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How to Deepen Your Major Donor Relationships

Greg Warner

For most large and even mid-size nonprofits, your major donors contribute the great majority of your revenue. According to the Fundraising Report Card, nearly 70% of all donation revenue comes from donors giving $5000 or more. Even more staggering, these people comprise less than 1% of all donors.

So, a tiny percentage of donors are giving the great majority of money.

This should at least give you pause when thinking about how your organization is doing at developing relationships with its current and potential major donors. And how much you’re investing in that operation compared to the amounts you invest in events or direct response solicitations.

People rarely give in great amounts to random organizations they barely know. The Bill and Melinda Gates Foundation employs over a thousand people – all of them working hard to…. give away money. Who knew it was that difficult?

Your revenue and your very livelihood as a nonprofit depend on the quality of your major donor relationships.

How effectively do you reach out to new prospects?

  • Are you allowing them a chance to prequalify themselves for outreach or are you just merely identifying them and telling your staff to “go get ‘em”.
  • What is your follow-up process, and how do you adapt and personalize it for each donor?
  • What do you do leading up to a first gift?
  • How do you respond when a donor says they’re not ready?

These and hundreds of other questions all reveal how well you’re relating to major donors and prospects.

The Current State of Major Donor Relationships

If you think you’re struggling, it’s okay. You’re not alone. A recent study by Dickerson-Bakker interviewed a wide array of nonprofit workers and leaders, and compiled the results in a revealing report titled A Better Way – a National Study of Nonprofit Leadership and Fundraising in a Rapidly Changing World.

The status of major donor relationships was one of several big topics addressed in the study. Here’s some of what they found.

Risk-taking is happening, but not enough

46% of survey respondents said their organization is at least somewhat willing to try new things in improving their major donor relationships. That’s good, because it indicates that a good number of nonprofits recognize the need for improvement and are looking for solutions.

But, 37% described their organizations as ‘risk averse.’ That’s not good, because it suggests these places are stuck in a rut and aren’t willing to step out of it.

This, of course, doesn’t mean that all risk-taking is smart strategic thinking. There are ‘dumb’ risks too. But to categorically avoid trying new things is to assert that nothing can work better than what you’re doing now. For major gifts fundraising, that’s very unlikely.

Major donor relationships need more attention

46% said their organization should increase its emphasis on relationships with major donors, and only 28% think that what they’re doing now is highly effective. And that’s with actual donors. Only 6% think they’re effective with potential major donors.

The good news is that 46% see the need to focus more on major donor relationships, while only 19% would prefer to focus on near-term revenue.

However, though 19% is small, that still means one-fifth of organizations are being led by people who think grabbing the money as soon as possible matters more than cultivating the relationship.

That means these people suffer a disconnect between the act of giving and the relationship with the recipient of that gift. Who gives large amounts of money to things they don’t care about? And who cares about nonprofits where they have no relationships with anyone at the organization?

Relationships do matter. A lot. Prioritize them, and you will win more gifts, and bigger gifts.

No strategy for treating donors uniquely

What’s one of the biggest challenges in developing better relationships with major donors?

Making them feel special, unique, and like a human being who is known, heard, and cares about your mission. Even mass-market donors giving $20 are unique, and they give for different reasons. How much more is this true for donors who give tens or hundreds of thousands – or more?

58% of people in the survey say their organizations lack a strategy for treating major donors uniquely.

And even though you have far fewer major donors than low-dollar donors, it’s still quite a challenge to treat them all uniquely. It’s easier to send out special campaigns – even segmented ones given only to the major donors – than it is to call them, meet with them, and dialogue with them over their preferred communication channel.

How to create a strategy

This is where fundraising automation like MarketSmart comes into play.

Our engagement fundraising system was built for exactly the purpose of helping each donor progress along their unique donor journey. It’s donor-driven. So, they can go at their own pace, share what they want when they’re ready, and indicate when they want to step up their involvement, including giving a big gift.

Even better, our platform also serves that other constituency mentioned earlier – the potential major donors that only 6% of organizations say they have a method for building effective relationships with.

By automating cultivation and letting potential donors interact with you at a level they’re comfortable with, they will share information when they’re ready to, indicate and give permission for when they’re ready to be contacted, and reveal their wealth capacity and motivation for giving.

Asking for money too often

This one continues to be an area of disagreement among nonprofit professionals. In the survey, 68% of respondents said their communication with major donors does not achieve the right mix of asking for money with other topics. And 42% think they should ask for money less often.

Those statistics leave quite a bit of room for other viewpoints, indicating this remains an unsettled issue.

But if you’re thinking in terms of relationships, and what makes them rewarding, enjoyable, beneficial, and gratifying – for both parties – ask yourself one simple question:

Do you ask for money from people in your life? Ever? And how does it feel when a friend or relative constantly asks you for money?

The simple truth is that being pestered for money all the time cannot result in the best quality of relationship. If you want to develop strong, long-lasting relationships with more major donors, take a close look at how often you’re asking, rather than offering.

Assets or cash?

What’s better – to try to win more gifts of wealth assets, or go after simple cash?

If you’ve studied wealthy people much, or spent enough time talking with them and knowing them (you know – that relationship thing), you would have learned that most wealthy people do not keep the majority of their wealth in cash or simple bank accounts.

They own stock. They own property. They own non-liquid assets like retirement accounts, trusts, and donor advised funds.

These sorts of things comprise the great majority of wealth for most potential major donors. That means, if you’re only asking them to write checks, you’re asking them to give from a small fraction of their actual wealth.

Why gifts of assets are better

Picture a potential major donor with $10 million in net worth, $500,000 of which sits in liquid, accessible accounts. If you ask them to write a check, they’ll do so, considering how much of that $500k they want to give. And they’ll ignore the other $9.5 million.

But if you pursue gifts of assets, you could realistically expect to receive a gift that equals the total of all their liquid assets. They could, for example, sell $500k in stock options. But they would never write a check for $500k from their liquid assets. That’s all they have!

Do you see why it’s much smarter and more rewarding to pursue assets instead of cash?

But pursuing assets means having a relationship with the donor, because giving assets is more complicated.

Also, by pursuing assets, you’re empowering them to take advantage of the various tax benefits of giving assets instead of cash. So they give more, and it also benefits their overall financial situation in ways they may not have imagined.

In the survey, 55% of respondents said their organizations need to do more to increase charitable gifts of assets instead of cash. So that’s heartening to know that a majority of nonprofit fundraisers already understand this.

But, there’s also a sizable number who hopefully will see the value of it.

Want to see more of the survey results?

There’s a lot more in the ‘A Better Way’ report than just this. It touched on many other topics related to donor relationships. For example, here’s what the study found regarding mid-level donor relationships.

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