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The Architecture of Major Donor Cultivation

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The Architecture of Major Donor Cultivation

  1. 1. The Architecture of Major Donor Cultivation, Part I October 16, 2013
  2. 2. 1. Why major gifts? 2. How to develop your case 3. Finding, rating and prioritizing prospects 4. The culture of giving and asking
  3. 3. Objectives for This Morning’s Training • Provide understanding of what a major gifts structure looks like • NOT an exhaustive review • Focus on practical things that a very small team or individual can achieve • You should leave this morning with several concrete ideas that can be implemented quickly to start achieving results 1. 2. 3. 4. How to identify and prioritize a prospect How to cultivate How to solicit How to steward
  4. 4. Introductions • Your name and your organization • What big idea or belief inspires your organization? • Limit to one sentence
  5. 5. The Benefit of Individual Major Gifts Defining major gifts Highest ROI Fastest and most reliable path to increased fundraising Changing funding priorities from a few foundation donors can be hard to weather without diversified sources • Helps cultivate and recruit potential leadership and influencers • Complementary to other forms of fundraising • • • • • Foundations like to see robust individual giving • Direct face to face feedback can improve your case for giving
  6. 6. Real world example 1 Annual Fund for ORGANIZATION X Total giving FY  ‘11-12 Major Gifts $50k - $99k $25k - $49k $10k - $24k $5k - $9k Community Giving $2.5k - $4.9k $1k - $2.4k $1 to $999 TOTAL # $ # Cumulative $ % 1 3 14 23 $50,000 $93,400 $152,570 $132,766 1 4 18 41 $50,000 9% $143,400 26% $295,970 55% $428,736 79% 24 25 21 111 $73,113 $34,463 $6,203 $542,515 65 90 111 $501,849 93% $536,312 99% $542,515 100%
  7. 7. Real world example 2 5-Year Annual Giving to ORGANIZATION Total giving 1E+12 $2M + $1M - $1.9M $500k - $999k $250k - $499k $100k - $249k $50k - $99k $25k - $49k $10k - $24k $5k - $9k $2.5k - $4.9k $1k - $2.4k $1 to $999 1 3 4 10 31 47 71 209 385 627 2,021 36,649 TOTAL 40,058 # $ # $2,500,000 1 $4,276,696 4 $2,504,371 8 $3,458,744 18 $5,036,014 49 $3,190,236 96 $2,326,005 167 $2,963,555 376 $2,518,684 761 $2,070,990 1,388 $2,881,612 3,409 $5,250,907 40,058 $38,977,813 Cumulative $ $2,500,000 $6,776,696 $9,281,067 $12,739,810 $17,775,824 $20,966,060 $23,292,064 $26,255,619 $28,774,304 $30,845,293 $33,726,905 $38,977,813 % 6% 17% 24% 33% 46% 54% 60% 67% 74% 79% 87% 100%
  8. 8. Nonprofit Funding Sources Source: GivingUSA 2013 report
  9. 9. Case for Giving Major Gift Fundraising Success
  10. 10. Individual Major Gift Program What you need to have in place or develop: • Commitment to creating relationships between prospective donors and the organization • Staff and/or volunteers willing and able to cultivate and solicit • People who are willing to leverage their own generous giving • Qualified prospects • • • • Upside •High ROI •Fastest and most reliable •Protects against foundation funding • • changes •Helps cultivate leaders •Complementary to other fundraising •Get new ideas and feedback • • Cultivation and engagement plans Well-articulated, compelling case System to track progress and manage solicitors Follow-up for acknowledgment, billing Downside Many people don’t like to solicit People are reticent to ask friends, family and colleagues Smaller number of asks compared to other methods Smaller reach and therefore less community building 10
  11. 11. Case for Giving Major Gift Fundraising Success
  12. 12. Components of the Case for Giving What is our core belief? What do we hold dear? What’s our history & what makes us special? What are the most pressing problems we are trying to address? How do we measure success? Why is the plan likely to work? What is the plan to get there? What does future success look like? How much will it cost? How will we raise the $? Why do we exist? ACTION: $ or Time 12
  13. 13. If you answer nothing else… • What is your core belief? • What problems/opportunities are you going to address? • What is your solution/plan? • What is the cost to execute your plan? • What does success look like?
  14. 14. Case Study
  15. 15. Belief The most important job in the world is taking care of a child. And when a child is very sick, families need to be together.
  16. 16. Problem/ Opportunity Thousands of families a year come to UCSF from around the country for care of their critically ill children. Without support, many would have to sleep in their cars, or in hospital corridors. And when the UCSF Benioff Children’s  Hospital  opens  at   Mission Bay, the need will double.
  17. 17. Solution/Plan Family House is the home away from home for families of children with cancer and other lifethreatening illnesses. It is a place to stay and a community to rely on, right next door to the hospital. We will double our capacity by building a new Family House in Mission Bay.
  18. 18. Cost 3-YR. INITIATIVE EXPENSE DETAIL 3-YR COST Ongoing Operations Build a New Family House $3,0000,000 Construction Item A $23,800,000 Item B $5,000,000 Item C $6,200,000 Endowment $5,000,000 Total $43,000,000
  19. 19. Vision No family being treated at the hospital will be turned away from Family House if they are in need of our help.
  20. 20. Discussion/Workshop DISCUSSION • What worked or didn’t work about Family House’s introduction? WORKSHOP • You all developed your organizations’ value propositions yesterday. What is the central problem/opportunity in the world you are trying to address? • Do you have a bullet point version of your plan? • How well does your budget map to the plan? • What is your ramp-up period? How many years are you putting together in your budget?
  21. 21. Exercise • Pair up with someone next to you from another organization. • Tell each other the brief introduction we just worked on
  22. 22. Case for Giving Major Gift Fundraising Success
  23. 23. Probable Donors • Where to find • How to prioritize • DISCUSSION: Where would you look?
  24. 24. Where to Find Probable Major Donors • Existing donors, big and small • Existing board, volunteer leadership and their networks • Friends, family, professional, and nonprofit colleagues • Publicly published donor lists from organizations with related missions • Ask existing leadership and supporters for information about and entrée to those people • Program participants • Your personal network
  25. 25. How to Prioritize Prospects • 6 key indicators: 1. 2. 3. 4. Have they given to you before? Can they afford a “major gift?” Do they make gifts this large to other organizations? Are they likely to care about the problems you are addressing? 5. Do you have access to them? 6. Have they volunteered or participated in your programming? • Establish a likely ask amount
  26. 26. Discussion & Exercise DISCUSSION • Imagine your ideal donor. What qualities do they have? • If you gathered together the 50 best donors for your organization, what do they have in common? EXERCISE • Write down the names of at least 5 potential major donors • Rate them 1-5 in each of the areas
  27. 27. Other Sources of Information to Prioritize Probable Donors • “Key informants” currently active in your organization • Online research • Free: Google, Blockshopper, public business filings, etc. • Subscription: NOZA, WealthEngine, ResearchPoint • Face to face conversation
  28. 28. How many prospects do you need? • Depends how much money you are trying to raise • As a rule of thumb, you will need to have 3-4 prospects identified for every major gift you are trying to secure • If you hope to get 3 gifts at $10,000, you should have 9-12 qualified prospects at that level, etc.
  29. 29. Gifts Needed for Sample Fundraising Effort Gift payable over x years Projected Gifts Needed # $ 1 $50,000 2 $50,000 3 $30,000 6 $30,000 8 $20,000 $50,000 $25,000 $10,000 $5,000 $2,500 Major Gifts Subtotal 20 $1 - $2.4k Many TOTAL many $180,000 $25,000 $205,000
  30. 30. Prospects Needed Gift payable over x years Projected Gifts # of Identified Prospects Needed Needed # $ 3 to 1 4 to 1 Identified 1 $50,000 3 4 3 2 $50,000 6 8 3 3 $30,000 9 12 14 6 $30,000 18 24 16 8 $20,000 24 32 40 $50,000 $25,000 $10,000 $5,000 $2,500 Major Gifts Subtotal 20 $1 - $2.4k Many TOTAL many $180,000 $25,000 $205,000 60 80 82
  31. 31. Case for Giving Major Gift Fundraising Success
  32. 32. Major Gifts Cultivation • Face time • Small cultivation events • Site visits • Participating in programs • Volunteering in programs • Written communications • Highly personalized (email or letters/updates) • General (online, social media, email newsletter, annual reports, etc.)
  33. 33. Face Time: Activity Needed • We are seeking 20 gifts, and we determined we need between 60 and 80 prospects • Assume on average it will take 2 or 3 visits to cultivate and close. • 150 to 200 prospect visits • Assume you have 1 ambassador for half of the visits, and 2 ambassadors for the other half • 225 to 300 ambassador visits • May seem daunting, but if E.D. does 3 visits a week, that’s 150 in a year.
  34. 34. When and How to Solicit a Major Gift • Major gift fundraising is the art of asking for the right amount for the right purpose at the right time by the right person • You are ready to solicit a major gift when: 1. You have confirmed that a donor supports the mission of the organization 2. You understand the interests, needs and concerns of the donor 3. You are sure they understand your plan, what it costs and the type of gifts that you need
  35. 35. Gift Chart Gift payable over x years Projected Gifts Needed # $ # $50,000 1 $50,000 1 $25,000 2 $50,000 3 $10,000 3 $30,000 6 $5,000 6 $30,000 12 $2,500 8 $20,000 20 Major Gifts Subtotal 20 $180,000 20 $1 - $2.4k many $25,000 many TOTAL many $205,000 Cumulative $ $50,000 $100,000 $130,000 $160,000 $180,000 $180,000 $205,000 % 24% 49% 63% 78% 88% 88% 100%
  36. 36. Giving Circles • Good for public recognition and stewardship • Role models generosity • Demonstrates you have secured support from other thoughtful people • Raises sights of giving • Example: • • • • “Angels” at $25k and up “Benefactors” at $10k and up “Pioneers” at $5k and up “Friends” at $1k and up
  37. 37. UNDERDEVELOPED National Study of Challenges Facing Nonprofit Fundraising A joint project of CompassPoint and the Evelyn and Walter Haas, Jr. Fund
  38. 38. UNDERDEVELOPED • Culture of Philanthropy • A set of values and practices that support development • Most people act as ambassadors and engage in relationship building • Everyone promotes philanthropy and can articulate the case for giving • Fund development is valued as a mission-aligned program of organization • Organizational systems are established to support donors • The ED is committed and personally involved in fundraising • ~ 50% of Development Directors expect to leave within 2 years • ~ 33% of ED’s are very satisfied with their Development Directors
  39. 39. UNDERDEVELOPED • Smaller nonprofits struggle to compete with larger organizations with experienced Dev. Dir. • It’s about more than one person • Many nonprofits lack basic fundraising systems and plans • Executives say Board engagement in fundraising is lacking • One in four executives report they lack the skills and knowledge to secure gifts and one in five don’t particularly like doing it • Many nonprofits do not have an organizational culture that supports fundraising success
  40. 40. Creating a Culture of Giving and Asking • Board • Role model audaciously generous giving • Help introduce, cultivate, and solicit • Fellow board or staff to meet annually in person with each board member to solicit and create a development activity plan • Staff • Show how a discussion about giving can be celebratory, meaningful, and enjoyable • Role model how to deliver the case for giving • Be the Ambassador-In-Chief • Inspire and support others • Track and celebrate board and staff activities • # of visits • Hosting events • Making thank you calls, etc.
  41. 41. Stewardship • Most donors stop giving because they feel underappreciated and they don’t feel their gift has had an impact • Best way to build a major gift program is to retain and upgrade existing donors • Stewardship should be specific, tiered (donor circles) and do-able
  42. 42. Sincere Stewardship* • Stewardship begins with delivering the promised benefits and reporting on them. • Stewardship is designed to confirm the donor's wisdom in making the original gift and to draw him or her closer to the organization. • Should not be left to chance, but should be part of a structured plan. • What differentiates true stewardship from mechanical gift acknowledgement, however, lies in doing the unexpected — in communicating with donors not because it is part of a plan, but because donors are your organization's best friends. • An attitude that should permeate your entire program. * Definitions taken from Corporation for Public Broadcasting, Major Gift Initiative 42
  43. 43. Sample Excerpt from a Stewardship Plan • Donors $2,500+ • Receive thank you call from ED or President within 24 hour of making pledge/gift • Personal thank you note sent within 48 hours of receipt of gift • Invitation for in-person update with President and ED at least one time • Two written “behind-the-scenes” updates (mid-year and end of fiscal year) • Personal note from a client in the summer • Holiday card has personal note from a staff or board member connected to the donor • All other communications sent to rest of donor base (annual report, newsletter, etc…)﴿ 43
  44. 44. Recap • Develop clear, compelling answers to the basic case for giving questions • Identify and prioritize major gift prospects, and establish a likely ask amount • Engage board/volunteers in fundraising and start by soliciting them the right way • Get comfortable being Ambassador-In-Chief by getting out and building personal relationships with potential major donors • Develop a stewardship plan to retain and upgrade existing donors

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