Sometimes, this happens because by the time your nonprofit comes around to thinking seriously about major gift fundraising its finances are already constrained. Other times, it may be simple naiveté. A byproduct of the notion that somehow nonprofit means low-cost and that paring administration or overhead to the bone is the right thing to do.
Major gift fundraising is by far the most cost-effective of many fundraising strategy. The return on investment generally achieved by a focused major gift or capital campaign will be around 4 to 5 times the amount expended. However, this means if your target is to raise, $1 million you are going to need a budget of somewhere between $200,000 to $250,000. Do the math and add zeros depending on how much it is that you need to raise.
Let's have a look at some of the reasons why. First, for anyone of you new to major gift fundraising here is a quick rundown of the basics. You will need a case for support. That case is a well researched and tested argument which will be the basis of your communication and asking for donations. Next you will be to identify and understand who your most likely major givers are. That done, you will need to reach them, have conversations with them, and eventually win their support. All of this will cost money.
To develop a good case for support you will need to develop a thorough understanding of whatever it is for which you are fundraising (this could include your entire organisation, a particular program or project, or building or facility). This does not mean taking for granted and using your organisation’s operational strategies and documents as your case. You will need to flesh these out into language that will resonate with potential donors. This means talking to those responsible for generating these documents. It means talking to those who will be involved in actually doing the work that these documents describe. It means talking to those who will benefit from this work. And, most importantly, it means talking to some of your most likely major givers to test their likely response to your case for support. All of this is going to cost in time and travel. You will probably need to undertake around 20 interviews of say an hour each. The travel costs will depend on the location of your personnel, beneficiaries and major gift prospects. If you are fortunate they are local. But for many of you the gift prospects may involve airfares and accommodation.
To be successful asking for a major gift it is important that you have a thorough knowledge and have developed an effective plan about how you are going to approach the potential major giver. There is only one way to do this is to carefully research that person or organization. You will need to know what they are likely to support, how much they are likely to give and also how best to approach them. You can do this yourself. A thorough research profile will take half to a day of work if you have access to the right tools (there are many sources of free information but sometimes really good, accurate information requires paying for subscription services). The alternative, is to use a specialist professional prospect researcher who will charge in the ball park of $250 to $350 per prospect. For larger campaigns, or ongoing major gift fundraising, a full-time in-house prospect researcher as part of your fundraising team, is almost certainly the best way to go.
Having done your research, you will need to plan how you are going to take your case for support out to your major gift prospects and persuade them to make a gift. The general consensus among experienced major gift fundraisers is that you will need to have had somewhere between three and five ‘conversations’ (used here in its widest sense) with a prospect before they are willing to be asked. Your best major gift prospects will probably be scattered around a wide geography and you won’t always be able to wait for them to come to you. Proper conversations will usually involve more than one person from your organization, often your CEO or Chair and therefore their travel and accommodation. Effective conversations and persuasion to support you also will also often require expenditure on hospitality of some sort or another.
Asking, thanking, and looking after your major donors once they have committed will likewise involve more than one person and their travel plus expenditure on additional hospitality, the costs of visits to view results and other communications about outcomes and progress.
Added to this are myriad other expenses related to communication and administration. You will probably want to produce some campaign collateral materials. Usually there will be some events associated with the campaign – the campaign launch, site visits and ultimately some form of completion celebration. There will be phone calls, invitations, thank you cards, progress reports, receipts, data entry and so on all of which will be additional to your normal routine costs.
Have I missed anything? Please feel free to add to this list with your own experience or conjecture. It is vital that you are able to convince your CEO and board that you are given sufficient budget to run a campaign successfully. Anything less is courting disaster.
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