The Architecture of Major Donor Cultivation, Part I

October 16, 2013

1. Why major gifts?

2. How to develop your case

3. Finding, rating and prioritizing prospects

4. The culture of giving and asking

Objectives for This Morning’s Training• Provide understanding of what a major gifts structure

looks like• NOT an exhaustive review• Focus on practical things that a very small team or

individual can achieve• You should leave this morning with several concrete

ideas that can be implemented quickly to start achieving results

1. How to identify and prioritize a prospect2. How to cultivate3. How to solicit4. How to steward

Introductions• Your name and your organization• What big idea or belief inspires your organization?

• Limit to one sentence

The Benefit of Individual Major Gifts• Defining major gifts• Highest ROI• Fastest and most reliable path to increased fundraising• Changing funding priorities from a few foundation donors

can be hard to weather without diversified sources• Helps cultivate and recruit potential leadership and

influencers• Complementary to other forms of fundraising

• Foundations like to see robust individual giving• Direct face to face feedback can improve your case for

giving

Real world example 1Annual Fund for ORGANIZATION X

Total giving CumulativeFY  ‘11-12 # $ # $ %

Major Gifts$50k - $99k 1 $50,000 1 $50,000 9%

$25k - $49k 3 $93,400 4 $143,400 26%

$10k - $24k 14 $152,570 18 $295,970 55%

$5k - $9k 23 $132,766 41 $428,736 79%

Community Giving$2.5k - $4.9k 24 $73,113 65 $501,849 93%

$1k - $2.4k 25 $34,463 90 $536,312 99%

$1 to $999 21 $6,203 111 $542,515 100%

TOTAL 111 $542,515

Real world example 25-Year Annual Giving to ORGANIZATION

Total giving Cumulative1E+12 # $ # $ %$2M + 1 $2,500,000 1 $2,500,000 6%

$1M - $1.9M 3 $4,276,696 4 $6,776,696 17%

$500k - $999k 4 $2,504,371 8 $9,281,067 24%

$250k - $499k 10 $3,458,744 18 $12,739,810 33%

$100k - $249k 31 $5,036,014 49 $17,775,824 46%

$50k - $99k 47 $3,190,236 96 $20,966,060 54%

$25k - $49k 71 $2,326,005 167 $23,292,064 60%

$10k - $24k 209 $2,963,555 376 $26,255,619 67%

$5k - $9k 385 $2,518,684 761 $28,774,304 74%

$2.5k - $4.9k 627 $2,070,990 1,388 $30,845,293 79%

$1k - $2.4k 2,021 $2,881,612 3,409 $33,726,905 87%

$1 to $999 36,649 $5,250,907 40,058 $38,977,813 100%

TOTAL 40,058 $38,977,813

Nonprofit Funding Sources

Source: GivingUSA 2013 report

Case

for G

ivin

g

Major Gift Fundraising Success

Individual Major Gift Program

• Commitment to creating relationships between prospective donors and the organization

• Staff and/or volunteers willing and able to cultivate and solicit

• People who are willing to leverage their own generous giving

• Qualified prospects

Upside•High ROI

•Fastest and most reliable

•Protects against foundation funding

changes

•Helps cultivate leaders

•Complementary to other fundraising

•Get new ideas and feedback

• Cultivation and engagement plans• Well-articulated, compelling case• System to track progress and manage

solicitors• Follow-up for acknowledgment,

billing

What you need to have in place or develop:

Downside• Many people don’t like to solicit• People are reticent to ask friends,

family and colleagues • Smaller number of asks compared to

other methods• Smaller reach and therefore less

community building

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Case

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ivin

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Major Gift Fundraising Success

Components of the Case for Giving

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What is our core belief?

Why do we exist?

What do we hold dear?

What’s our history & what makes us special?

What are the most pressing problems we are trying to address?

What does future success look like?

What is the plan to get there?

Why is the plan likely to work?

How do we measure success?

How much will it cost?

How will we raise the $?

ACTION:$ or Time

If you answer nothing else…• What is your core belief?• What problems/opportunities are you going to

address?• What is your solution/plan?• What is the cost to execute your plan?• What does success look like?

Case Study

The most important job in the world is taking care of a child. And when a child is very sick, families need to be together.

Belief

Problem/ Opportunity

Thousands of families a year come to UCSF from around the country for care of their critically ill children.

Without support, many would have to sleep in their cars, or in hospital corridors.

And when the UCSF BenioffChildren’s  Hospital  opens  at  Mission Bay, the need will double.

Solution/Plan

Family House is the home away from home for families of children with cancer and other life-threatening illnesses. It is a place to stay and a community to rely on, right next door to the hospital.

We will double our capacity by building a new Family House in Mission Bay.

Cost3-YR. INITIATIVE EXPENSE DETAIL 3-YR COST

Ongoing Operations $3,0000,000

Build a New Family House

Construction Item A $23,800,000

Item B $5,000,000

Item C $6,200,000

Endowment $5,000,000

Total $43,000,000

Vision

No family being treated at the hospital will be turned away from Family House if they are in need

of our help.

Discussion/WorkshopDISCUSSION• What worked or didn’t work about Family House’s introduction?

WORKSHOP• You all developed your organizations’ value propositions yesterday.

What is the central problem/opportunity in the world you are trying to address?

• Do you have a bullet point version of your plan?

• How well does your budget map to the plan?

• What is your ramp-up period? How many years are you putting together in your budget?

Exercise• Pair up with someone next to you from another

organization.• Tell each other the brief introduction we just

worked on

Case

for G

ivin

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Major Gift Fundraising Success

Probable Donors• Where to find• How to prioritize

• DISCUSSION: Where would you look?

Where to Find Probable Major Donors• Existing donors, big and small• Existing board, volunteer leadership and their

networks• Friends, family, professional, and nonprofit colleagues

• Publicly published donor lists from organizations with related missions

• Ask existing leadership and supporters for information about and entrée to those people

• Program participants• Your personal network

How to Prioritize Prospects• 6 key indicators:

1. Have they given to you before?2. Can they afford a “major gift?”3. Do they make gifts this large to other organizations?4. Are they likely to care about the problems you are

addressing?5. Do you have access to them?6. Have they volunteered or participated in your

programming?• Establish a likely ask amount

Discussion & ExerciseDISCUSSION• Imagine your ideal donor. What qualities do they

have?• If you gathered together the 50 best donors for your

organization, what do they have in common?

EXERCISE• Write down the names of at least 5 potential major

donors• Rate them 1-5 in each of the areas

Other Sources of Information to Prioritize Probable Donors• “Key informants” currently active in your

organization• Online research

• Free: Google, Blockshopper, public business filings, etc. • Subscription: NOZA, WealthEngine, ResearchPoint

• Face to face conversation

How many prospects do you need?• Depends how much money you are trying to raise• As a rule of thumb, you will need to have 3-4

prospects identified for every major gift you are trying to secure

• If you hope to get 3 gifts at $10,000, you should have 9-12 qualified prospects at that level, etc.

Gifts Needed for Sample Fundraising Effort

Gift payable over x years

Projected Gifts Needed

# $$50,000 1 $50,000

$25,000 2 $50,000

$10,000 3 $30,000

$5,000 6 $30,000

$2,500 8 $20,000

Major Gifts Subtotal 20 $180,000

$1 - $2.4k Many $25,000

TOTAL many $205,000

Prospects Needed

Gift payable over x years

# of Identified Prospects Needed

Projected Gifts Needed

# $ 3 to 1 4 to 1 Identified$50,000 1 $50,000 3 4 3$25,000 2 $50,000 6 8 3$10,000 3 $30,000 9 12 14

$5,000 6 $30,000 18 24 16$2,500 8 $20,000 24 32 40

Major Gifts Subtotal 20 $180,000 60 80 82

$1 - $2.4k Many $25,000

TOTAL many $205,000

Case

for G

ivin

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Major Gift Fundraising Success

Major Gifts Cultivation• Face time• Small cultivation events• Site visits• Participating in programs• Volunteering in programs• Written communications

• Highly personalized (email or letters/updates)• General (online, social media, email newsletter, annual

reports, etc.)

Face Time: Activity Needed• We are seeking 20 gifts, and we determined we need

between 60 and 80 prospects• Assume on average it will take 2 or 3 visits to cultivate

and close.• 150 to 200 prospect visits

• Assume you have 1 ambassador for half of the visits, and 2 ambassadors for the other half

• 225 to 300 ambassador visits

• May seem daunting, but if E.D. does 3 visits a week, that’s 150 in a year.

When and How to Solicit a Major Gift• Major gift fundraising is the art of asking for the

right amount for the right purpose at the right time by the right person

• You are ready to solicit a major gift when:1. You have confirmed that a donor supports the

mission of the organization2. You understand the interests, needs and concerns of

the donor3. You are sure they understand your plan, what it costs

and the type of gifts that you need

Gift ChartGift payable over x

years Projected Gifts Needed Cumulative

# $ # $ %$50,000 1 $50,000 1 $50,000 24%

$25,000 2 $50,000 3 $100,000 49%

$10,000 3 $30,000 6 $130,000 63%

$5,000 6 $30,000 12 $160,000 78%

$2,500 8 $20,000 20 $180,000 88%

Major Gifts Subtotal 20 $180,000 20 $180,000 88%$1 - $2.4k many $25,000 many $205,000 100%

TOTAL many $205,000

Giving Circles• Good for public recognition and stewardship• Role models generosity• Demonstrates you have secured support from

other thoughtful people• Raises sights of giving• Example:

• “Angels” at $25k and up• “Benefactors” at $10k and up• “Pioneers” at $5k and up• “Friends” at $1k and up

UNDERDEVELOPED

National Study of Challenges Facing

Nonprofit FundraisingA joint project of

CompassPoint and the Evelyn and Walter Haas, Jr. Fund

• Culture of Philanthropy• A set of values and practices that support development

• Most people act as ambassadors and engage in relationship building

• Everyone promotes philanthropy and can articulate the case for giving

• Fund development is valued as a mission-aligned program of organization

• Organizational systems are established to support donors

• The ED is committed and personally involved in fundraising

• ~ 50% of Development Directors expect to leave within 2 years

• ~ 33% of ED’s are very satisfied with their Development Directors

UNDERDEVELOPED

• Smaller nonprofits struggle to compete with larger organizations with experienced Dev. Dir.

• It’s about more than one person

• Many nonprofits lack basic fundraising systems and plans

• Executives say Board engagement in fundraising is lacking

• One in four executives report they lack the skills and knowledge to secure gifts and one in five don’t particularly like doing it

• Many nonprofits do not have an organizational culture that supports fundraising success

UNDERDEVELOPED

Creating a Culture of Giving and Asking• Board

• Role model audaciously generous giving• Help introduce, cultivate, and solicit• Fellow board or staff to meet annually in person with each board

member to solicit and create a development activity plan• Show how a discussion about giving can be celebratory, meaningful, and

enjoyable• Staff

• Role model how to deliver the case for giving• Be the Ambassador-In-Chief

• Inspire and support others• Track and celebrate board and staff activities

• # of visits• Hosting events• Making thank you calls, etc.

Stewardship• Most donors stop giving because they feel

underappreciated and they don’t feel their gift has had an impact

• Best way to build a major gift program is to retain and upgrade existing donors

• Stewardship should be specific, tiered (donor circles) and do-able

Sincere Stewardship*• Stewardship begins with delivering the promised benefits and

reporting on them. • Stewardship is designed to confirm the donor's wisdom in making the

original gift and to draw him or her closer to the organization.• Should not be left to chance, but should be part of a structured plan. • What differentiates true stewardship from mechanical gift

acknowledgement, however, lies in doing the unexpected — in communicating with donors not because it is part of a plan, but because donors are your organization's best friends.

• An attitude that should permeate your entire program.

* Definitions taken from Corporation for Public Broadcasting, Major Gift Initiative

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Sample Excerpt from a Stewardship Plan

• Donors $2,500+• Receive thank you call from ED or President within 24 hour of

making pledge/gift• Personal thank you note sent within 48 hours of receipt of gift• Invitation for in-person update with President and ED at least

one time• Two written “behind-the-scenes” updates (mid-year and end of

fiscal year)• Personal note from a client in the summer• Holiday card has personal note from a staff or board member

connected to the donor• All other communications sent to rest of donor base (annual

report, newsletter, etc…)﴿

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Recap• Develop clear, compelling answers to the basic case

for giving questions• Identify and prioritize major gift prospects, and

establish a likely ask amount• Engage board/volunteers in fundraising and start by

soliciting them the right way• Get comfortable being Ambassador-In-Chief by

getting out and building personal relationships with potential major donors

• Develop a stewardship plan to retain and upgrade existing donors