We are often asked this question about the size of a major gift program in an organization:
“How much should we depend on major gifts for revenue?” And the answer is usually, “Way more than you are now!”
This is not some pie in the sky statement without factual basis. It is the result of years of experience and analysis which shows that most organizations are not realizing their potential in this very critical area of major gifts.
Here are some of the usual scenarios we encounter out in the marketplace:
- The organization has one MGO who is performing way below what he or she could be. This is the most common scenario. We find an MGO struggling to survive with no management and no direction, but with a potential donor list far greater than he knows about. So he sits at an annual “production” amount of about $300,000, carrying an inner sense of dissatisfaction, along with a manager who is likely worried about “how much money we’re spending on this MGO with so little return”. But no one talks about it. It just is.
- The organization has one MGO with a lot of unrealized potential. If the organization took the time to do the analysis, which Jeff and I do for free, they would see that there is more room to add MGO’s to staff and then properly take care of the donors they have. Usually, after one year of our involvement, we will uncover the path to adding one or more MGO’s to staff, increasing productivity for each MGO and increasing the organization’s relationship-building capacity.
- The organization has more than one MGO, but they are not managed properly. This results in poor production per MGO, which then means that the return on the cost is too little, leading to a situation that is negative for the MGO and the organization. We have seen this happen so many times. Let’s say there are three MGO’s with a total revenue is $900,000. Their total cost, counting compensation, benefits, admin support, office, travel etc, is $375,000, making their ROI $2.40 of revenue for every dollar that is spent! Goodness, you might as well do a bad direct mail program rather than this!
The chart below illustrates these situations.
Why would you have one MGO who is producing far less than she could? Why would you only have one MGO when you could have two or more? The answer is very simple: No one has done the analysis to figure it out and then do the right thing.
And here’s the thing: Our world is becoming more and more impersonal. There is more isolation and detachment than there is real relationship now. Many managers are finding it easier to do the direct marketing thing (direct mail, online, etc.) rather than build a system where relationships thrive. The result of all of this is a fundraising “machine” that is built to harvest dollars and manage transactions instead of nurturing donor relationships.
And that’s why it’s important to carefully evaluate the media mix in every organization’s fund raising program to make sure that major gifts carries a larger share of the donor relationships and thereby the revenue burden.
When managers get this right the MGO is happier and more productive, the donors experience a deeper and more rewarding relationship with the organization and the organization secures more revenue at a better cost.
It’s a win all the way around.