12 Days of Major Gift Fundraising - Day 4: Identification

Unlock the secrets to successfully identifying major gift donors and elevate your nonprofit’s fundraising game. Our latest episode promises to transform how you approach potential donors by aligning with your organization's core principles. Discover practical guidelines like the "10 times the average annual gift" rule and Nathan's "holy smokes" moment that redefines major gifts. We delve into setting internal thresholds for donor categorization and highlight the crucial role of individual donors, who make up a staggering 70% of charitable gifts annually. This episode is your guide to understanding and leveraging the power of individual contributions, even when surrounded by the allure of grants or corporate gifts.

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Chapters

• 0:07 Identifying Major Gift Donors Training
• 9:36 Identifying Major Gift Donors Process
• 19:02 Prioritizing Major Gift Donors for Qualification

Transcript

Nathan Ruby: 0:07

Welcome to the Practice of Nonprofit Leadership. I'm Nathan Ruby. Well, here we are on day four of the 12 days of major gift fundraising, where we covered some prerequisites. By the time this series is over, I may be able to say prerequisites I got to choose an easier word next time but either way, prerequisites so that we are fully prepared to maximize our major gift program. Now one word of caution Don't overlook your organization's vision, mission, values and pillars. Resist the urge to just skip over that, because it might take a little bit of time and it's going to be a little bit of hard work. We spent time going over those things because it's important. Don't skip it.

Nathan Ruby: 1:02

Okay, so today we are talking about identifying major gift prospects. So where do we find donors who have the potential for making larger gifts? Now, our output here today is actually a list, and that's it. When we're identifying prospects, the output is a list. We want to list one through 10 or one through 20. And it's a list of prospects who we think might give us a larger gift than our typical or regular donors.

Nathan Ruby: 1:37

Now, before we get into that, into identifying and how we're going to pick those out, let's start with how do we define what a major gift is, and I do get asked this a lot. Whenever I'm talking about major gifts it's a question that comes up pretty frequently and the answer is there's really no hard or fast definition of what a major gift is. You, the executive director or the fundraiser, you get to define what a major gift is for your organization. Now there are some typical rule of thumbs that you could use to kind of help you figure out what that is. So one rule of thumb you could use is 10 times what your annual average giving is. So if you have, let's say, that your average gift is a hundred dollars, that's a pretty typical average of a hundred average gift of a hundred dollars. So if you were going to do 10 times that, then a major gift would be a thousand dollars. So anybody who gives you a gift over a1,000 would qualify to enter into your major giving program or your major giving process. $250. If that's your average gift, well then it's $2,500. So a 10X 10 times your regular gift. That is a way to define what a major gift is for you. Now another way, another rule of thumb, and there's not much science behind this. This is a little bit more on the art side of the equation, but I call it the holy smokes rule, and that is, if you get an envelope, you open the envelope, you pull out the check and, without even thinking, you utter the words holy smokes, then that's going to qualify as a major gift. So there you go.

Nathan Ruby: 3:34

There's two rules of thumb. You get to set the number and don't get too wrapped up on it, because you can always change it later. You can raise it, you can lower it. This number is internal. It's something that you're always change it later. You can raise it, you can lower it. This number is internal. It's something that you're using in-house. You're not publishing this, you're not putting it into a newsletter or an email.

Nathan Ruby: 3:54

And what we're looking to do here by defining a major gift amount, is that we're looking to set a threshold so we know which donors are going to go into the major gift process and which donors are not. So effectively, we are sorting donors You're going over here, you're going over here and it doesn't mean that we're treating one group better and one group worse, but we are going to treat one group different than the other group. We are treating the groups differently and we need to know who's going to go into which group, and by setting a major gift level. That is your, that's your decision point of whether they're going into this group or that group. So that's how we do that. Now, I don't want you to be confused on this and I don't want you to overthink this, so if this doesn't make sense, send me an email. My email is going to be in the show notes for this episode. Our Tim's and my emails contact information is always in the show notes. If this doesn't make sense to you or you want to talk a little bit more about it, shoot me an email and we'll talk through it. I don't want you to be confused by this. So if you've got questions, send me an email. I'll be happy to talk through with you and help you get it set right for you and your organization. Okay Now, yesterday, in day three, at the end of the show, I asked a question of where did you think your, where do you think your major gift donors are going to come from?

Nathan Ruby: 5:28

What? Where do you think the best prospects will be? Where will you find them for your major gifts program? Well, the answer is individuals. Individual donors are always going to be your best source of prospects for major gift donors. Now, year after year after year after year, for decades. When they do, when the national, they have national research organizations and they do you know the year of giving 2023, 2022, what, what you know, every year they do these things. And then there's always a pie chart of where are charitable gifts coming from individuals, corporate grants, they have different categories. Almost always, individuals are about 70%, sometimes 71, 72, 73, 68, 69, 70, right at the 70% mark for decades, and they are it's not even close. By far the most funding for your organization is going to come from individuals.

Nathan Ruby: 6:36

Now, there may be some exceptions. You may be an organization that is heavily grant funded through state grants, and okay, so your funding is grant funding. But when it comes to pure charitable gifts, pure charitable funding, it is going to be the individuals are going to be your best source of major gift prospects. Now, another caveat to that is you may have a in a strong relationship with a corporation or a foundation. You may have a board member who is the owner of the largest company in town, or might be the president or the vice president have access, and that's totally awesome, and if you have that, you absolutely want to pursue that. But again, for most of you the vast majority of you your best prospects are going to be individuals, and so that's where the low hanging fruit is. So that's what we're going to focus on as we're talking about our setting up, our major gift prospects and today, specifically talking about how do we identify them.

Nathan Ruby: 7:39

So here we go. We want to look for people who are effectively raising their hand saying come talk to me about a larger gift, come talk to me about being part of your major gift program. And so how do people raise their hands? All right? Well, there's three different ways that they do that. One is what I want you to do is I want you to take your donors and add up their total giving for the last three years. Add it all up, I don't care where it came from. They may have sent a check in a direct mail letter that you sent them. They may have bought four tickets to your gala. They may have won a silent auction bid. They may have given online, I don't care where it came from. I want you to add up everything that they've given over the last three years. Then rank those donors from number one through number 10, 15, 20. I wouldn't go any more than 20 for this, 10 to 15 is probably more reasonable. So what does that look like? So let's say Joe and Sandy Blake, and they gave from all their sources over the last three years. They gave a total of $10,200. Okay, that's your top donor over the that three-year period. So they go into the number one slot. Number two, uh, let's see John and, uh, susan McIntyre. Uh, and they gave from all sources, all the, all the things that they gave to you over the last three years. Let's just say $9,000 over the last three years. They're your number two donors. So they go into the second slot and you go one, two, three, four, five, all the way down to 10 or 15, whichever ones that you want to do.

Nathan Ruby: 9:36

A couple of questions that come up usually when I talk about this why three years? Well, we are looking for a pattern and we're looking for a recent pattern and we're looking for consistency. So we want somebody who is giving in a pattern, giving consistently and giving relatively currently. So if you have a donor who gave 15 years ago but they haven't given in the last three years, I'm not saying that they're not a prospect or that we couldn't bring them to be a prospect, but that's not where we want to start. We want to start with our most current donors that are giving consistently, that are our biggest donors. All right, so that's what we're looking for. So if somebody's giving every year for three years and they've got this total, that's what we're looking for they're raising their hand, saying come talk to me, all right.

Nathan Ruby: 10:34

Well, what if I don't have any donors that have given, you know, $10,000 over three years? What if I don't have donors that are that big of donors? Doesn't make any difference. It is. The concept is the same. If your top donor gave $10,000 or $5,000 or $2,500 or $1,000 or $500, doesn't make any difference the size of the gift it is, you just rank your donors one through 10, one through 15. So it works with large, with big amounts, but it also works with smaller amounts. What if I don't have three years of data? I had one organization I worked with a couple of years ago and they had no data at all. They've been an organization for years and years and years and they had no giving data whatsoever. So it does happen.

Nathan Ruby: 11:25

You may not have a database, you may not have all of this nice data easily accessible. And I will say if you don't have three years, use what you have. If you only have a year, go with a year. If you have two years, go with two. If that's all you have. If you don't have any data, that's probably beyond the scope of our series that we're in. If you don't have any data, that's probably beyond the scope of our series that we're in. If you don't have any data, send me an email, reach out to me, and I've got some suggestions for you to help you get started. But that's outside of our conversation today. So use the data that you have.

Nathan Ruby: 12:00

Number four what if I have more than three years of data? You may have 15 years going back in the database. For now, we're going to stick to the three years. Just use the three years for now, and then, as we get more advanced, as you go through the series here and then you go through the donors that we're going to be talking to, that you're going to be talking to, we can. We can expand that. We could get a little bit more advanced as we.

Nathan Ruby: 12:29

So we've got our donors that have our one through 10 or one through 15, whichever you want to do. So we have those donors on a list. The second thing that we're looking for for people raising their hand saying come talk to me, is I want you to go through that, through that list not the 10 or 15 people that you've already, uh, that you've already got on your list other people than them and look over those three years and look for things that stick out. Um, so, if your number one donor is $10,000, that over the that they gave each year for the three years, but you have a donor, uh, two years ago who gave uh, $4,500. Um500, and your list of of that we went through with your that gave each year for three years and those top donors. So you know your top donor was 10, 10,200. What do we have? That was the let me go back up here that was the Blakes. They were 10,200. We had the McIntyres at 9,000 and we went down and your 10th donor was let's just say, for easy math, it was $5,000 was your 10th donor. But you had a donor two years ago who gave $4,500. So they wouldn't show up on your first list because they didn't give each of the three years and they didn't give enough to make it up into that top 10. But they gave a significant gift 4,500 is a pretty good gift within that same three-year period.

Nathan Ruby: 14:02

I want to talk to them, you want to talk to them, and so you want to add them to this list because there could be, there could be something in there that you know, maybe they got an inheritance, or maybe they sold a business and or maybe they, you know, uh, I don't know who knows what happened, but if they obviously have some capacity. So we want to talk to those folks. So let's say, you know, I would say three, four, five, probably no more than five. Um, so we'll, you know, let's put five, we'll say five, put five of those If you could find them. If you only find two, then it's two. You know, it is what it is. So that's.

Nathan Ruby: 14:42

Our second way is looking for abnormally large gifts over the last three years. And then the third way that we're looking for people to raise their hand is donors that have significant connection to the organization. Now I call these our wild cards. Now they are not on the list because of their robust giving in the past, but we still want to talk to them because of their strong connection with the organization. Now, what does that look like? What would this that look like? What would this donor look like?

Nathan Ruby: 15:17

So they probably respond to every Facebook post you make. They like your pictures, they make comments, they engage with you on social media. They show up at the gala and maybe they bring their neighbors with them or they bring somebody with them. They respond to their, to your direct mail. Maybe they don't respond to every direct mail piece, but for sure you know they're going to respond to at least one every year and you probably know which one they're going to respond to. They've been around forever. They show up. They're probably a volunteer. They may be a volunteer if you have a volunteer program, and so they are. They are a major champion, they're a major supporter and you know that you can count on them.

Nathan Ruby: 16:00

So in this group we are not necessarily like I said, we're not necessarily putting them on here, because we think that they have capacity to make gifts or make larger gifts, have capacity to make gifts or make larger gifts, but they are so passionate about what you do and so excited about the organization, we want to talk to them as well. So let's say I don't know. Let's say another five. And again, if you only have three, then it's three. If it's four, it's four, but I would pick five, kind of shoot for that and see where we go, okay, so those are the three things that we're looking for.

Nathan Ruby: 16:39

So number one was um donors that had given, your top donors that have given each year for the last three years, ranked one through 15. Number two our donors who have made a significant uh gift that up in the last three years, as I'm not going to say a strange gift, that's not it, but just where you say, wow, look at that, that's interesting. So we got five of those. And then we got five of our oh my gosh, these donors, they love us, they show up, they're our biggest champions, we want five of them. Love us, they show up, they're our biggest champions, we want five of them. Okay, so where are we? What do we have here? We have 10 to 15 in our first group, five and five. So now we've got 20 to 25 prospects on our list, and that's what we were looking to do. We were looking in the identification process is we? Our output was to create a list of prospects that we now could take through the rest of the major gift process. So we're off to a good start.

Nathan Ruby: 17:42

Now remember when it comes to fundraising. Fundraising is about relationship and relationships between the donor and the organization, and relationships between the donor and the organization and relationships between the donor and someone within the organization. Now, maybe that someone in the organization is you as the executive director. You own the relationship with that donor. Or it could be a board member, or it could be another donor. It doesn't matter who has the strength of the relationship, as long as they have a relationship with someone in the organization and with the organization itself. That is where your best major gifts come from. So the deeper the relationship, the closer the donor is with you in the organization or with someone in the organization, the closer you're going to get to the maximum gift for that donor. Okay, so well. Hey, we have our list of 20 to 25 prospects. We achieved our goal for this, and that's pretty cool, isn't it? Yeah, it is so all right.

Nathan Ruby: 18:51

Next, what we have to do next is we have to qualify those process, those prospects, to see who is most likely to give a major gift.

Nathan Ruby: 19:02

Will they all write a big check to you?

Nathan Ruby: 19:05

Oh, maybe, I don't know they might. Given enough time, they may all 25. You may have done such a good job with your identification, that all 25 of them is going to write you a check, well above the level that you have set as a major gift. But probably a little more reasonable to assume is that a handful of those 25 will write you a check now or relatively soon, at a level that you probably haven't even dreamed of. And so our job next, then, is to identify, or to figure out, of those 25, who are the most likely to give now or relatively soon, and how do we get in front of them.

Nathan Ruby: 19:53

So that's what we're going to be talking about next Tomorrow. We're going to be talking about qualification, and so taking our list of 25 and then prioritizing those 25, qualifying them as the most urgent to the least urgent, and that's what we're going to do tomorrow. So, excited about that, I hope you're enjoying this. Again, if you have questions, if something's not making sense, shoot me an email. I will answer your questions. I want to make sure that you're tracking with this and that you're on the right page as we move forward with this. So excited to get to tomorrow. I'll see you then. That's all for today, until next time.