Major Gift Fundraising: Facts and Opinions from a Recovering Fundraising Consultant

This week, Craig Harris, the founder and CEO of NOZA, Inc. is sharing his wisdom on developing a major gifts program at nonprofits. NOZA (a TechSoup donor partner) is a Santa Barbara based technology company that has developed a platform to convert unstructured web data into searchable databases. Prior to founding NOZA, Craig founded South Coast Strategies, a fundraising consulting firm. Craig graduated from U.C. Santa Barbara in 1995 and then spent two years as Peace Corps Volunteer in Paraguay. Upon finishing his Peace Corps service he began his nonprofit career as the founder and first executive director of Servicios Ecoforestales Para Agricultores (SEPA), a large agroforestry demonstration farm in Eastern Paraguay. Eligible nonprofits and libraries can request a special NOZA discount through the end of this week.

Where do major gifts come from?

Major gifts come from three primary sources: (1) Corporations (2) Foundations (3) Individuals.  According to the annual GivingUSA Foundation statistics (PDF) charitable giving in the U.S. topped $307 billion in 2008. Here is where the money came from:

• Corporations:  $14.5 billion (5%)
• Foundations:   $41.2 billion (13%)
• Individuals:      $251.9 billion (82%)

While foundation and corporate giving play a major role in U.S. philanthropy, most of the money comes from people. Having spent several years as a fundraising consultant, I've worked with organizations that excelled at major gift fundraising, and I've worked with organizations that couldn't raise a major gift to save their mission. One of the common threads for the successful organizations is that they followed the money, focusing the majority of their time and resources on individuals. Those that failed typically hid behind the relative ease and comfort of shotgun blasting grant proposals and letters to foundations and corporations. In fact, I'm yet to find an organization that was able to develop and SUSTAIN a major gift program from only foundations and corporations. While the relative proportion of individual/corporate/foundation giving will vary from organization to organization, for those just getting started with major gift fundraising, my advice is to focus on individuals.

Why do people give major gifts?

What is the number one reason why people make major gifts to nonprofit organizations? Because they were asked. During my early years as a fundraising professional, I once heard a line during a fundraising workshop that I've always remembered: "People don't give money to causes. People give money to people with causes." I believe this to be the single most fundamental truth about major gift fundraising. But people-to-people fundraising for major gifts isn't about just doing a lot of "asks" (although it helps). It is about cultivating relationships with prospective major donors, and engaging them in genuine and meaningful ways with the mission of the organization and its leadership.

Who should be asked for a major gift?

In order to sell an expensive product you must first start with qualified sales leads. In the case of nonprofit major gift fundraising we refer to these sales leads as donor prospects. Major donor prospect lists can be created from two sources: (1) from within your organization's existing base of annual donors, volunteers, event attendees, and other "friends" of your organization, and (2) from scratch.

Whether creating a list of prospects from your existing base of support or building a list from scratch, the process is the same: to identify individuals with both the financial capacity to make a major gift and an inclination to support your particular mission. This identification process requires research, and you'll need to budget time and resources to conduct the research. Depending on your budget, this research can be done either with or without fee-based research products. To do it without spending a dime (but a lot of time), the two best resources are your board of directors and Google. You can put together a spreadsheet of some of your most promising existing donors and constituents, and distribute this to your board for what is known as peer-review. Essentially, you are asking your board members to comb through a lengthy list of current supporters, and have them indicate who they know, who they are willing to contact, and any information they are comfortable sharing with respect to an individuals' capacity and inclination. This peer-review process with the board can be preceded with or followed by staff using Google or other free sources to find additional relevant information that helps to shed light on capacity and inclination.

For those organizations who can afford to utilize fee-based products to streamline their research, there is a great way to efficently uncover relevant data that even the deepest Google search won't deliver. The company that I founded, NOZA, has developed one of the most widely used fee-based products to search for major donor prospects. In terms of cost, annual subscriptions to NOZA cost $800 per year, but there are a variety of highly discounted packages available through NOZA's partnership with Techsoup for eligible organizations. To serve as a double disclaimer, I'll reiterate here that I am the founder of NOZA.

The goal of your major gift research should NOT be viewed as simply identifying who to solicit, but rather, the goal should be to identify which prospects should be engaged for deeper relationship-building. Each organization and each staff and volunteer involved in the major gift fundraising  efforts will be limited by a finite number prospects and a finite number of relationships…so focus on those with the greatest known capacity and inclination!

Who is supposed to do the asking?

With the exception of a select few large organizations that lean on staff to do all or most of the face-to-face solicitations, for the rest of us, the participation of the board and other volunteer leaders is absolutely critical for successful major gift fundraising. If you work for an organization whose board members refuse to solicit on behalf of the organization, then you have an uphill battle ahead of you. If that is the case, and depending on your organization’s circumstances, you might want to consider putting off your plans for a full-blown major gift campaign and instead focus on a board development initiative. This is a very sensitive topic for most organizations, but fortunately there are great resources available to assist in evolving your board. One of my favorite resources is BoardSource. Having worked with so many excellent fundraising organizations and an equal number of lousy ones, in my experience success or failure usually boils down to the volunteer leadership.

In my opinion, if your non-fundraising board isn't willing to give personal stretch gifts and take on a few solicitations of their own, well, maybe it's time to promote those board members to your "honorary board" and then go find some new board members willing to take on the real work of a nonprofit board.

Conclusion

For most people, including myself, asking for money is uncomfortable and it is hard. It is hard. And therein lies the reason why so many organizations fail to launch and sustain successful major gift fundraising programs. For many people asking for money is akin to flossing regularly, eating healthy, exercising for 20 minutes a day, and avoiding using our credit cards.  We know we should be doing these things but often we don't. We are predisposed to avoid doing those things that bring us displeasure, discomfort or pain, and asking for money is at the top of the list for most of us. As with flossing, eating healthy and exercising, it takes commitment, discipline, and practice. Sometimes all it takes is thinking about the alternatives to not doing those things. For nonprofits, the alternatives could be downsizing a program, eliminating a program, or closing the doors altogether. Isn't that enough motivation to put our fears aside and begin the process of starting or improving our major gift programs?

Photo: Mindful One