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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Why Major Donor Fundraising?
You might think there’s potential in major donor fundraising but need to influence internally to get the investment and focus to succeed. Read on for 3 key points with supporting evidence, that you can use in a case to invest in major donor fundraising:
1. You cannot develop major donor fundraising without investing
This is a basic truth. Major gifts can be transformational for your cause. Return on investment for an established major donor programme can be 9:1 within 2 years and you should be able to break even or return 2:1 in the first year. However, one of the biggest reasons I see for the failure of organisations to raise large gifts from major donors is a lack of consistent investment:
Fundraisers are there for 12 months and then their post is cut.
Charities send a donor a thank you card for their £50,000 gift but the resource isn’t there to do anything else (and the donor unsurprisingly stops giving).
Someone is tasked with some network mapping and major donor development, fitting it around their already stretched role; and then major donor income doesn’t grow.
One of the biggest reasons I see for the failure of organisations to raise large gifts from major donors is a lack of consistent investment. Fundraisers are in post for 6 months and then their post is cut; or a donor is sent a thank you card for their £50,000 gift but the resource isn’t there to do anything else.
When I was at Unilever we wouldn’t have dreamed of planning for growth without investing in a product line. So why do some charities think it’s possible? Is the third sector saying it will increase fundraising targets by £50,000, £100,000 or £500,000 based on hope? You can’t develop major donor fundraising and build great relationships with the same level of resource. Investment is needed to confidently raise more large gifts.
2. The wealthiest have more financial resilience and are getting richer
As the rising cost of living truly hits I’ve come across some staff and trustees who maintain that “our wealthy donors are also going to be struggling.” Let’s look at some evidence:
Giving by the wealthiest is often elastic. Research by Dr Beth Breeze, Director, Centre for Philanthropy at the University of Kent, shows that major donors often add new charities to their portfolio of giving (rather than have a ‘one in, one out’ policy and a fixed giving budget).
After the Global Financial Crash in 2008 major donor income held up, and some donors increased their giving.* Some major donors’ investments and industries were shaken by the global pandemic and are uncertain moving forward. This means some might not be in a position to give today, but that doesn’t mean they won’t give later when they have more certainty over their businesses and affairs. Other industries have flourished over the past few years with high-net-worth individuals feeling increasingly financially secure (see below).
Many of the richest are getting richer. Oxfam International’s 2022 Report “Profiting from Pain”** evidences how wealth has soared since the COVID-19 pandemic as companies in the food, pharma, energy, and tech sectors grew rapidly. We need to understand that even in a cost of living crisis, not everyone is going to be affected, and be aware that some people are going to be better off.And this wealth creation is not incompatible with major donor fundraising – I’d recommend In Defence of Philanthropy by Beth Breeze for anyone who struggles to make sense of society’s inequalities in the context of philanthropy and major donor fundraising (as I have at times).
We need to understand that even in a cost of living crisis, not everyone is going to be affected, and be aware that some people are going to be better off. The rich of the world are getting richer. There are more millionaires and billionaires than ever before.”
3. You need to start today
To succeed in major donor fundraising you need to be having conversations with your existing and potential major donors to understand their world. A CEO I’ve been working with phoned a major donor and realised how uncertain the donor’s business was. The CEO, therefore, didn’t talk about giving! However, he did ask to keep in touch and six months later the donor gave £20,000. Major donors give at a time that’s right for them.
If you’re not having conversations now though, why would a donor give to you in 6 or 12 months time? The one on one relationship building in major donor fundraising gives us a tremendous opportunity to develop these relationships for lifelong giving, at high levels.
To succeed in major donor fundraising you need to be having conversations with your existing and potential major donors today for giving 12-18 months on from now. How many conversations are you having?
I’m often asked if a charity’s cause is in the right or wrong area for major donor fundraising. There are no wrong or right causes! Make your charity’s reason for existence and impact relevant and urgent and you can raise large gifts! I do not know a charity whose beneficiaries or cause area hasn’t been affected by the pandemic or the cost of living increases.
Your organisation is relevant.
It’s about finding the potential major donors who care about what your charity is trying to achieve. That could be climate change, the dwindling of the arts in the local community, families going hungry, or finding cures and treatments for a rare disease. Professor Jen Shang’s research, the world’s leading philanthropic psychologist, shows us that charities are in a unique position to build deep connectedness with their donors.
Philanthropy means love of humankind after all. This is more relevant than ever, with the growing problems in society becoming more and more apparent. High-net-worth individuals are the people that could enable your cause to survive and to thrive. If we want to partner with them, we need to invest in our major donor fundraising and in the fundraisers and leaders pivotal in building these relationships.
If you’re ready to invest to take your major donor fundraising to the next level, Summit Fundraising’s flagship programme, Major Donor Fundraising from Scratch could be for you. Check it out here or get in touch if you want to talk through what support would be right for you.
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.
