an income tax deduction for the shares’ current value.
- Real estate, such as land and property holdings, tend to be some of the largest types of gifts to nonprofits. As with stock donations, donors won't pay capital gains tax on appreciated real estate and can receive an income tax deduction on the current value.
- Cryptocurrency (or crypto) is a form of digital currency that can be invested in for long-term gains. Crypto is held by many of the wealthiest potential donors, making it likely that they might want to donate in this form.
- Qualified charitable distributions are tax-free gifts made from an individual retirement account (IRA). For older, wealthy donors, this type of major gift decreases their income tax and counts toward the amount they're required to withdraw from their IRA each year after turning 72.
- Donor-advised funds allow donors to make a lump sum charitable contribution to a private fund administered by a third party. As a result, the donor receives an immediate tax deduction for the entire amount and can add to the fund over time.
Major donors often have varied financial situations and preferences, so it’s important to accept all of these types of gifts. Giving donors options makes it more likely for them to find a suitable option and ultimately make a major gift.
How to define a major gift at your nonprofit
From one organization to the next, the definition of a major gift is almost always unique. For example, a nonprofit that is just starting out might count anything over $1,000 as a major gift, whereas a larger, well-established organization might only consider donations of more than $10,000.
For your own nonprofit, you’ll have to review your gift history and donor database to determine what constitutes a major gift. To determine your organization’s range, follow these steps:
- Examine the gift size range of 5 to 10 of the largest gifts to your organization.
- Eliminate any outliers. If every gift is between $7,000 and $11,000, except for one at $25,000, eliminate the $25,000 gift from your list.
- Estimate a major gift minimum, accounting for the remaining gifts. 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.
- Find the major gift sweet spot. Major gifts are rare, but they aren’t so scarce as to be nonexistent. Make sure you haven’t set the major gift amount bar too high or too low by testing it in practice.
Once you move your estimate from the theoretical to the concrete, you can adjust as needed. For instance, if you notice that your fundraisers are converting nearly all of your prospects into donors, your major gifts minimum amount should likely be higher. To make the most of your major gift efforts on an ongoing basis, track metrics like the conversion rate and amount raised, and adjust your minimum as needed.
Where does major giving fit into your overall fundraising strategy?
While your major gifts program is essential to your nonprofit’s fundraising success, it should be one part of your fundraising strategy. For many nonprofits, major giving can often be paired with other types of giving on the donor pyramid, including annual giving, capital campaigns, and planned giving:
- Annual giving. The best major gift prospects are often already giving to your organization each year. As a result, it's critical to dedicate time to your annual fundraising program and building existing relationships with recurring donors.
- Capital campaigns. Capital campaign fundraising is used to raise large amounts of money over a limited period of time for significant investments such as new construction, creating a new program, or building an endowment. Research shows that many capital campaigns raise 40 to 60% of their total goal in a "quiet phase" through a few major gifts before the campaign is publicly announced. For successful fundraising results, your major gifts strategy must work alongside your capital campaign strategy.
- Planned giving. Planned giving is the allocation of gifts to be given in the future, often through wills or trusts. Major gift fundraising and planned giving are very similar, so organizations will often combine the roles for managing the two into one position.
How your nonprofit integrates these types of giving will depend on your nonprofit's current situation. In any case, your nonprofit should leverage some combination of major donor fundraising, capital campaigns, planned gift cultivation, and establishing an annual giving program to create a sustainable fundraising strategy.
How to identify a potential major donor
Before you can go through the major donor acquisition and retention processes, you have to find your prospects. For every four or five qualified prospects, your organization will typically be able to secure one major gift. To build a qualified prospect list and secure these donations, you will have to know what to look for.
The best major giving prospects have:
- A connection to your cause. A major donor might be a long-time supporter, or they could also be a person who has been directly affected by your organization, like a graduate of a university. Even a donor who hasn’t previously engaged with your organization but has been involved with nonprofits that have similar purposes could be a good candidate.
- The ability to donate at your nonprofit’s major giving level. Keep in mind that the number of prospects in your donor pool will change according to how high the major giving level is set. Small organizations asking for $1,500 will attract different prospects than larger ones asking for $50,000.
To assess whether someone could be a good major giving prospect, some indicators of their capacity and willingness to give include:
- Previous donations to your organization
- Past giving to other nonprofits
- Donations to political campaigns
- Relationship with your nonprofit
- Real estate and stock ownership
- Fundraising event attendance
- Volunteer involvement
Your major gift prospects are going to be incredibly valuable no matter how much you expect them to give, and your cultivation, solicitation, and stewardship of them should reflect that idea.
What is a major gifts officer?
A major gifts officer is the leader of a nonprofit organization's major giving efforts. Smaller nonprofits may have just one major gifts officer who handles most of the research and cultivation duties, while large organizations often have multiple staff members on their major giving team.
Major gifts officers should be experienced fundraisers who have backgrounds in major and planned gift fundraising. They’re persistent, goal-oriented, and driven by donor needs. When you find someone who balances that combination of skill set, qualifications, and personality characteristics, you’ve found your major gifts officer.
Why are major gifts important?
It’s estimated that the top 80% of nonprofits’ individual donation revenue comes from the top 20% of donors. While the exact percentages fluctuate, the principle remains constant. In general, when you implement a major gifts strategy and begin to secure major gifts, your fundraising numbers will quickly climb.
Here are some of the specific benefits of major gifts:
- They’re some of the largest donations your organization will receive. Your nonprofit might be growing and performing well with a large pool of mid-level donors, but if you want to level up and accomplish more goals, you need to incorporate major giving. Imagine that your organization regularly receives gifts right around the $25 range. A major gift of $1,000 from one donor would be equivalent to 40 gifts of $25!
- They give donors control over the allocation of their funds. When you establish a major gifts program, you can determine the parameters of major gift size, the programs and options that donors can allocate major gifts to, and timelines for giving. Allowing for some flexibility in these options encourages donors to give as they feel comfortable.
- Major gifts are available to every nonprofit. Some nonprofits claim that major gifts are only for large organizations and are beyond the scope of a newer nonprofit. In reality, any organization can seek major gifts because the parameters of major gifts are defined by the respective fundraising capacities of the nonprofits seeking them.
- Prospects are easier to find than you might expect. If you actually know the donor qualities you are looking for and how to look for those characteristics, you won't have trouble finding major gift donors. Sure, the process of going from cultivation to solicitation to stewardship is not without its challenges, but troubles with identifying major gifts prospects should not hold you back.
When someone has the means to give a major gift to your organization and a strong enough philanthropic connection to your particular cause to follow through with the process, that person should go on your prospect list. To start your search, you'll begin with your existing donor base. As long as you keep track of donor data in your CRM, you'll be able to sort out the major giving prospects from your list of donors.
How to cultivate major donors
Before you can successfully ask for a major gift, you have to cultivate a relationship with the donor. Donor cultivation is the process leading up to the ask, while solicitation is the process of making the ask itself.
To cultivate major donors, follow these steps:
- Create a plan. Use a major gift calculator to map out your financial needs so you can prioritize the prospects who can meet those needs.
- Build personal relationships with prospects. Schedule one-on-one meetings and exclusive events to build a strong foundation, and follow up with each prospect regularly.
- Track your interactions. Store all data in your CRM so you can adjust your cultivation strategy as needed.
All of these activities will help your organization start building a relationship with your donor prospects. Building relationships creates the necessary motivation for supporters to give major gifts to your organization.
5 steps to solicit major gifts
After you’ve done the hard work of cultivating a relationship with a major donor prospect, it’s time to transition to the solicitation phase. While asking for a large amount of money might seem intimidating at first, following the five steps below will make your major gift solicitation easier and more effective.
1. Personalize your ask
When it comes to an ask of this magnitude, major donors (like anyone!) appreciate the little things that prove that you've been listening and paying attention to them. You can ensure that your team shows major giving prospects just how well they know them by:
- Keeping track of valuable information from your prospect research. While prospect research primarily helps identify major gift prospects, it provides many additional insights into a prospect's biographical information, interests, and business affiliations that you can use to personalize your solicitation.
- Incorporating what you learn during the cultivation process into the ask. Major gift prospects need to get to know your organization before they commit to giving a sizable gift, and your organization needs to get to know your major gift prospects in order to make the right kinds of asks. Even something as simple as addressing a donor by their preferred name can show them that you were listening as they told you about themselves.
During cultivation, your fundraisers spend a good amount of time conversing with and meeting with the major gift prospect. Track all interactions in your CRM to ensure that the ask itself is coming from the most well-informed angle possible.
2. Plan out your solicitation
In most cases, you’ll solicit major gifts during an in-person or virtual meeting. Occasionally you can get a donor to commit through a written major gift proposal, but having a conversation allows the prospect to ask questions and helps you work together to find a solution that benefits your organization and the donor.
Even for a meeting, writing out your solicitation in proposal format can help you get your thoughts on paper and make the ask go more smoothly, plus it can serve as a leave-behind for the donor’s reference. If you don’t write a full letter, at least jot down some talking points or a brief outline of the conversation to prepare.
3. Have a specific amount and purpose in mind
Physically stating the ask is a bridge easier crossed when you have a specific dollar amount in mind. Using calculations and formulas, combined with the knowledge you gained during the cultivation process, your team should be able to determine a specific ask amount.
Most major donors want to know exactly how their contributions will be used if they choose to give. Give the donor agency by suggesting a few areas of your organization they could donate to, but try to encourage them to give to the program or project that needs the funding most.
4. Engage the prospect in dialogue
It’s easy to slip into default pitch mode during your solicitation meeting, but you’ll need to be able to adapt your presentation based on their reaction. Part of this is engaging the prospect in a true dialogue—your solicitation will have a much bigger impact if you make the meeting a conversation.
Talk to your prospect about their:
- Charitable interests
- Ties to your organization
- Current giving inclinations
Let their responses frame your conversation. Successful solicitations should be donor-centric, because, at the end of the day, this process is all about the donors.
5. Prepare for the stewardship process before making your ask
Much of the discussion surrounding major gifts solicitation is about how to handle that ask, but there's also the transition stage from ask to stewardship. How you go about that process can affect the way your brand-new donor sees your organization and considers making future gifts.
Donor stewardship is the relationship-building process with donors after they've made a gift. While it should always involve thanking donors for their gift, it can (and should) also include a range of additional activities, such as phone calls, personalized letters, event invitations, and volunteer opportunities.
In each of these activities, focus on regularly acknowledging the impact your major donors can have on your organization and purpose. However you choose to steward your donors, you should put your major donor solicitation strategies and goals into a clear plan for future reference.
Start earning major gifts now
Ultimately, major gifts can make a significant difference in your organization’s ability to further its purpose. However, because of these donations’ size, it's important that you take the time, invest in the tools, and dedicate the resources to implement a detailed strategy for identifying, cultivating, and stewarding major donors.