Sometimes the pressure of budget setting for a fundraiser on top of everything else can be stressful. Although your charity needs to plan what might be raised next year, it can be easy to end the budgeting process having committed to a target or to phasing that you know isn’t achievable. Which can be hugely demotivating.
Because although major gifts can be transformational, they can also be a tricky customer when it comes to predicting how much will come in and when. After all, people’s personal financial circumstances that might mean they’ve sold some shares so can give a large gift, are out of your control. And if just one forecasted major gift doesn’t come in, you can easily be left with a large gap to target.
Despite this, I often see unrealistic hope and boldness with major donor predictions. There could be that one wealthy individual out there that you haven’t yet met, couldn’t there? They might be able to give £100,000 or more…. Let’s up the target by £100,000 then. I’ve known leadership and fundraising teams to add tens or hundreds of thousands of pounds to a major donor target in a flash.
When all the other income streams don’t add up to what your organisation needs for next year, it can seem a simple fix to add zeros to the major donor target.
A major donor fundraising target of £1.1m The previous year’s income £85k A charity with an 18 month old major donor fundraising programme.
This was how I started a role heading up a major gifts team over a decade ago. This was quite some growth that had been predicted -13 times more income in a year! I assumed (never assume!) or hoped there were opportunities and a pipeline behind the target. On further investigation, this wasn’t the case. Someone decided that major donor fundraising must mean millions of pounds of income.
With such an unachievable goal, the major donor fundraiser had, unsurprisingly, become demotivated. In my first few weeks on the job, with 3 months of the year to go, I had to report a significant risk to income.
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We desperately want to raise more for our causes and often you will be able to through an effective major donor fundraising programme. It’s vital to identify new potential major donors (not from the Rich Lists!), and plan for some new major donors rather than just rely on the same donors giving again.
So how can we plan for this growth through exciting new opportunities but keep our feet on the ground with a healthy dose of realism?
Here are 5 top tips to having more confidence in your major donor budget:
1. Resist the temptation to just increase last year’s figure
You increase last year’s income by 50% — because you’d like to see 50% growth. This is a very quick way of setting a budget but it isn’t robust. Let your opportunities and your plans (see 2, 3, and 4 below) tell you what that growth figure should be.
2. Identify confirmed pledges
List your pledges and the value – major donor income that is 95%-100% likely to come in because of donor commitments or past giving behaviour. If you don’t have any or many pledges, consider multi-year asks to the right donors, so when you look at pledges in 12 months time, you’re not starting over again.
3. Build a pipeline of named major donor fundraising opportunities
Sound obvious? Many fundraisers use pipelines, especially for trusts and foundations. However, it’s amazing the number of organisations I work with that have major donor budgets without a pipeline behind them.
You can use your caseload/list of existing and potential major donors here but don’t just add a name of a “cold prospect”. Only include people who you know are high-net-worth and where there is some connection to your organisation. Some charities only include someone in their pipeline once they’ve met or had a conversation with them.
Estimate a gift amount for each person — this can be uncomfortable for those you know less well, but still include it. Although it may fee like a “guestimate” it’s a lot better than a top down budget figure being given to you. When you’ve added the estimated gift value, include the percentage likelihood of success. If for example, you estimated a £20k gift with a 50% likelihood, you have £10k going towards your budget.
4. Consider those major donors you don’t know
This is the trickier element – you might not want to limit your major donor fundraising programme just to those individuals already on your radar. You may have meetings coming up where you’re likely to get some introductions to new potential major donors. You might be investing in some wealth research. As your budgeting might be taking place 15 months out from the end of your next financial year, you could have time to develop some of these new relationships within the year and for some of those people to give.
However, it’s easy to let the hope and ambition edge up to unrealistic levels and you could end up adding extra zeros to your budget without basis. It’s a judgement call.
5. Educate and challenge
Some of you will have finance colleagues, your line manager or CEO who talk through your budgets & challenge you. And you may need to assertively challenge back when they propose significantly increasing your budget! Although this can feel like a negotiation or tussle, saying out loud why you’ve made certain decisions and discussing the judgements you’ve made is crucial. Particularly as the decision you make about one major donor could influence your entire target. It’s also vital for others’ understanding of major donor fundraising. The more you discuss the reality of working in your role the more you are building a culture of philanthropy E.g. by explaining the time it can take from identifying a potential donor to meeting with them, or sharing anecdotes of unpredicted major gifts coming in that didn’t bear any resemblance to the forecast! Because at the end of the day, we’re talking about humans and relationships – these can’t be accurately predicted. Although your organisation will want to budget, having others who understand the nuance of this income stream is vital.
6. Perfection isn’t possible with budgeting!
Did you smash your figure? You obviously weren’t ambitious enough! 🙄
Did you not manage to reach it? There’s a hole in income…
This may sound familiar. Don’t aim for complete accuracy, because it will never be possible.
DO aim for a budget that is looking for new opportunities, but one that you truly believe you and your team could achieve.
Louise Morris is the Founder of Summit Fundraising. She is a major donor fundraising specialist and has worked with over 200 charities helping them raise large gifts.
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Who are major donors for your charity?
I’m on the Board of trustees meeting for a regional charity, I’m the Fundraising Director. We’ve got a gap to reach our income target for the year. After discussing the plan to close the gap, one trustee mentions that Antonio Banderas has recently moved into the area.
This seems to be changing the subject and I have to coax him to understand his comment. “Well, wouldn’t Mr Banderas be able to donate a large sum to the charity because he is incredibly wealthy after all?” !!
Have you got your eye on those millionaires on the Sunday Times Rich List? It’s published annually in Spring in the UK and there are levels of wealth that are almost unimaginable. There are also a lot of fundraisers, Chief Executives and trustees for whom it becomes a huge distraction. If your charity is serious about its major donor fundraising please ignore it.
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Why? Well there are three things your charity needs to bear in mind when deciding who to try and build a relationship with, to hopefully secure a major gift. We can take Antonio as an example here:
1. You need a LINK to the person
Who can introduce you to this person, persuade them to come to an event, or to have coffee with the charity Chief Executive or Chair? Some of your trustees may know high-net-worth individuals. If you identify an existing or past supporter as being high-net-worth, you may well have contact details and permission – you can then start communicating with them in a different way. Did anyone at my charity know Mr Banderas? Unfortunately not. We didn’t know his agent either. A letter from our Chairman, however wonderfully worded, would have wasted time and resource.
2. They must have an INTEREST in your type of cause or charity
Are you a small local community charity, but this individual seems to fund wildly different projects internationally? Or is this person passionate about climate change, and you think your environmental work could be right up her street. All causes are worthy. Put yourself in the philanthropist’s shoes; they’ll follow their passions and interests; you should too. Mr Banderas? He hadn’t funded any similar causes and showed little interest in the local community.
3. The ABILITY to give
With the Rich List, this is the easy part. The logic goes that they are rich, so therefore they could easily give a large gift to the charity. £10,000 or £100,000 or £1million – it wouldn’t be much for them would it? In major donor fundraising we should focus on building really personal, tailored relationships with those who have got wealth. Those on the Rich List have wealth. Mr Banderas? A big tick for this one
The logic goes that they are rich, so therefore they could easily give a large gift to our charity. £10,000 or £100,000 or £1million – it wouldn’t be much for them would it?
However, without a link to them, without them having an interest, you’ll be wasting precious charity resource at a time when you and your teams are stretched! This is before taking into consideration that philanthropists are approached by hundreds of charities per year with those on the Rich List are likely approached by thousands.
Quite simply – don’t become distracted by the list. Please don’t ask your team to follow up with people on the Rich List, and if you know all of this as a fundraiser, make sure you’re not distracted and are armed with an assertive response to why you won’t be focusing on it.
Whatever size your organisation is, we work together to focus on how you can build relationships with those individuals who are most likely to give a large gift.
Whether you are getting some major donor gifts already but want a more proactive major donor programme, or whether you’re setting one up for the first time, this approach works! You will raise more large gifts!
Louise Morris is the Founder of Summit Fundraising. She is a major donor fundraising specialist and has worked with over 200 charities helping them raise large gifts.
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Don’t make the same mistake as Dominic Cummings with your key donors
Dominic Cummings appears to be going to great lengths to hide the truth. His story of travelling to Barnard Castle to test his eye sight seems unlikely and ill-judged at best, insulting, patronising & contrived at worst. Any trust ratings of Cummings right now would surely be rock bottom and it’s easy to scorn his approach.
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All of the bluster and spin got me thinking about the third sector – as charities when things haven’t gone quite to plan with projects, when we’ve made mistakes, we’ve often thought how we can spin the truth with our donors. We sometimes think that a project delayed will reflect negatively on our charity and discourage future support from key individuals. We might get a sinking feeling when we read survey results from a new project – the transformation we hoped to see in our beneficiaries lives in reality is not quite as dramatic as we’d hoped. I remember managing a capital appeal and being terrified when we realised there could be a pause in the build. We became preoccupied with how we would explain this to key major donors and funders. We spent much time ‘spinning’ the challenges we were facing delivering our work.
And no wonder. Innovation and failure aren’t yet widely seen as a positive and inevitable part of progress in the non-profit sector. In his world-famous Ted Talk, Dan Pallotta talks about the inability for charities to take risks compared to the for profit sector.
Yet many of your major donors and funders will be in the world of business. They are well aware that projects don’t stay stagnant, that challenges crop up continually, that mistakes get made, that progress doesn’t get made without risk. It is how these challenges are dealt with and communicated, and what your charity learns from them that’s key. This will not be lost on your donors.
When working with CEOs and fundraising leads I often see the dread of telling bad news. So the call to update the donor is put off, the report that’s due is cobbled together with an unrealistically positive spin and emailed across (with the hope no questions will come back.)
Yet most of the time, when someone in the charity has had the difficult conversation , it’s been rewarded – with understanding, and appreciation for the learning that things not going 100% brings. A disability charity I worked with phoned a key funder when a project had to be delayed because they hadn’t raised enough from other sources. They thought that would reflect really badly on them – a failure in getting others to support the project. In reality the donor understood what a challenge it was, knew that the charity wasn’t an obvious cause to support, and offered to increase their contribution to the project.
So although it might be uncomfortable, remember to do what Dominic Cummings and the government haven’t – have honest conversations with your donors that build trust and respect of you and your charity. Don’t try and pull the wool over their eyes – because they’ll spot it a mile off, just as those of us who watched the bank holiday Monday briefings by Cummings and Johnson did.
Louise Morris is the Founder of Summit Fundraising. She is a major donor fundraising specialist and has worked with over 200 charities helping them raise large gifts.
