Major Donors

Category Archives — Major Donors

What do major donors want?

by Diane Remin
Posted in Major Donors

Two strategies will prompt your donors to give again and again.

This list is going to sound shocking simple. But it’s research-based (thank you Penelope Burk, Donor-Centered Fundraising Second Edition).

Here are the keys to the major gift kingdom:

1. Major donors want to know what difference their gift made (gift impact)

  • They want to know what their money did each and every time they make a gift. What was accomplished thanks to that gift?
  • They want to know about the impact of the gift they most recently made before they are asked for another gift. Consider an “Impact Report”—which can be a one-pager.

2. Major donors want to be thanked promptly and personally (per Penelope) and often (keep building the relationship)

  • Promptly (pick up the phone)
  • Personally
  • Heartfelt hand-written notes continue to be the gold standard—even more so in this digital era.
  • A compelling, personal, 30-second thank you video or special photo can also be heart-warming. Looking for sincere gratitude—not production values. Reasonable mobile phone quality that is easy to see and hear is fine.

Note: The IRS-required thank you, even beautifully written with a sparkling first sentence and personal note, is not sufficient.

Recommendation: Create a “thank you/impact strategy” for each of your major donors. Consider at least four “touches” between gifts. Timing can’t always be predicted. Send news when it’s newsworthy.

Mix-up the “touches,” which should include an Impact Report and might include:

  • An initial thank you series: call, hand-written note, IRS-required documentation provided in a compelling letter (with IRS info at the bottom or as an enclosure)
  • An email with an article attached that might be of interest to the donor
  • Your newsletter with a note attached
  • News
  • Coffee with the donor where you simply provide an update and/or ask for advice
  • A birthday or Thanksgiving card
  • An invitation to an exclusive event
  • A conversation at an event

Report gift impact and thank right away and often. That’s it!

Major Gifts: Resist the urge to negotiate unless you hear an absolute “no”

by Diane Remin
Posted in Major Donors Major Gifts Making the Ask

Only negotiate if you hear a flat-out: “there is no way in the world I/we can do that” or “I/we can’t possibly afford that much.”  You are listening for an absolute “no” that will be expressed through words, voice tone and body language.

 The following are not negotiating triggers:

  •  “Wow, that’s a lot of money.”  [An observation, not a definitive statement that the donor can’t or won’t make the gift.  Respond with an “impact statement,” e.g., “With that gift, you will be <describe impact>.”]
  •  “I wasn’t expecting that.” [Surprise is not a definitive “no.” Donors are often surprised. Keep the focus on the project and help the donor determine how involved s/he wants to be in the opportunity.]
  • “How did you come up with that number?” [Respond with impact, not process: “We know how much you care about <nonprofit> and thought you would want to take a leadership role” [or thought this might be the level at which you would want to be involved].
  •  The classic: “Let me think about it.”  The donor may simply need time.  Your job becomes to understand what the donor is thinking about and to determine if you can help that process.  If not, let the donor think.

Donor-respectful Negotiation steps

  1. If you do receive a flat-out “no way” and want to negotiate:If you asked for the gift as a lump-sum, e.g., for an outright $50,000, test a timing solution:  “Would you be able to fund this project the way you’d like to if we spread your gift over time—would $10,000 a year for 5 years for a total of $50,000 make it possible?”
  2. If timing doesn’t get you to “yes,” then negotiate the amount.  Reduce the amount by 50% and re-ask using the “ask” format:  “So John, would you consider a gift of $25,000 to support this project?” 
  3. If a 50% reduction does not get you to “yes,” then shift to letting the donor tell you what amount will work: “So John, I can see that you want to support this project–what amount will make that possible for you?”

 Why 50%? 

  1. If the donor could come close to the amount you asked for, you wouldn’t hear an emphatic “no way.”
  2. You want the donor to feel listened to and respected.
  3. This is not a bazaar—you don’t want to be in the position of haggling.

Note:  There may be different advice for potential gifts of $10M+.  That’s not my space.

Capital Campaign Feasibility Studies: Yay or Nay?

by Diane Remin
Posted in Capital Campaign Readiness Donor Cultivation Fundraising Major Donors

You’re planning a capital campaign.  Then it’s time for a feasibility study — or is it?

For years, nonprofits have retained consultants to visit with potential campaign donors to learn how they feel about the organization and its proposed project. The consultant typically poses hypotheticals (if nonprofit ABC were to conduct such campaign how much might you hypothetically be willing to give) to better understand the donor’s willingness to make a gift. The study results are used to refine the project’s case for support, assess how realistic the campaign goal is, and determine if there will be adequate campaign leadership. The practice of conducting feasibility studies is being called into question. Let’s take a look.

Feasibility Studies: The nay-sayers

James LaRose’s forthcoming book will have a chapter titled, “Feasibility Studies: the Crack Cocaine of Nonprofit Consulting,” reports Holly Hall in a March 17, 2015 Chronicle of Philanthropy article. Mr. LaRose is quoted as saying: “Eighty percent of nonprofits don’t need to spend $25,000 to $50,000 to find out what they already know, that they aren’t ready.” He also points out that the consultants conducting the feasibility study stand to earn hundreds of thousands of dollars if the campaign moves forward. He recommends using different consultants for the study and campaign.

A November 6, 2012 blog post by Tom Suddes on the forimpact.org website is titled: “No More Feasibility Studies.” Mr. Suddes focuses on the failure of such studies to involve and engage donors. Instead, as he puts it, internal leaders enlist external consultants for “justification, CYA and backup.”

Feasibility Studies: The Advocates

Most of the capital campaign consulting industry.

Rationale for Feasibility Studies:

  1. You don’t know your donors very well… and truly have no idea how they will respond to the campaign.
  2. Prospective donors are more likely to tell outside consultants what they really think. How do people feel about the organization? Do they care about his project? Do they have pent-up frustrations or specific concerns?
  3. Being included in the study is part of the donor cultivation process. Donors are flattered to be asked. The conversation gets them thinking about making a gift.
  4. The prospect of a campaign falling flat is scary. Well done feasibility studies provide a measure of assurance about how much you can raise—and from whom.
  5. You’ll find out if the necessary volunteer leadership in place—is the board ready and are there campaign co-chairs in the wings?
  6. You may learn about external events that should be taken into consideration, e.g., a competing campaign.

Rationale Against Feasibility Studies:

  1. You already know the answer, in which case the study is a waste of money.
  2. Involve your donors early on and you will find out what they think, engage them more deeply and have no need have an outsider “study” them.
  3. In this day and age, a small number of donors typically account for 90-95% of the campaign.  If you have them lined up, then you are good to go.
  4. Beware consultant bias: If the consultant knows that a lucrative campaign gig is riding on a positive outcome, there may be unconscious bias in play. Think of the studies of physicians who have financial ties to test facilities compared to those that don’t. Physicians with the ties order more tests. Their patients do not have better health outcomes.

My take:

To Mr. LaRose’s point, it is ridiculous to spend $25,000-$50,000 if you already know the answer—and the answer is: “not ready.” If you answer “no” to the questions on the Capital Campaign Readiness Litmus Test™ below, then you don’t need a feasibility study. You need to build your board and/or donor base or get a handle on the project.

  • You can’t name at least three donors with the potential to give 10-20% of the campaign goal. (You’ll likely need four or five, but can you name three right now?)
  • You don’t have at least 20 qualified prospects you could send a capital campaign consultant to talk to if you were to do a study.
  • You don’t have a campaign goal (estimated project cost along with endowment or other components, if applicable) .
  • Your board doesn’t have at least two members who can make an impact gift—a gift would situate them among the top 10-15 donors on your campaign gift chart.
  • You can’t identify two volunteer campaign co-chairs who are well-known in your community and would likely commit to making a campaign gift and picking up the phone on your behalf.

Feasibility studies and deep donor engagement need to work hand-in-hand.

  • Mr. Suddes is right—it makes sense to involve your donors early on. Include key stakeholders in the preliminary conversations about the need, the project and the messaging—a “leadership consensus building” model he calls it.
  • Skip the feasibility study and go for it if you know your donors well; have multiple potential donors for each of the top spots on the gift chart or have lined up the top three gifts; have engaged a core group in “leadership consensus building;” and witness enthusiasm for the project.
  • Otherwise, use “leadership consensus building” to get key stakeholders involved and to refine your messaging and case. Then, get ready for the campaign by visiting a wider group of donors as part of a feasibility study.

Even if you ordinarily might forgo a feasibility study, re-consider if your donors have a particular reason to want to vent or be re-assured, e.g., the organization has:

  • Shifted direction or leadership;
  • Endured recent financial struggles; or
  • Been embroiled in controversy.

Feasibility studies are likely to be helpful if this is your first capital campaign; the campaign goal is unprecedented; or the project is unusual or unexpected for your organization.

Confidence matters. There is value to the board and senior leadership in a research-based report from an experienced consultant that answers the question: “Can we reasonably expect to attain the campaign goal?”

Author’s note: MajorDonors.com focuses on non-capital major gift revenue streams and campaign readiness for small-to-mid-sized nonprofits. This post was edited on April 7, 2015.

Keeping donors informed in the midst of charitable deduction uncertainty

by Diane Remin
Posted in Donor Communications Major Donors Major Gifts

The charitable deduction headlines are confusing.  The final outcome is unclear.  What better time to communicate with your donors?

Warning:  Charitable deduction facts in this blog post may time-limited.  The donor communication concepts are not.

Donor communication stances

1.  Non-expert “head’s up”

Your goal is to let your donors know you are thinking about them and to refer them to expert information sources. Your communications do not try to explain the charitable deducation rules.  Instead, they focus on the process, i.e., when might the next decision be made, and recommend expert resources to which your donors might want to refer for additional information.

One information source you may want to consider: The Tax Policy Center, which is a joint venture of the Urban Institute and Brookings Institution — http://www.taxpolicycenter.org/.

2.  Non-expert, but communicating expert information 

We understand from <source 1> that xxxxxxxxxxxxxx.  If there are differing points of view, you might add: <Source 2> tells us yyyyyyyyyyy.  You don’t have to solve the problem.  It is acceptable to share the confusion and commiserate.

You may; however, be able to highlight some of the basic incontrovertable facts, e.g., “As of today’s date, donors with household incomes under $300,000 (and individuals under $250,000) are subject to the same charitable deduction rules that were in place in 2012.  But we’ll have to wait see what happens over the next sixty days.”

3. Expert:  Your nonprofit is on top of the issue.

Your organization quickly reviews the “charitable deduction rules” and becomes an interpretation resource.  The Tax Policy Center cited above is one such example.  Understandly, charitable deduction expertise and the requisite tax law and accounting knowledge is outside the mission and scope of most organizations. 

What about major donors?

As of January, 2013, there is a charitable deduction divide.  Some of the headlines proclaiming victory tor the charitable deduction fail to explain that the Pease limit, which had expired in 2010, is back. For higher income donors, Pease creates a limit on total itemized deductions, which includes the charitable deduction.  (Do refer to www.taxpolicy.org for details).  To further confuse the issue, the legislation that was passed in early January may be amended over the next sixty days as “fiscal cliff” conversations continue on Capital Hill.

If you are someone who speaks with major gift propsects, you probably want to have an answer ready–especially while the topic is “hot.” Using a paradign similar to the one described ablve, you might refer the donor to a trusted source.  Or, if you are comfortable with the information, relay your understanding directly.  Be certain to cite your source, unless you are, in fact, the expert.

Major donors are in your midst

by Diane Remin
Posted in Major Donors Major Gifts Major Gifts Program

How can smaller nonprofitsengage potential major donors?

My mantra is, “pick up the phone.”

Who do you call?

Anyone making an annual fund gift of $1,000 or more.  Don’t have anyone like that?  Then drop down to $500 or even $250.

The nonprofit community has a love affair going with paper. But to engage major donors, you’ve got to get to know them. And they need to know you. So, when I say, “pick up the phone,” it’s not to ask for anything – quite the contrary. It’s to set-up an in-person visit at the donor’s home or office. If your donors are spread across the country, focus on one geographic area at a time and set-up multiple visits.

The corollary mantra to “pick up the phone” is “get on the plane.”

To engage potential major donors, you need to deeply understand their interest in your organization. What prompted the first gift? What does he/she likes best about your programs and services. How does your organization tie into the donor’s life -family, work leisure and school? What other organizations does he/she support? What’s the draw?

Similarly, the donor wants to know more about you. If you’re on the board, why? As staff, what do you see on a day-to-day basis that keeps you motivated? How well your organization’s programs and services resonate with his/her interests. What impact is he/she having?

Board, staff and donors alike want to help build your wonderful organization. An in-person visit is a great time to consider whom else the prospective major donor knows who might be interested in your organization’s work. Do be clear about how the donor can assist as a “connector” and ask how to best involve him/her, e.g., “Are you willing to make an e-intro?” to “Can I use your name?”

Where’s the money, you might be wondering? Nowhere until a relationship is established. And rightly so.