🌟 Are you wrestling with understanding what your donors really want?🌟
If you’re an executive director on the hunt for that sweet strategy that separates annual donors from major donors, pull up your comfy chair! Here’s the scoop: treating both types of donors with the same approach just isn’t cutting it. Annual and major donors are as different as chai is from espresso – both amazing but distinct in flavor!
On today’s episode of Nonprofit Lowdown, I’ll be diving deep into the magic formulas that distinguish these donors not just by the size of their gifts but by their expectations, engagement, and your strategic communications with them. Understanding these critical differences can revolutionize your approach, shifting your outcomes from spinning wheels to celebrating wins!
💡 In this must-listen episode, we’ll explore:
- Why recognizing and catering to the unique characteristics of annual versus major donors can drastically enhance your fundraising efforts.
- Practical strategies to tailor your outreach, making every donor feel like the hero in their own story.
- The secret to transitioning from transactional to transformational relationships with your donors – because they’re more than just ATMs!
Ready to stop the guesswork and start engaging effectively? Tune into the full episode to transform your donor interactions from ordinary to extraordinary. Trust me; your nonprofit can’t afford to miss out on this gem!
Don’t forget to subscribe for more insights and join our vibrant community of nonprofit leaders just like you!
Important links:
https://go.rheawong.com/big-ask-gifts-program
Episode Transcript
RHEA 00:00
Hey you, it’s Rhea Wong. If you’re listening to Nonprofit Lowdown, I’m pretty sure that you’d love my weekly newsletter. Every Tuesday morning, you get updates on the newest podcast episodes, and then interspersed, we have fun special invitations for newsletter subscribers only, and fun raising inspo, because I know what it feels like to be in the trenches alone.
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Welcome to Nonprofit Lowdown, I’m your host, Rhea Wong.
Hey folks, welcome to Nonprofit Lowdown. I am your host, Rhea Wong. Today, I want to talk about my favorite topic, like ever, which are major gift donors. So if you’re interested in learning about major gifts, check out my group coaching program, Big Ask Gifts. We are recruiting now for the June 13th cohort.
So if you’re interested, check it out. Anyway, in this episode, I want to break something down, and that is the difference between. Annual gift donors and major gift donors. Now, I realized as I was talking to people that I actually haven’t ever done an episode that draws a clear distinction between the mindset and processes for annual gifts versus major gifts.
And I thought it would be useful for us to do because often, even though they’re both donors. The way that you think about them, the way that you approach them, the timeline, et cetera, are all very different depending on annual gifts versus major gifts. Both are critically important to your nonprofit, but the approach, the mindset, the timeline is different.
And I personally am very bullish on major gift fundraising. When we look at the statistics of, of annual giving, what we see is about 74 percent of all giving is done by individuals, either through personal gifts or bequests. When we break that number down, we can see that it is actually not even the 80, 20 principle.
It’s more like a 90, 10 principle, which is that 90 percent of the individual gifts are given by 10 percent of the donor pool. We can also see that across the board. Gifts by, gifts by household generally have been trending downwards. Annual gifts in general have seen a downturn since the pandemic.
Whereas I think we are seeing incredible levels of generosity from folks with donor advised funds and family foundations. So quite simply, I like to focus on the low hanging fruit. As my husband would say, low hanging fruit is the sweetest. I want to help you to focus on that 10 percent of givers that really move the needle that really make a difference.
And by the way, they give generally unrestricted. I say this a lot. If there was going to be an inscription on my gravestone, it would be multi year unrestricted. Some of my favorite words in the English language. So let’s get into it because I think we need to understand what the difference is between these two types of givers and what that means for the way that we approach them.
So let’s talk about what we mean by donors versus major donors. First of all, the, the distinction here is gift size. Annual donors are typically, and again, I’m just going to caveat this by saying that, yes, there are outliers. Everywhere. We all know the Mackenzie Scott phenomenon of never having given and dropping a couple million dollars on a nonprofit.
Conversely, we also know big givers that give small and small, small givers who may leave a request, et cetera. Yes, I understand that there are outliers, but as a general rule, here’s what we’re going to talk about. These are trends and general rules of thumb. So first of all, gift size, let’s talk about that.
When we were talking about annual donors, we’re generally talking about smaller gift sizes, usually under a thousand dollars. When I see major donors, and again, major donors can be very subjective, right? What may be a major donor to a small grassroots nonprofit may be What is considered a major donor to say the Met Opera.
But generally when I think major donors, I’m thinking upwards of five figures. So 10, 000 or more. So now that we have the definition of what we’re talking about, let’s talk about some other characteristics that might be different giving frequency. Now our annual donors. If we’ve done our job and retain them, usually give once per year.
And it usually comes at the end of the year, either November or December. What’s annoying is that we know that 30 percent of giving happens in December, which can be annoying from a budget projection standpoint. Anyway, be that as it may, people are in the giving mind frame and want to give their end of year tax benefits at the end of the year, major donors may give multiple times a year.
They may, they may give multi year pledges or they may give once and then skip a couple of years. So it’s less regular than your annual donors in general. In terms of the relationship with the organization, your annual donors tend to be a little bit more transactional and they may have some limited personal connection to the organization.
Whereas with major donors, they really think of it more as an investment. If they are invested at, uh, significant levels, they tend to have a deeper, more personal relationship with the organization and its leadership. This is why I always say that both boards and executive directors have to be engaged when thinking about major gifts, because if I’m a major gift donor, I want to be able to have a direct line of access to the leadership.
I want to be able to trust the leadership with the gift that I’m giving. In terms of the timeline, annual donors can be a shorter appeals cycle. It can often be driven by annual appeals or events. Major donors, on the other hand, we’re looking at a longer cultivation process. So on average, it takes about 18 to 20 months to close what I would consider to be a major gift.
So again, we have to think about the long term relationship building, trust building, when we’re thinking about major donors. And I think, um, When nonprofits shoot themselves in the foot is when they rush to a solicitation before they’ve significantly built a trust. Sometimes they call that mariachi money.
So for those of you who’ve ever been, who’ve ever had a mariachi band come up to you and interrupt your dinner, sometimes you give them some money to go away. Sometimes I see donors who have significant wealth, either give you money to go away Or they give you a small amount of money as a test gift to see what you’ll do with it.
And I think it’s very important to know your donors, to know if there’s more capacity there in order to stewardship their gift, in order to build the relationship, to see if there’s a bigger gift in the future. In terms of decision making, people who give an annual gift are Motivated generally by a belief in the cause and maybe emotional appeals.
This is obviously where storytelling comes into place. Major donors are motivated by a specific impact in alignment with their personal values and a trust in the leadership. So you could imagine that it’s quite easy for me. I’ll just be personally, it’s quite easy for me to give a 20 donation. It would be more significant.
To give a 20, 000 donation. If I’m giving a 20, 000 donation, I’m going to take more time to think about it. I’m going to take more things into consideration. I’m going to need to see more data and I’m going to have a deep trust in the leadership to be able to give that kind of a gift. The solicitation approach for annual donors that tends to be mass communication.
So the email campaign, the Giving Tuesday campaign, the mass mailers that you sent out. Are people still doing mass mailers? Anyway, let’s say you’re sending a letter. That is how you get emails. annual gifts. The solicitation when we’re talking about major gifts is generally speaking personalized face to face solicitations by leadership or board members.
By the way, if you are going for a major gift, I would say that you should know that your chances of getting a guest increase by 70%. And by the way, with major gift solicitations, Getting the meeting is usually the hardest part. Once you’ve gotten the meeting, they know why you’re there. You know why you’re there.
So it’s really a matter of getting the ask out of your mouth. I’m going to take a pause here. Oftentimes people will ask things like, well, how do I know what amount is appropriate? What I will say to you is if you have not, if you have not done your homework, if you haven’t built a sufficient relationship with your, with your donor, then you probably don’t know what number to ask for.
So if you don’t know, it may not be the right time to ask. I also like to ask for permission to ask leading up to the solicitation conversation. So The donor and I will have had some conversations about their general areas of interest, the general, uh, size of their philanthropic giving and where they are thinking.
We have to think of ourselves as a facilitator of a gift, not as someone extracting anything from them. If we have done that, if we have been of service to our donor and really served them to realize their philanthropic interests and goals. And by the way, they know a lot more about their own financial capability and situation than you do.
So by the time you get to the solicitation, you should have already had conversations with them about, generally speaking, what is the level of gift that they have, that they give to organizations like yours, what kinds of things are they interested in and can we present to them a menu of the types of projects that they may be interested in along with the project cost.
Now, there are some folks out here who think that, and again, like there’s no magic voodoo here. There’s no magic number that you’re going to come to. What I will say that rubs me the wrong way is when we surprise people. With asks that they’re not prepared for or asks that we think that they should be doing without any indication for them that it’s right for them.
I generally don’t like that because I wouldn’t want to be treated that way. I think that there’s a school of thought that says, you know, you be bold and ask big. I am all for asking big, but I’m also all for reading the signs. If this is a person who has not given any indication to you that you, let’s say you want to ask for a six figure gift, but there’s been no indication that they are either interested in or have in the past given a six figure gift, I would be very hard pressed to ask for a six figure gift.
And in fact, I think there is a school of thought that says it’s never a, that it’s never insulting to ask for much bigger. Perhaps it’s not insulting. Perhaps it may even be flattering to people. To be asked for a bigger gift. But I like to read the signs and ask people what, what level they are comfortable with, because at the end of the day, it’s not your money.
It’s their money. So I think there’s a fine tension here between being bold and asking and also respecting people and where they feel comfortable giving. Okay, let’s get back to it. So stewardship. So once you’ve gotten the gift, I also really want to talk about stewardship. You all know the hill that I am willing to die on is around retention.
As a sector, we are very bad at retention. I think we are retaining at less than half, which means that more than half of the people that we get into our pipeline every year fall out of retention. Of the leaky bucket, so to speak. The reason that this is true is that we, I think, as a sector have, have thought that the end of the relationship is once we get the gift.
Your job is not to close a gift. It is to open a relationship. I want you to write that down. Your job is not to close a gift. It is to open a relationship. Which means that once you get the gift, that is an indication that you should start to steward them to the next gift. You are hoping to make this a long term relationship.
When we are dealing with annual appeal donors, we can send generalized thank yous and updates and newsletters and emails and such. When we are talking about major gifts, We’re talking about highly personalized recognition, tailored updates, and regular engagement opportunities. Now, caveat here, these types of highly personalized.
Thank yous and stewardship activities should only be used if your donor indicates that they’re interested. So I think a lot of the time we spend guessing at what our donor wants, as opposed to just asking what they want. We guess that they might want to have the lunches and do the dinners and go to the site visits.
We should just ask them what they want. Some people just want an email once a quarter. Some people want the whole nine yards. We should have a clear idea of the types of activities that we can offer them and personalize accordingly. Okay. Let’s get back into it. Your annual appeal donor, generally as in terms of their engagement level, maybe lower, They may attend events or volunteer occasionally.
When we’re talking about major donors, it’s usually a higher level of engagement. So they’ve often been involved in the organization as volunteers, advisors, board members, attendees at events. So generally speaking, the more involved they are personally, the bigger the gift. When we think about ROI, return on investment, your annual appeal donor has a lower dollar per return, but generally provides the broad base of support that you need.
Your major donors have a higher dollar return per donor. But they require more time and resources to cultivate. And then finally the impact on the organization. Generally, we love our annual appeal donors because they provide unrestricted funds for ongoing operations. Generally, when we think about major donors, they provide significant funds, but generally speaking, those funds are usually.
Geared towards a specific initiative or for long term sustainability, like an endowment fund. Just to reiterate, both types of donors are incredibly important to an organization. However, when we’re thinking about major donors, we really cannot be rushed and we have to think about it from the longterm.
The last thing I will say is that often the mistake that we make is. Trying to chase down people who don’t want to talk to us. So generally this is how it looks. You have your list of annual appeal donors. You run a wealth screen or you do some Google searching or however it is you do it, and you try to segment the list into some subset of people who might be major donor potentials, usually based on the capacity.
Then what happens is that you spend a lot of time and energy. Emailing those people, asking them if they want to go for coffee. Now, my guess is that you are not getting a great return on investment. This is for a couple of reasons. Number one, oftentimes these folks know they’ve been around the block.
They understand what the, what they’re in for. So when you’re asking them for coffee, when you really want to ask them for a transaction, they’re avoiding your call because they are not ready for a solicitation. If this is an approach that you were using, my recommendation would be to be clear in your email about what the purpose is.
If this is a solicitation, tell me it’s a solicitation. If it’s not a solicitation, tell me it’s not a solicitation. If you tell me it’s not a solicitation and it is a genuine outrage to connect, I may be more likely to respond to your email. Secondly, what we know is that donor behavior. Mirror set of consumer behavior, consumer behavior in the last couple of years, and particularly after the pandemic shows us that people are much more likely to shop online versus shopping in stores.
Now, when I go into stores, I actively do not want to talk to a salesperson unless I’m looking for something the same, I think holds true of your average donor, generally speaking, and this is very annoying to fundraisers, but people self. Cultivate and self solicit. How many of us have received a random check in the email that we hadn’t expected or a random credit card donation that we hadn’t expected?
The reason being that a lot of people don’t really want to talk to you. They will donate when they are ready to donate. That is why your website has to be on point. And then the other strategy that I recommend is creating a survey in which you are actually actively surveying your donor base to inquire who of among them actually want to be reached out to actually want to have a conversation, actually want your staff members to contact them.
I think we need to do our donors. the honor of interacting with them the way that they want to interact, not the way that we want to interact. So I hope that was helpful. If this is of interest to you, I recommend checking out my Big Ask GIF program. I’m recruiting now for the June 13th cohort. Check it out at Rheawong.
com. I’ll put the information in the show notes and shoot me a line at hello at Rheawong. com. Let me know if this is helpful for you. Until then, have a good week, everyone. Talk to you next week.
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