How to Think About the Cost Of Major Gift Fundraising–A six part series

#4 – How Do 150 Qualified Donors Relate To Cost?

“Look, I know I have 150 donors on my caseload, but I need to add these two couples I met at the event today.  They are very wealthy and I know they could give a very large gift!”

I’ve heard some form of this statement hundreds of times from MGOs in many good non-profits around the country. And it seems like a reasonable statement to make.  When a MGO meets a wealthy prospect, who they believe has expressed some interest in the organization, it just seems like the right thing to do.  I mean, you are just months away from a $1 million dollar gift, right?

There are several important reasons this is not true:

  • A qualified donor on your caseload is worth more than one that isn’t.
  • You don’t have the time to do this.
  • Using your labor this way is a waste of money.

Let me un-pack these three points.

A qualified donor on your caseload is worth more than one that isn’t.  If you have qualified the donors on your caseload properly you have a good group of people who have shown inclination and capacity. Inclination means recency (they gave recently) and amount of giving.  You know what capacity means. Why would you trade a good current donor for a promise of one?  If you stop and think about it, you wouldn’t.

You don’t have time to do this.  Take a look at this chart that basically concludes you have 18 days or less a month to deal with the good donors on your caseload.  18 days!

Here’s how I get to this number.  You start with the 365 days we all have each year and subtract weekend days (not saying you may work some weekends). Now you have 261 week days left.  Then take off 50 vacation and holidays and the days you are required to spend in the office, a category I call business days. You might not have a lot of vacation or holidays but, believe me, I know those days really add up.

In fact, on this point, I have to say that I do not understand managers who require their major gift people to be in so many meetings which rob their MGOs of precious donor time. Some of the meetings are necessary. Most are not. MGOs belong with donors, not in meetings.

Using your labor this way is a waste of time.  On the post just before this one, I showed you how to calculate the cost to service each donor by adding up the total cost of your major gift unit and dividing it by the number of qualified donors on your caseload.  The point of that exercise was to show that it costs quite a bit of money to service just ONE of your donors – money that you can not afford to waste.

Remember, you put that donor on your caseload because you felt they would contribute a value greater than the cost – in fact a multiple greater than the cost, meaning, at least, a 3:1 to 10:1 ratio of revenue to cost.

So, if what I am saying is true and you believe it, then why would you waste your precious time chasing a potential donor that “has a lot of capacity” but has really not proven inclination, i.e. current giving at a level that meets your criteria?  You wouldn’t.

So, why do MGOs have the urge to do this kind of thing?  Probably for the same reason people buy lottery tickets.  They think they will win.  And the sad fact is that by diverting your time and effort over to prospecting you have run out of time to serve the good donors who are already with you.  Chances are, because of your neglect, some of those donors will now go away and the value of your caseload will drop somewhere between 30-60%!

This means that if you caseload value was $1,000,000 last year it will likely be $400,000 to $700,000 this year, from the same people – all because you didn’t pay attention to your current qualified donors.  And the cost of that diversion is going to be embarrassingly enormous!!

So, avoid the urge to buy that lottery ticket, remembering that very few people actually win. Instead, stick with those good donors who are currently with you.  They are the ones who have shown, by their behavior, that they care about what you are doing.  Honor them with your care and attention.  It’s the right thing to do and it will have economic benefit.

Richard

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About Jeff Schreifels and Richard Perry

Jeff Schreifels and Richard Perry have over 55 years of experience fundraising for non-profits. Richard Perry was co-owner of Domain Group until 2005. Jeff Schreifels was a Senior Strategist for Domain Group for 12 years. They came together a few years ago to start Veritus Group, a full-service major gift fundraising agency. Veritus Group has a unique, data-driven approach unlike any agency focused on major gifts. Jeff and Richard are passionate about their work, passionate about life and hopes this blog will provide you with insights and tangible benefits for you and your work. Thank you for reading!
This entry was posted in Development Directors, Donor-Centered, Major Gift Officers, Major Gifts, Non-Profits, Philanthopy, Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

3 Responses to How to Think About the Cost Of Major Gift Fundraising–A six part series

  1. Heather says:

    At my first fundraising job, I worked for a Development Director who acted COMPLETELY as you’ve described above. She met an extremely rich couple with some interest in our cause (the wife was a dog therapy volunteer at our senior services organization). And from then on, it was all about them because she seemed to think that, as you said, we were just months away from a million dollar gift. She ignored other prospects and actual donors, even kicking someone out of her office once when this wealthy woman happened to stop by without an appointment. To make matters even worse, she ignored all other fundraising activities (annual giving, stewardship, events, marketing, etc.) except for the major gifts program (i.e., this one rich couple).

    Although I was brand new to fundraising and knew very little about major gifts, my instincts told me this was wrong. This blog post certainly helps articulate why it was wrong! At the time I left that position, this rich couple still had not given any monetary gifts (even though the Director had the husband sign one of our appeal letters!) and it looked like the husband was going to join the Board of Directors at a “competing” organization. I don’t think the couple was really interested in making a more personal connection to us — they certainly weren’t qualified donors. The whole mess was really just a shame for that organization, because it actually did great work for seniors.

  2. Perfect example, Heather. Perfect.

    Isn’t it amazing how easy it is for a person to become so self absorbed that they REALLY think that “two donors in the bush are more valuable than one donor in hand”, to coin that bird in the hand saying? Sometimes I think that people like this just want to BE around the rich, famous and powerful vs. actually do their jobs! Even more interesting to me is the mental gyration the person has to go through to actually believe that what they are doing is right. A lot of drama…

  3. Pingback: You Can’t Use the Economy as a Crutch | Passionate Giving

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