Ninety percent of a nonprofit’s fundraising revenue often comes from just 10% of its donor base. This 10% is composed of major donors who provide nonprofits with large or ongoing gifts that make a significant impact. The data shows the importance of major gifts for nonprofits, but also leaves a lot of questions:
- What is major gifts fundraising?
- How do you find major donors?
- What types of gifts do major donors give?
- How do you cultivate existing or new donors to become major donors?
If you’re new to major gifts fundraising, getting started can feel like a lot of work. In this guide, we’ll cover all the basics you need to know to kickstart your program with ease.
What Is Major Gifts Fundraising?
Major gifts fundraising will look different based on each nonprofit’s particular situation. For small, local nonprofits, any gift over $1,000 may be considered a major gift. On the other hand, for a large, nationwide nonprofit, gifts may need to be over $100,000 to be considered a major gift.
There are a few ways you can determine who your current major donors are and what major gift threshold makes sense for your organization:
- Review your donor database to pull your top ten donors. Look at the range between those gifts. If they are all pretty similar, pull your next top ten donors until you start to see a dropoff in giving amounts. The donors whose gift amounts stand out high above the norm are your current major donors.
- Pull the top 10% of your donors. Use the median giving amount within that cohort to set what you consider to be your minimum gift amount to be considered as major giving.
- Set a number that you would like to be your major gifts fundraising threshold, such as $5,000 or more. Pull all of your donors who have given at least that amount over the last year. If there are a lot of donors that pop up with that number, then it’s too low of a threshold. If there are none, it’s too much of a stretch for you right now. If there are a few donors who meet that level, then that’s a good level to set for your major gifts fundraising program. You can always increase it later as your program grows, but for now, aim to ask for gifts of around that size.
Overall, a major gift is a significant amount of financial support given to your nonprofit that helps to fund a specific project or ensure the ongoing sustainability of your organization.
Ways to Receive Major Gifts From Donors
Major donors may not always store all of their wealth in cash. Given different tax benefits, major donors may want to give their donation in a form other than a traditional bank transfer.
In addition to cash donations, some of the common ways nonprofits may receive major gifts include:
- Real estate: Donors may give land, commercial buildings, or residential properties either for the nonprofit’s use or for the value of the real estate. This provides them with certain tax deduction advantages as well as avoiding capital gains taxes.
- Stocks: Donors may give a nonprofit publicly traded stocks, mutual funds, treasury bills, bond, or stock in privately held businesses. Doing so allows them to avoid capital gains tax on the gift, so they may be willing to give a larger donation of stocks than they otherwise would if they had to cash out first.
- Qualified charitable distributions from an IRA: People are required to withdraw minimum amounts from their individual retirement accounts (IRAs) after turning 72. To meet these required minimum distributions, some wealthier adults will provide tax-free gifts from their traditional IRAs to nonprofits.
- Donor-advised funds (DAFs): DAFs are an investment account set up solely for charitable giving. Major donors may set these up for tax savings and for an easy way to grow their money for donations to nonprofits.
4 Steps of the Major Gifts Fundraising Cycle
Now you know a bit about what major gifts are and the ways donors typically provide them to nonprofits. With this knowledge, you’re ready to lean into the major gifts fundraising cycle. This strategy includes four stages. You’ll continue to repeat them as you grow your major gifts fundraising program.
1. Identification
In the section above, we covered the details of how to identify your current major donors and set the threshold amount for what you consider to be a major gift. In addition to identifying this cohort, you may want to identify prospective donors that you can encourage to give to your nonprofit.
When looking for individuals from outside your current donor pool to cultivate as major donors, you may want to consider the following resources:
- Board members and staff: Ask your board members and staff if they know of anyone who might have an interest in supporting one of your major projects. Having a warm handoff to a prospective donor can be a lot more effective than making cold calls.
- Volunteers: Look at your current list of volunteers for anyone who could potentially become a major donor, as well. If they’re already enjoying supporting your nonprofit in a volunteer capacity, they may be more likely to give a financial gift that could make a big impact for your programming.
- Similar organizations: Review nonprofits in your geographic area and beyond that work within a similar field. Who are some of the individuals or family foundations providing their major gifts? Seeing where current resources are coming from within your field can point you in the right direction for who to ask for support.
2. Cultivation
After you’ve identified the individuals you’d like to pursue for major gifts, it’s time to move into relationship-building mode. You never want to just walk up to a donor and ask for a major gift out of the blue. Instead, aim to fold them into your nonprofit’s community, help them see your mission in action, and begin to tell the story of the even greater impact their gift could make.
Some of the ways you can cultivate major donors include:
- Face-to face meetings
- Personalized invitations to your nonprofit’s events
- Consistent and clear communications
- Opportunities to engage with your beneficiaries
- Collaborations with their workplace, civic groups, or other community connections
3. Solicitation
Once you’ve built a solid relationship with a prospective major donor, it’s time to make your ask. Before you do so, make sure you know the who, where, how, and what of your ask.
- Who: Choose the person within your nonprofit who will ask the prospective donor to make a major gift. This could be your board president, chief development officer, executive director, or any other member of your major gifts fundraising team who has been developing a relationship with the prospective donor over time.
- Where: Figure out where you’ll make your ask. You could invite the prospective donor to your nonprofit’s offices, a dinner or lunch spot, or even visit them at their home. You can also combine this with an ask over email or via postal mail as a follow-up or to set the stage for your in-person meeting.
- How: Think through how you'll make your ask. You can consider an in-person conversation over a meal or prepare a more formal presentation. You should also decide whether you’d like to include a printed proposal or have any other materials available to support your request.
- What: Know what you plan to do with the donor’s money and be able to explain that to them in detail. For example, if you’re a nonprofit after-school program, rather than simply asking for $10,000, ask for $10,000 to support building a new playground. Be prepared with a budget breakdown for that project and be able to clearly demonstrate how the project will support your nonprofit’s greater mission.
4. Stewardship
After you secure a gift from a major donor, it’s time to move into the stewardship phase. This is where you continue to build your relationship with that donor to keep them engaged in your work over time.
Some of the key ways to steward your major donors after their gifts include:
- Gratitude: Send personal letters and make phone calls to thank donors for their support. You can even send thank-you letters from some of the beneficiaries of their gifts. Consider other ways to express your gratitude, as well, such as naming buildings after them, presenting them with an award at your next gala, or including them in a press release about your new project.
- Progress updates: Keep your major donors in the loop on how you’re using their gift. Provide timely updates and ask for their input as you do. Clear communication will increase their confidence and trust in you as their charitable giving partner.
- Additional ways to help in the future: Let your major donors know about volunteer events, upcoming projects, and other ways they can continue to be involved and help out in the future. Doing so shows them you value their contribution and want to keep them as a part of your community.
Grow Your Nonprofit’s Work Through Major Gifts Fundraising
Starting or growing a major donor fundraising program can seem like a big undertaking. However, these are an important cohort of donors who can make a big impact on your nonprofit’s mission-driven work. By learning the basics of major donor fundraising, you’ll be ready to move through the four phases of the major gifts fundraising cycle.