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Philanthropic Trends and Their Impact on Major Gifts

The number one motivation for high net worth donors to give to your institution is to make a difference (74%).  Are you communicating how gifts are making a difference?
In addition, research shows that high net worth donors are willing to make unrestricted gifts.  Are you soliciting major gift commitments for the operational needs/annual fund needs of your institution?
The majority of high net worth donors, 70.9%, have a giving strategy in place.   Do you know the charitable giving priorities of your major gift prospects?
In reviewing the recent philanthropic trends, we have identified 5 best practices that you should integrate into your institution’s major gift program.

1.       Examine the effectiveness of your current major gift program.

  • Because the number one motivation for high net worth donors to give is “making a difference,” make sure you are communicating to donors and alumni the impact of charitable giving on your institution.
  • Emphasize to your advancement team the importance of creating a systematic approach to consistently have individually-tailored, meaningful interaction with each major gift donor and prospect. It is important that there are written strategies developed for the engagement of each top donor or prospect with your institution and a plan to follow to implement these strategies.
  • Examine your donor and prospect portfolio to ensure you have a balance of women and men. Female-headed households give more than men in comparable households, except in the widow/widower category. You don’t want to ignore this important demographic and it’s potential for significant charitable contributions.
  • Also, ensure you are making an effort to meet with husband/wife couples together.  High net worth couples are almost equally divided on who makes the charitable giving decisions in the household, thus you do not want to eliminate one spouse from the conversation.  2011 data shows 51% of high net worth households make joint decisions about charitable giving and 48% decide separately.

2.       Understand the engagement of major gift prospects takes time and the involvement of you, as the president, and your senior leadership.

  • It is crucial to build relationships with multiple people at your institution, including senior leadership and faculty, etc. This helps solidify the relationship the donor has with your entire institution, rather than just one person.
  • Providing meaningful volunteer opportunities is one way to engage major gift prospects in your institution.  Research shows 89% of high net worth donors volunteered in 2011 and are looking for leadership volunteer opportunities, like board service.
  • Finally, don’t rush to solicit too quickly. A reported 58.9% of high net worth donors stopped giving because they were solicited too frequently or for the wrong amount.  Realize that you need to solicit a major gift prospect not when the time is right for your internal schedule, but when the relationship has been developed to a level that makes solicitation a natural next step.

3.       Know your prospect!

  • The majority of high net worth donors, 70.9%, have a giving strategy in place. Do you know the charitable giving priorities of your major gift prospects?
  • An important step in cultivation with donors is having conversations with them about their philanthropic motivations.  It is important to uncover the motivators and de-motivators of your major gift prospects and to learn the values and beliefs they would like to perpetuate in a philanthropic legacy.
  • A vast majority, 91%, of responding high net worth households had children and roughly one-third of them want to involve their children in their charitable giving.  Are you engaging with the family members of your prospects where appropriate?

4.       Match the right project with the right prospect and giving vehicle.

  • Research shows that high net worth donors (60.9% in 2011) are willing to make unrestricted gifts. Are you soliciting major gift commitments for the operational needs/annual fund needs of your institution?
  • Make sure your institution is effectively positioning and communicating your philanthropic needs to potential donors in a way that will elicit a meaningful response.  Try to tie what you know about a specific donor’s motivations to similar needs at your institution.
  • Learn how your major gift donors and prospects each prefer to give and match your funding needs with those giving vehicles, be it through a private foundation, trust, or donor advised fund.

5.       Practice excellent donor stewardship.

  • Don’t let your relationship building efforts with a major gift prospect end when a gift is made.  Establish a long term focus and make a plan for how you will grow the relationship beyond the signing of a gift agreement or cashing of a check.
  • Use stewardship as an opportunity to lay the groundwork for the next area of interest and for increasing charitable support of your institution.  Work with donors to learn the issues that are important to them and make the connection between these issues and your mission.  Create tailored stewardship opportunities for your prospects to match their individual needs.
  • Look at how you are tailoring stewardship of gifts for women and men rather than creating a “one size fits all” approach. Women donors’ primary motivations for giving are even more likely to be focused on making a difference (81.7% compared to 70% for men), which means they are more likely to want see the impact of their gifts in their stewardship recognition.

These statistics and much more information on the motivations of high net worth donors and women philanthropists were pulled from the following sources:  Giving USA, The Indiana University Lilly Family School of Philanthropy COPPS Study, Women Give 2010, and The Bank of America Study of High Net Worth Philanthropy.  I encourage you to review the full reports for more insights.

While this data provides insights into the generalities of why, where, and how these important constituents want to give, it is crucial that we avoid the tendency to make generalizations.  As emphasized above, the key to an effective major gift strategy is relationship building.  Allow this data to inform your decisions about how you structure a major gift program, but take the time to get to know your donors and build a tailored engagement plan.