When Should You Hire a MGO?
You want to develop a major gift program for your nonprofit, but you’re not sure you have enough donors to warrant hiring a major gift officer (MGO). Or you are growing your major gift program, and you’re wondering when it makes sense to hire another MGO to add to your team.
Richard and I come across these quandaries weekly from clients, readers of our blog and nonprofit leaders. Our answer is fairly simple: There are two things you need to have before you hire a MGO to build one-on-one relationships with donors:
At Veritus, we believe that before you consider hiring a MGO, you need to ask yourself if you and your organization have the vision to invest in a major gift program.
You have to understand, major gifts is a long-term strategy. Unfortunately, Richard and I run into a lot of nonprofit leaders who think we can “test it” and find out if it works. By “testing” it, they will give it 12 months (but want to see results in four to six months) to see if they can get a good return on their investment. This is a red flag to us.
In fact, we have turned down a good amount of business over the years when we hear directly from leadership or get a feeling that the organization doesn’t understand that major gifts is a long-term investment. Why? Because this means the organization doesn’t have the patience or persistence to build a proper major gift program.
Major gifts is not direct-response fundraising. You don’t just try it for a short time and see what the results are. Remember, major gifts is about the long-term game.
Without the mindset, which really says, “We’re going to invest in the long-term health of the organization by building a proper major gift program, and do it correctly,” the program is doomed to fail.
We have seen this over and over again. We believe that we are either so conditioned to get immediate results or that the pressure is so high from authority figures (CEO, board, chief development officer) that the major gift program has no chance.
But, for those organizations that do have vision it looks like this: The CEO or executive director is fully supportive and has inspired the board to view major gifts (and planned giving) as a long-term strategy for growth and more net revenue. There is a five-year strategy put in place for growth with low ROI in the first two years and higher net revenue growth in three to five years. Everyone in leadership understands that major gifts is about building long-term relationships with donors. That money is a result of the efforts around figuring out the passion and interests of their donors and matching it up with the programs and projects the nonprofit has to change the world.
Having a vision for major gifts also means that they will pay their MGOs well. They want MGOs for the long-term—not the 2.3 years that MGOs normally last at an organization. This allows the MGO to build relationships with donors and for donors to trust the organization has their best interests at heart.
Having a vision also means knowing there will be ups and downs with a major gift program. There will be immediate wins, but there will be frustrations. Leadership knows over the long-term, if they stay with it, they will see tremendous growth.
On a practical level, the organization has to have enough donors to warrant hiring a full-time MGO. So, here is a formula we use to help nonprofits determine if they have enough donors to hire.
Do you have 450 donors who have given a cumulative of $1000 plus in the last 24 months? If you do, you can hire a full-time MGO. The reason I say 450 donors is because once the MGO goes through a qualifying process, only about 150 (or one-third) of those donors will want to relate in a more personal way. One hundred and fifty is the maximum number of donors an MGO can cultivate.
Now lets say, initially, those 150 donors have a total value of $200,000. And let’s say, with salary, benefits, travel, etc., the MGO will cost $100,000. You’re starting at an initial two-to-one ROI. I know that seems low for major gifts, but remember you start low and build it. The vision is that over time (e.g. five years), that caseload will grow in value to six-, eight- or even ten-to-one. And donor attrition drops from 40 percent to five percent a year. And on top of that, the MGO has identified three or four donors who have capacity to give high six and seven figure gifts. This is how it grows.
Now, what if you look at your database and you only have 250 donors that meet the cumulative level of $1000 plus in the last 24 months? Well, consider hiring a part-time MGO or allocate 50 percent of a current staff member to it. What if you only have 100 donors or 50 donors? Again, while you cannot hire a full-time person, you can allocate your current staff to at least begin the process. But taking that initial number of donors and figuring out that only one-third will end up a caseload, you can figure out how much time to allocate to major gifts.
So, the answer to whether or not you should hire an MGO is all about two things: Vision and donors. You have to have both. Trust us. We have been building major gift programs for over 15 years, and if vision and donors are in place, great things will happen for revenue growth at your organization.
If you like baseball, tennis, golf, Gregorian chant, jazz, rock, good wine and deep conversation, then you’ll like to hang out with Jeff.
If you are passionate about fundraising, Jeff will inspire you to be a true “broker of love” for your donors, helping you bring together a donor’s desire to change the world and the world’s greatest needs. Jeff believes that if nonprofits truly want to grow and obtain more net revenue for their mission, it will come through creating, building and successfully managing major-gift programs. The Connections blog will give you inspiration and practical advice to help you succeed. Jeff has more than 25 years of nonprofit fundraising experience and is senior partner of the Veritus Group.