Everything We've Been Taught About Major Gifts is Wrong

Of course, by "everything" for purposes of this article I mean "three big things." But conventional wisdom can lead us astray when devising effective fundraising strategies. Like leprechauns, these mythical truisms can mislead us into thinking we should be chasing pots of gold that will always remain out of reach:

Myth #1: People have been acculturated to resist asking people for donations. Training them in "doing the ask" and inspiring them about goals are good ways to overcome this resistance.

Actually, only a few people are very resistant to asking strangers for money. Board members are notably willing to sell raffle tickets at the gala or make five calls to people they don't know and asking, for example, for a renewed donation.

What we do resist is something quite different: asking our friends and family for money.

What goes unspoken in "board fundraising training" is that when I ask a friend or cousin for money I am leveraging an important personal network to do so. We all know that if a cousin gives you a wedding present, when she gets married you pretty much have to give her a wedding present. It's not as explicit as a quid pro quo; rather, it's natural reciprocity in a human relationship.

So resistance to asking friends is not just "a learned fear of asking." It's more likely legitimate resistance to:

  • Uncertainty about whether one would be overstepping the invisible bounds and hierarchies of the social network and
  • Reluctance to incur social (and perhaps financial) indebtedness.

These are real concerns that will not be swept away by practice sessions at board retreats. If we don't confront the real obstacles to asking friends and relatives for donations, we'll continue to have fun but ineffective trainings.

Our field needs to think more deeply and more practically about how volunteers (including board members) can integrate their work with their conversations in ways that might (or might not) lead to talking about a particular nonprofit and why supporting it might be something to consider. We need to acknowledge and value the invisible, nuanced aspects of relationships rather than act as if they don't influence asking.

Myth #2: People will give more to our nonprofit if we demonstrate outcomes to them.

True: this is what people say. But one of the intriguing aspects of fundraising is that prospective donors often act very differently from how they believe they act.

For example: if we were to ask people, "Would you like to be telephoned during dinner by a stranger who asks you for money?" pretty much everyone would say, "No!" Yet doing exactly that raises hundreds of millions of dollars every year (without any discussion of outcomes by the way).

And if we look at the "big three" in terms of giving, none of them are related to outcomes at all: churches/religious organizations, alma maters, and disease-related nonprofits. If, for example, you went to Yale, you will give to Yale without for a minute comparing Yale's effectiveness or efficiency with that of Stanford or the University of Ohio.

When we look at how people give -- rather than how they say they give -- the answer is clear: people give when they feel a connection to a nonprofit and its cause. We can demonstrate outcomes, too, but let's not fall prey to this beckoning leprechaun.

Myth #3: Nonprofits should focus more on major gifts

Some nonprofits should focus more on individual giving. But for many nonprofits -- perhaps especially those based in poor communities and/or communities of color -- individual major gifts may not be the right fundraising strategy.

One foundation president commented to me, "If nonprofits spent as much time asking individual donors for money as they spend asking me for money they would have more than enough money!" A similar and even more common belief is that the only long-term strategy for sustainability is one that relies on major donors.

The recent economic impact study of nonprofits in California showed that once churches, religious organizations, hospitals and universities are removed from the equation, donations from individuals constitute only about 16% of nonprofit revenue (!).

So why are we under the mistaken impression that individual giving accounts for the majority of nonprofit revenue? I suspect two reasons:

  • Fundraising consultants and publications frequently state that 72% or even 90% comes from individual donors. They are usually careful to say "of private donations," rather than "of total revenue," but it's easy to make the mistake.
  • We all receive so many emails and letters and requests for donations that say something like, "We depend on YOU!!

Individual giving varies significantly depending on the type of nonprofit. Today most nonprofits combine donations with earned income: in effect, we are all hybrid organizations. Many nonprofits have viable strategies that rely, for instance, 80% on contracts with three government agencies, or 55% on earned income such as program fees. (For some nonprofits of course -- notably international and environmental organizations -- individual giving is more likely to represent more than 50% of revenue.)

While sub-sector averages are useful, what matters is finding the strategy that's right for you.
    
Wait a minute! Are you saying we should give up on individual giving?

Of course not. Individual giving is a key revenue stream for many nonprofits. And for some nonprofits, it may eveb represent 100% of revenue.

But major donors aren't the answer for everyone. Very few nonprofits that were not founded by wealthy, social elite individuals manage to develop even a small individual donor program. And while small donations from many people is an excellent constituency-building activity, it's seldom a successful revenue strategy.

Consider two after-school tutoring programs, both eight-years-old and both with budgets of $350,000. One is emerging from a low-income community of color that was started by activists and professionals and almost certainly has some government money. The other, started by lay leaders in a mostly-white church and has no government money, but they already have some significant individual donors and people experienced with high-end special event fundraising.

Looking below the surface, one of these nonprofits is more likely to grow through government and foundation funding, and needs board members who can help with those connections. The other is more likely to grow through bigger special events and more major donors. The moral: different nonprofits have different trajectories that result in different assets at a given stage of development.

Now if only I could find a leprechaun who would show me where to find a pot of gold . . .

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Jan Masaoka is editor of Blue Avocado and despite being part of it, a frequent critic of the Philanthropic-Consultant Industrial Complex.

See also in Blue Avocado:

Comments (21)

  • What a great article! As the development person for a nonprofit in a low-income community of color, it was a wonderful relief to read this. I've struggled for years to get our donations up, and though they have increased, I always feel that I'm missing out on some nearby yet elusive 'major donors' that could make a huge difference in our budget. I think it's time for me to stop wasting time and energy on looking for these leprechauns and appreciate all our 'small donors' more!! Additionally, I feel liberated to focus more of my time on grants - so thanks very much for this information!

    Aug 27, 2015
  • Laura Ann, it makes my heart break to think of how many of us have been chasing leprechauns too long. Thank you for making my day -- my month! -- with your comment. Jan

    Aug 27, 2015
  • Jan, I appreciate you responding to my comment! I know I'm not the only one reading your article that had this reaction. I've been told all three of these myths in countless trainings.

    Aug 27, 2015
  • What an excellent article! First, you help parse the issues into important subcategories. Second, bringing up that people really only have a problem with asking people they know is SO important and I, for one, have missed it. Third, my organization will always have trouble with proving outcomes, so we are going to build on our strength--relationships!!
    Like Laura Ann, I have found it easy to get swept up into "what am I missing" instead of thinking about the trajectory of MY organization and where it could best lead us for fundraising.
    ( We have missed Blue Avocado, BTW, but happy you had a sabbatical!)

    Aug 27, 2015
  • Thank you, Meri! I confess that the conventional wisdom on these topics is so, so maddening to me as they are passed of as Eternal Truths. I really appreciate your taking the time to write. Jan

    Aug 27, 2015
  • Jan,
    Oh how I've missed you! Your clear thinking is always engaging, I couldn't agree more with your analysis - and it makes even more clear what I've been thinking and saying for years, not only is small shop fundraising fundamentally different, it really has to be...

    Aug 28, 2015
  • Thank you, Jevan! I'm a bit reminded of how medical science was based for decades on tests done on men, and so people didn't realize that many of the diagnosis protocols and treatments were inappropriate for women. The field of fundraising has been dominated by work done for universities, colleges, high-end cultural institutions (such as ballets) and mainstream, mostly-white charities. The field hasn't realized (or doesn't want to realize) that these frameworks in the context of activist organizations and those emerging from lower-income and people of color communities are like telling women they need get prostate check-ups.

    Aug 28, 2015
  • Jan, I was nodding my head, yes yes yes, through your article, but this insight got me out of my chair, YES! I've been consulting with small to mid-size community-based nonprofits for 20+ years and have struggled with how so-called best practices in fundraising are often a misfit. Some particular challenges (and often teachable moments) arise when I'm working with businesspeople board members who read up on fundraising, and from-the-community executive directors who despair over some of the fundraising goals or tactics pushed (but not taken on) by said board members. This example will help tremendously. Thank you!

    Sep 02, 2015
  • Jan, thank you for your keen insights, as usual. We are embarking on a campaign to cultivate major donors (which makes some sense for us, I think), but these will be valuable lessons and hopefully make our efforts better focused.

    Aug 28, 2015
  • I'll add to the list the practice of setting a specified dollar amount as an organization's definition of "Major Gift," and then those donors automatically fall into the org's "Major Donor" program i.e. a major gift is $5,000 and above based on a formula or calculation per the data. It's time non-profits also view "major gift" in the context of the individual. This statistical definition of major gift ignores (and tragically misses) the donor who gives $150 or $500 and it is a major stretch gift at that level under their individual circumstances, but they stretch because they are passionate about the cause or issue. To the donor it's a "major gift" indeed, but not from the organization's view??

    Aug 28, 2015
  • Interesting fact you brought to light about the California impact study (individual donations account fro 16%). I wonder what this would look like nationally and in NY? I imagine such studies can be misleading in the sense that particular subsectors, like certain arts organizations, rely on individual donations.

    Aug 29, 2015
  • This a great piece, Jan. Sharing, sending, using in class.

    Aug 29, 2015
  • Anonymous

    I really wish you'd done a bit better editing this piece. Not doing so calls your expertise into question, I think.

    Aug 30, 2015
  • I really wish you would understand that posting under the name "anonymous" makes your comment irrelevant and calls your integrity into question.

    Sep 22, 2015
  • Dear "I Think"...7 years of Blue Avocado spanning all manner of nonprofit subjects, in depth, and you find one article to trash to impugn the expertise of Masaoka, et al. Laughable, Anonymous.

    Karen Aitchison

    Nov 06, 2015
  • Then we face the conundrum of unrealistic expectations of government funding by families of consumers. Government used to fully fund services for the developmentally disabled, but this entitlement has been steadily eroded by shrinking state funding. Yet, most families -including wealthy families - don't perceive an obligation to support the community-based, non-profit services that benefit their family member. Most people are looking for a free ride. The ones who give are also giving to other causes.

    Aug 31, 2015
  • Great piece, Jan! However I am afraid you may have inadvertently suggested that foundation funding is greater than individual donors. Individuals are about 16% of all nonprofit revenue but foundations are about 4%. To me the issue is not about what % is this or that but rather some larger questions that every nonprofit should ask. One such question is how should we be funded? For example, if your nonprofit addresses a public health issue, you should be funded by the government. On the other hand, if your nonprofit is a government watchdog, you probably should not seek government funding. If you are trying to build power among a broad constituency you need to have funding from individuals. A second question is to look at gross and net. Earned income has become all the rage again (every ten years or so earned revenue comes back in style) but in my experience the ROI of earned income ventures is often tiny. An organization might show 80% of its income from an earned income strategy while failing to note that 79.95% of their expenses are in service to that strategy. Again, depending on their philosophy, an earned income venture might be mission fulfilling and so a tiny profit is fine, but few nonprofits will have analyzed their income streams this carefully. Finally, in my experience, the world falls very evenly into two asking camps: those who prefer to ask strangers and those who prefer to ask friends. Asking family is different from asking friends and the two should not be conflated. The mistake organizations make is not helping board members and volunteers think through who they would like to ask and how they would like to ask. The issues around asking are more complicated than your article has time to explore.
    You have gotten a good conversation going and I appreciate that!

    Sep 01, 2015
  • Myths 1 and 2 are spot on, but #3 tripped up this fundraiser for social justice. The status quo does not equal our future, at least I certainly hope it does not.

    My first mentor and, since then, decades of work influenced by Jan, Kim Klein and others taught me that museums, universities and hospitals raise lots of money from individuals because they serve in loco parentis, create a sense of community and / or provide brief-to-immersive experiences that make their donors partners in the mission.

    Groups that want to emulate this don't have to be fancy: I've seen organizations fast-track major donor giving by reaching out to the parents of interns (in loco parentis lite) or having coffee with a faithful ticket buyer who, until then, had not yet been treated like a mission-driven donor. Another advocacy group cultivates major donors by having, at the crack of dawn the day after election day, coffee, donuts, cable news on the telly and their brilliant advocates around the conference table room to chew over results. They would have done this anyway, informally in the hallway, and around the water cooler. It is what they do. They just opened it up so that their donors could touch the mission before heading to work.

    Admittedly, interns get you into elite-land, but coffee and donuts do not. Comrades, let's not let the elite institutions have all the good techniques. Let's adapt some of them for our own missions and culture and get some of that major donor scratch.

    Sep 21, 2015
  • Definately a great article to raise discussions. Thank you.

    Dec 02, 2015
  • The link to the CA study you mention under myth #3 is broken. Could you please update or name the study so we can access it? Thanks.

    Aug 17, 2016
  • Thank you for notifying us of the broken link. The study on the external site was moved, but the link has now been fixed. You can also access it here.

    Aug 19, 2016

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