The Most Major of Major Gifts
Donors always have wanted to make a difference with their gifts to nonprofit organizations. But one of the most remarkable trends in giving over the last 10 years is how large those gifts have become — so large in dollars and so significant for their lasting impact, they’ve taken on the label of “transformational gifts.”
By definition, transformational gifts are large enough to have major, lasting effects on the organizations that receive them.
When it comes to determining how much money qualifies as a transformational gift, there is no one magic number. The phrase “one size fits all” does not apply.
A $5 million gift to one charity could mean the difference between continuing its operations or closing the doors. Yet, that same amount given to one of America’s top 50 universities could be just another generous contribution in an annual-giving program that tallies $50 million to $100 million a year or more.
Magnanimous gestures of philanthropy ranging from $10 million to $500 million in lifetime giving are becoming commonplace. This escalating level of generosity on the part of philanthropists has caused nonprofits in the U.S., Canada and around the globe to shift their efforts in pursuit of truly major gifts.
A little history
Men and women of vision have been getting involved with nonprofit organizations for more than a century. Let me take you back to San Francisco, the year 1878 and the announcement of a gift of $100,000 — one of the first transformational gifts in the U.S., which created the University of California Hastings College of the Law.
It was the first law department of the University of California and one that continues operations to this day.
Historical notes from the UC Hastings College of the Law Web site make mention of “ … the vision that Serranus Clinton Hastings had for a ‘temple of law and intellect which shall never perish, until in the lapse of time, civilization shall cease, and this fair portion of our country shall be destroyed or become a desert.’”
Transformational gifts are fast becoming nonprofits’ equivalent of the Holy Grail. It seems as though not a week passes without news of another extraordinary gift delivered to the doorstep of one of America’s million-plus nonprofit organizations.
In decades past, such gifts most often were directed to a select few institutions of higher education. Harvard, Yale and Princeton, to name a few, were among the beneficiaries. The gifts went toward general college funds, building funds or just toward a university’s endowment.
But contemporary philanthropists, flush with new wealth earned during and subsequent to the dot-com boom of the ’90s, are choosing a wider array of beneficiaries.
For those charities privileged enough to receive a transformational gift, the impact is stunning. A budget deficit might disappear. A brand might suddenly be poised for a turn. Credibility with other donors may zoom to new levels. Certainly, long-term plans for service delivery can be surrounded by a new blanket of financial security and certainty.
Another aspect, however, is that management and the board of directors face the challenge of what to do with the money, and stewardship takes on a new dimension.
At the end of the day, a transformational gift means a dramatic change in a nonprofit organization’s cash flow. The challenge around these gifts is twofold:
1. how to get them; and
2. once you receive one, how to make it work for the long-term benefit of your organization.
Following are some issues you need to keep in mind if your organization is, as it should be, looking toward cultivating transformational gifts.
Without stewardship, there likely would not be transformational gifts. That 1 percent of the population that has the capacity to make a very large gift to a charitable organization — the kind of gift that will transform it — usually has an idea about what the money will do and appreciates the kind of impact the gift will have.
Research shows that high-net-worth donors have come to expect greater levels of accountability, disclosure, and in-depth information about how programs and other initiatives operate.
They’ve been known to put on a hard hat and walk the grounds of new construction projects, roll up their sleeves and get involved because they have a vested interest in the success of the organization.
Stewardship, the ongoing relationship between donors and the nonprofit entities they support, is the common ground found most often when you look behind why people make the financial commitments that they do.
Implied and pre-emptive stewardship can be seen as the collection of activities that a nonprofit delivers as part of its ongoing operations. Implied stewardship is those activities that aren’t directed at any one donor in particular — publishing an annual donor report on schedule and as promised, or inviting the community to an open house to see for themselves the facilities and talk to the people who deliver programs. It’s the set of actions of accountability pushed outward to the community that makes prospective donors trust the organization enough to believe it will do what it says it will with the funds given to it.
Pre-emptive stewardship is more direct and customized to a prospective donor — someone who has been pre-qualified in the prospect-research process and is now considering a first gift.
Donors know what is going on in their communities — from their own personal experiences, their peers and neighbors, following the local news, and sometimes just walking among the goings-on at various events and happenings.
Think about the large university campaigns that have had such great success in past years and continue today. How many times have you heard about the first-time donor who made a $1 million gift? Quite often.
If you follow the notion of a Moves Management strategy, then those people who decided to step up and make a $1 million gift did so because of implied and pre-emptive stewardship efforts. People don’t often make decisions about giving away a lot of money in a vacuum. They listen, learn and then choose.
Transformational gifts aren’t just coming from wealthy individuals these days. Corporate America is taking note of what’s been going on in the nonprofit sector. Nurturing mutually beneficial corporate relationships is a stepping-stone to transformational gifts. Corporate philanthropy — and cultivating the relationships that drive it — is most often an extension of the marketing department.
Corporate support often is driven by self-interest in terms of the corporation’s brand name in the marketplace. A growing trend has corporations inching their way into the nonprofit marketplace with what many call strategic partnerships. In return, the business gets brand-name prominence on a significant property.
In 2006, for example, insurance provider Nationwide pledged $50 million to the Columbus Children’s Hospital’s expansion project. The hospital was renamed the Nationwide Children’s Hospital, and the Nationwide name is featured prominently on the main building, the hospital’s letterhead and its Web site.
The number of high-profile properties available for brand-name promotion is decreasing; that scarcity is an asset the nonprofit sector should treasure and not be in a hurry to give away at the first sign of a big check.
Transformational gifts will continue on. The mystery is we don’t know exactly when and where the next one will land and which nonprofit organization will be the joyous beneficiary. The question is, are you doing everything you possibly can to increase your chances of being that organization? FS
Terry Burton is founder and president of Vancouver, B.C.-based fundraising consultancy Dig In Research.
Related story: 5 Things You Can Do to Encourage Transformational Gifts