Save Yourself (and Your Major Gift Officers) Time, Money and a Bunch of Headaches
I’m going to describe for you the state of one organization’s major gift program that we worked on a few years ago that will highlight what’s going on with thousands of other organizations' major gift programs... and quite possibly yours.
Okay, so here was the situation going in.
Overall, it was a fairly large organization, a little over $20 million in revenue. Yet, the major gift program was hovering between $1.8 and $2 million a year over the last four years. The major gift program overall had been established about 12 years ago. So, this was not a brand new program.
There were 1,200 donors that made up that $1.8 million. The organization had six major gift officers (MGO) who had all roughly 200 donors each on their portfolios. The values of those portfolios were between $250,000 and $400,000 each.
Now, the cost to cultivate those 1,200 with those six MGOs that included salary, benefits, travel and some shared admin help in total was around $750,000 a year. This equated to a 2.4 to 1 ROI.
For a major gift program that was 12 years old that ROI was unacceptable. Yet, because the organization “grew up” on direct-response marketing no one seemed to take the time to examine this.
The result was that this organization had too many MGOs who were cultivating too many donors that produced too little revenue. Here is what was happening with the MGOs.
- They complained their donors didn’t want to meet with them.
- They could not get donors to engage with them on the phone.
- They were frustrated because they couldn’t find projects and programs for donors to fund.
- The MGOs had no revenue goals and little direction or management.
This left the MGOs frustrated and defeated. So, when we went back to figure out the root cause of the problem, do you know what it was?
None of those 1,200 had been qualified! What this organization had done was once the donor met a dollar metric, they were immediately tagged a major donor and put on someone’s caseload.
So we knew, because of the work we’ve done with hundreds of major gift files, that there were roughly only 400 major donors that wanted a deeper relationship with this organization.
So, here you have an organization, which for years has been operating this way. Not only was revenue and ROI unacceptable, it created a toxic culture for the MGOs. Of course, no wonder donors didn’t want to talk or meet with them... they didn’t even want that type of relationship... all because these donors were never qualified.
This is why Richard and I have repeatedly hammered home why you must qualify your donors. Yes, this is the secret to your time, money and headache problems.
To make a long story short, after one year of working with this organization here is what happened.
- We helped qualify their pool of donors—the result was 425 donors (remember, there were 1,200). The remaining donors went back in their mid-level program and their regular direct-response program.
- We put our Veritus structure to their program (tiering, goals, strategy, accountability, etc.).
- We let go four MGOs and hired one MGO for a total of three MGOs to cultivate those 425 donors.
- Those MGOs now started getting meetings and building relationships. Why? Because the MGOs were now working with donors who wanted that mutual relationship, and they had fewer donors to work with overall.
The result of all this was that by the end of just the first year of working with qualified donors the organization brought in $2.1 million in major gifts (remember they had 1,200 bringing in almost that same amount) at a cost of $360,000 or a 5.83 ROI.
Yes! This is MORE net revenue for programs!
Now, after a few years, they are well over $5 million in total major gift revenue and over an 8.0 ROI and climbing each year. Eventually they will be over a 10 to 12:1 ROI.
And, remember how frustrated those MGOs used to be. Now, they are working within a structure with donors who want to be related to, and it’s made a world of difference for their morale and their overall success.
Why? Because now they are working with donors who want their passion and interests to be known by the organization, so they can help them change the world. This is the difference qualifying your donors will make.
Jeff Schreifels is the principal owner of Veritus Group — an agency that partners with nonprofits to create, build and manage mid-level fundraising, major gifts and planned giving programs. In his 32-plus year career, Jeff has worked with hundreds of nonprofits, helping to raise more than $400 million in revenue.