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Investing In A Pipeline For Major Gifts

Study Finds Key to Meeting Fundraising Goals

About half of non-profit organizations surveyed said they would like new methods for identifying prospects in a 2019 benchmark study of major gifts fundraising.

A study of charitable organizations across the U.S. has found that just 43 percent of organizations met their major gift fundraising goals in 2019, with about a third of participants saying they are satisfied with their organization’s pipeline for developing major gift prospects. Of those organizations with no processes to identify major gift prospects, 61 percent solicited less than ten major gifts during the year.

The 2019 study is the second – following another benchmark study in 2016 – to be commissioned by MarketSmart, a planned and major gift marketing software and services firm based in Maryland (and the publisher of Fundraising Consultant). The study surveyed 580 charitable organizations of various sizes, primarily in the U.S., with a small sample in Canada.

“We found that organizations that are able to essentially devote more resources to major gift prospect identification are more likely to meet their fundraising goals,” said Melissa Brown, the principal researcher for the study. “For consultants, this really means helping non-profit organizations learn how to use the tools and how to use them efficiently.”

Putting a number on ‘major gift’

Non-profit organizations define ‘major gift’ differently depending on their size. The $1,000 to $2,500 range was the most common definition across the board. Higher education institutions defined major gifts at the top end of industry verticals at $20,000. Among organizations raising a substantial amount of funds – $10 million or more – 20 percent considered “major gift” to be something less than $5,000.

On the differences between the benchmark studies in 2016 and 2019, “We didn’t find many,” Brown said. “That’s sort of disappointing over three years where we’ve had robust economic indicators. Organizations in this survey were still working, most of them, with $1,000 to $2,500 as their definition of a major gift.”

Time spent on major gifts

Less than a quarter of organizations reported spending 60 percent of their time on major gift fundraising, and of those, 90 percent reported meeting their fundraising goals. “Unsurprisingly, a high percentage of study participants said they do not consistently have time for major gift fundraising tasks,” the study notes.

Improving major gift fundraising 

“Nearly half (48 percent) of study participants said they would like new methods for identifying prospects” when asked what would most benefit major gifts fundraising, according to the study.

Pipelines for major gifts “make sure that there are always people who are in a stage of being identified,” Brown said. “The process, we found this in this study, in most organizations takes one to two years, from the time that a potential donor is identified as somebody who might be interested in the organization to the point when the organization can actually negotiate and close a major gap.” 

Smaller organizations often struggle with basic training when it comes to building a pipeline, Brown said. “How does that cultivation process work, and what does it mean to cultivate somebody? Smaller-sized charities are often staffed by people who are very passionate about the work and sometimes forget that not everybody knows as much about it as they do.” 

On the other hand, larger organizations grapple more with information sharing, Brown said. “They have so many resources and so much going on that consultants might help organizations think about how everything’s integrated. How is information shared, how are prospects shared across major gifts and planned gifts staff? Who’s going to do the actual asking – is it the CEO, is it another donor, what is the plan for each individual donor?”

“We found a national break in the data where organizations that raised less than $3 million function differently from organizations that raised more than $3 million,” Brown said. The study notes that engaging three or more staff, volunteers or donors in the major gift process “is more likely to result in meeting major gift goals – except among small organizations (raising less than $3 million). It is possible that ‘too many cooks’ in a smaller organization created a challenge for major gift fundraising.”

Harnessing technology and human relationships

Organizations’ use of technology such as analysis of their database, wealth screening and engagement tracking are “slightly more closely associated with positive outcomes than are human knowledge,” the study found. But the research also affirmed the importance of human insight and using a combination of approaches.

“Technology is surfacing people we never would have found. We just could not have identified that this person gives us $25 a year actually has a capacity of a million,” Brown said, “but conversely, without the human side, we don’t know about the donor having really strong loyalty somewhere else, or life circumstances that make this the right time to give.”

Brown added that another significant conclusion of the study was that success in major gift fundraising is not solely reserved for larger organizations. 

“Many small non-profits will say we don’t have prospects or we don’t know how to do this, or we don’t have staff time,” Brown said. “This study shows that consultants can find ways to help small non-profit charities stretch their resources … to take really important steps that are associated with greater success and major gift fundraising.”

Key Findings

Use of technology for major gifts

86 percent using five+ technology resources met or got close to goals

49 percent using one or two

25 percent using none.

82 percent using five+ sources solicited 11 or more major gifts in 2019

60 percent using one or two 

35 percent using none

Use of human knowledge for major gifts

73 percent using five+ human-based sources of knowledge met or got close to goals

45 percent using one to two

25 percent using none

Nearly three-quarters (74 percent) used development/advancement staff knowledge of potential donors. 

Another 6 in 10 engaged board or committee members. 

Half (50 percent) had an individual who does prospect research (collect, review, and summarize information about potential major gift donors).