How well do you understand your major donors?
Not being prepared for a fundraising meeting is a mistake you should only make once. I remember the embarrassment and panic that struck when during one of my first fundraising meetings the prospect asked for a more granular breakdown of costs than I was prepared for. What was a warm lead turned cold the second I fumbled through my papers and had to admit that I didn’t know. Their response was kind, but they clearly lost confidence in our organization and in me.
Major donor solicitation needs to be treated with respect. We are no longer asking for a gift in exchange for the price of coffee, we are stepping into an arena where the donor, and their family, their financial advisors, and other philanthropic organizations, all have a deep stake in the process. Each step of a major donor solicitation should indicate a high degree of knowledge about the donor and respect for the investment that we are asking them to make. Personalization and due diligence is everything.
In order to prepare your organization to manage a major donor solicitation, and hopefully a major gift, time and effort need to be invested upfront in, (1) developing personalized, accurate, in-depth proposals, and (2) preparing the organization to be able to accept and manage the gift through the development of a gift acceptance policy.
The Personalized Proposal
A successful major gift proposal should include: (1) an acknowledgment of the time, effort, past engagement of the individual, or family, with the organization, (2) a clear outline of the project, or initiative, that you have determined is most aligned with the prospective donor’s interests, and (3) present a gift amount, acknowledgment and stewardship plan, and reporting structure that shows a great deal of knowledge of the prospective donor’s short-term and long-term intentions regarding their philanthropy.
Feeling daunted by this task? You are not alone. Getting to know the interests, passions, and expectations of a major donor prospect can be especially challenging. Often high net worth individuals make it a point to not advertise their giving priorities and can be difficult to engage in personal conversations prior to a formal meeting. This is where I rely on data developed from years of research and analysis such as the Bank of American, U.S. Trust Study of High Net-Worth Philanthropy, for which I worked as a research analyst. The insights from this study continue to help inform me of the priorities and preferences of high net-worth prospects and make the major donor proposal process feel less opaque.
Lessons Learned from Big Data
According to the Bank of America’s 2018 U.S. Trust Study of High Net Worth (HNW) Philanthropies, high net worth donors, as identified by a median annual income of $350,000 and net worth of $2,000,000, gave on average $29,269 to charity. In addition, 90% of high net worth individuals gave annually to charity compared to 56% of the general U.S. population. The average gift made by the average U.S. household was $2,514. What does this tell us? While major gifts require more upfront effort and time, they are (1) transformational to the health of our organizations, and (2) once made, are more likely to be repeated.
The Bank of America’s 2018 U.S. Trust Study of High Net Worth (HNW) study shed additional light on the characteristics of high net-worth donors:
What motivates major donors to give:
54% - the mission of the organization
44% - believing their gift makes a difference
39% - experiencing personal, satisfaction, enjoyment, or fulfillment
36% - supporting the same causes annually
27% - giving back to the community
23% - religious beliefs
18% - tax benefits
what major donors expect from the nonprofits they support:
89% - expect the organization to spend only a reasonable amount of their donation on general administrative and fundraising expenses
89% - expect the organization to demonstrate sound business and operational practices
88% - expect an acknowledgment of their donations for tax purposes
83% - expect their requests for anonymity to be honored
61% - would appreciate a thank you note
why major donors stopped donating:
41% - too frequent solicitation from the nonprofit organization
40% - changed circumstances in their household
18% - the nonprofit organization was not effective or did not sufficiently communicate its effectiveness,
14% - the organization asked for an amount the donor felt was inappropriate
Using Data to Craft Your Proposal
What does the Bank of America’s 2018 U.S. Trust Study of High Net Worth (HNW) tell us about the high net-worth individuals within our prospect pool? They are statistically most likely to be generous in their giving, already committed to contributing philanthropically, and highly motivated by supporting the mission of the organizations they care about.
Do Not Lose Sight of Your Mission
As we craft the major donor proposal, it is imperative that we represent the mission of our organization in as clear and compelling a manner as possible, honor the donor’s philanthropic intent through transparent and responsible stewardship, and lastly, be thoughtful and intentional in our communication and solicitation strategy.
Major donor solicitation can feel personal and the acceptance or rejection of a gift proposal can feel, at times, like an emotional rollercoaster. But the data reminds us that as ambassadors of our organization finding mission alignment is key. Keeping the work of the organization central to every discussion will help you discover early on if an alignment exists. If so, do not hesitate to ask.
The Data Gets Even better!
An additional data point that came out of the 2018 U.S. Study of High Net-Worth Philanthropies reported that 45% of high net-worth individuals expressed that their greatest challenge in regards to charitable giving was identifying what causes they care about and how to decide where to donate. This is highly encouraging! I read this as saying that 45% of the high net-worth prospects are open to discovering a new cause or organization to support. If we can introduce, educate, and engage new high net-worth donors into the work of our organization, we may be creating an opportunity for a lifetime of mutual benefit.
Gift Acceptance Policy
Once a thoughtful, mission-focused, gift proposal has been crafted, it is essential to combine the vision of the proposal with the substantive nuts and bolts of a well-thought-out gift acceptance policy. Elements of a robust gift acceptance policy include the organization’s capacity to accept mixed forms of assets, such as securities, property, retirement funds, insurance policies, cryptocurrencies, and other sources of funding, an outline of the roles and responsibilities of both the donor’s and the organization’s legal and accounting teams involved in these processes, and make clear what the donor can expect from the organization in terms of involvement, reporting, and opportunities to change or alter the gift.
The gift acceptance policy is an essential part of the major gift solicitation. It is an additional means by which an organization can signal two things: (1) their professionalism and capacity, and (2) their respect for the individual’s time and consideration. A well-presented gift acceptance policy acknowledges that the gift is an investment and honors the time and process required for a prospect to come to a decision.
Recap on High Net-Worth Individuals:
If your organization is lucky enough to have a number of high-net-worth donors, it may be time to review your cultivation, solicitation, and gift acceptance policies. According to the data, high net worth individuals are motivated by your mission but may be turned off by frequent, impersonal, and unsophisticated solicitations.
Two quick questions will help you evaluate whether you are ready to solicit the high net worth individuals within your donor pool:
Do you have an individualized solicitation plan with a personalized, mission-focused proposal prepared for these individuals?
Do you have a well-researched gift acceptance policy?”
If you are including high net worth individuals in your general solicitation calendar, you may be pushing them away and preventing them from considering your organization for a major gift. Too frequent and impersonal solicitations communicate that you are not interested in learning more about them and what they could do for your organization.
And finally, while creating a sophisticated gift acceptance policy can feel daunting, it communicates that you are ready to receive significant investment and are capable of managing a sizable donation, or better yet, sizable donations! A small investment in time and expertise now can result in successfully engaging high net worth donors that will continue to support your organization, and hopefully, increase their giving throughout their lifetime!
For more information or examples of great proposals and gift acceptance policies, contact me!
Warmly,
Carolyn