Time and People Yield Major Donor Success

Posted by Laura Otten, Ph.D., Director on September 22nd, 2017 in Thoughts & Commentary

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While the “2017 Major Gifts[1] Fundraising Benchmark Study:  How Does Your Organization Compare?” may not be much help in benchmarking your own operations, you may find a helpful point or two.

The report’s sponsor (Association of Philanthropic Counsel) and researcher (Melissa S. Brown & Associates, LLC) note that the 80-20 rule operates in the sphere of a nonprofit’s major gift fundraising:  80% of raised income comes from 20% or less of those in the donor database.  In 2015, Bloomerang put those stats a little differently:  88% of raised dollars come from 12% of a nonprofit’s donors.  Certainly, anyone who saw those figures would say, “We should have a major gifts program!”² Either not enough people have seen those figures or not enough think as I do, because Bloomerang says that 58.87% of nonprofits do not have a major gift strategy, yet 53.37% say such a strategy is absolutely essential.

Back to the recently released “benchmarking” study.  The nature of a benchmarking study is that it is to be used to compare a particular organization or program against other similar organizations or programs so that one can see how it is doing in relation to its peers.  From that, that one can decide what, if anything, needs to change, and perhaps even get some ideas on how things might change.  Thus, any study that claims to be a benchmark study better be good, and the data better be presented in ways that allow for the benchmarking to actually happen.  If done well, this study might have been really helpful.

Unfortunately, as a benchmarking study, this one leaves much to be desired.  First, there is a total of only 633 organizations in this study—out of millions.  Geographically, the distribution is fairly representative of America, except for the 7% of participants who come from Canada, making this not very useful to Canadian organizations and detracting from its value to Americans.  Why did they even bother to include that 7% in this report?  The organizations decidedly skew in favor of the larger, with 24% of participants having budgets of $25M or more, another 16% in the $10M to just under $24M range, and 18% in the $3M to $10M range.  This just doesn’t jive with the overall profile of the sector that shows upwards of 80% of organizations having budgets under $750,000.  And, lastly, over one-third (36%) of the sample identified as an educational organization (the national profiles has this about 17% of the total sector), 11% as arts and culture (9.9% of the national profile) and only 15% as human services (where as human services represent 35.5% of the national profile).  All in all, this is not an accurate representative sample of the American nonprofit sector, making its value for benchmarking, as opposed to learning, quite questionable.  On top of this, with the exception of one data point, all of the data are reported as the whole, disallowing a smaller nonprofit, for example, to benchmark just against its peer organizations.  There is no value in a small nonprofit benchmarking against a large nonprofit, and vice versa.

Thus, ignore the title of this study and don’t use it to benchmark.  But do see what lessons you might glean to move your major donor efforts into higher gear.  For example, this study clearly shows the strong correlation between having a process for identify potential major donors that is consistently used (37%) and meeting their major gift fundraising goals (74% hit their goals almost every year).  Those who have a process whose use is inconsistent (39%) are far less likely to meet their major giving goals almost every year (39%).  Interestingly, those without a process or system (24%) actually do a bit better in meeting their goals almost every year (43%) than those with a process who use it sporadically.  Clearly, it is best to have a process that is consistently used.  And though the report doesn’t let us know if this outcome varied by size of the organization, it makes intuitive sense that this would hold regardless of an organization’s size.

Here’s another finding that could guide nonprofits of all different stripes:  the number one method of identifying prospects, used by 90% of the organizations in the study, is the knowledge staff members have about donors.  Additional methods used, in order of popularity, were analysis of donor records (78%), prospect research (76%), and referrals from donors or board members (72%).  None of these methods is high tech, requiring extra expenditures of money; it just requires people’s time, which, yes, does come with a cost.  And each of these methods can be done with what is currently available (or should be) to a nonprofit:  a good database, working brains and the willingness to use both.

The study took a step further and looked at the processes used by those organizations that have a program of getting major gifts that is consistent and that meet their fundraising goals almost every year; there were 163 such organizations.  They found four process for identifying prospects that were linked to success almost year in and year out:  prospect research; getting referrals from current donors, volunteers and other close allies; analysis of the donor database; and tracking how donors engage digitally with the organization.  Again, nothing high tech, no need for acquisition of additional things.  Just time and people.

That, no surprise, is the number one challenge facing nonprofits in executing a good major gift program:  not enough staff or time in a day (reported by 54% of respondents).  Interestingly, this lament was equally shared by nonprofits, regardless of the size of their budgets (and, presumably, thus, the size of their staff).  Second, and close behind (47%), was insufficient board member involvement.   And, not too far behind (at 41%) and, quite a sad state of affairs, the third greatest challenge was not having the right gift opportunities to pair with donors’ interests.  Even more interesting, this last challenge was far more likely to be cited by the larger organizations (those with budgets of $3M and larger).

 

[1] While a major gift is whatever an organization deems to be significant, only 11% of participants define it as less than $1,000, while 21% define it as more than $20,000.
[² ]The Nonprofit Center presents how-to course on individual giving, including major gifts, on January 17, 2018.   You can register here >>

 

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