What’s the Rate of Return of Major Gift Fundraising?
2024
This post was first written by Gail Perry in 2019. Beth Ann Locke and Gail updated it in 2024. We are running this version because of the importance of these perennial concepts, and hope it’s helpful!
I wish you could have been there. It was a chilly day in New York City. We were up in tall office skyscraper, meeting with an important client. There everyone was, seated around a big conference table full of smart, thoughtful board members.
It was an exciting moment because we were showing the board how they could dramatically expand funding for their organization’s mission. They needed a new infusion of funding, and we knew where they could get it.
We had run the numbers on their potential from major gift donors, and we presented what would be possible if they invested in their major gifts fundraising program.
Since they had solid donor prospects, all they needed to do was connect with and nurture these donors even more than they had been. If they invested in their fundraising program by hiring more staff and then investing in the systems, training, coaching, and support – then success would be fairly easy to achieve.
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In our presentation, we laid out a very clear chart with all the arrows pointing up. It showed the exponential revenue increases they could expect as a result of spending more on fundraising.
We projected a HUGE 10 to 1 return on investment.
The numbers were pretty amazing, with a 10:1 return on investment (ROI). If the organization invested around $300,000 in new fundraising staff and training, they could expect to receive an additional $3 million per year in giving from the major donors.
The board members became thoughtful. I could see them weighing the pros and cons of taking some money out of the organization’s reserves and investing it for this huge return on their investment.
But one board member got cold feet: “We can’t possibly spend that much on fundraising!” he said. He wanted to back away from the strategy because he couldn’t connect the dots between investing the money – and seeing the exponential return.
What kind of ROI might YOUR organization expect from investing in major gifts?
Typically, a major gift program provides a “profit” of 8 to 10 times the cost of the program.
In his many groundbreaking books on fundraising practices, fundraising virtuoso James Greenfield found that the average cost per dollar raised from major gifts was $.05-$.10 per dollar raised.
With the recent rapid growth in mega gifts, even a modest investment could have profound positive impacts on the work of your organization and your ability to scale your impact.
The GivingUSA 2023 Report specifically noted tremendous major gift growth. You could easily see a minimum ROI of 5:1 in a new major gifts program and a minimum ROI of 10:1 or even 20:1 in a more mature major gifts program.
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Investing $100 and receiving a $1,000 or $2,000 return? That sounds like an excellent investment to us!
Looking for untapped revenues? Look to your major gift prospects.
You can almost certainly improve your fundraising bottom line if you had more time and resources to spend with your major donors and major donor prospects.
Many organizations hold endowment investments that are bringing in only a 3-4% return. Compare that to the potential return from major gifts of 10:1. And these gifts can do the work of your mission right away.
What if your organization could invest $100,000 in major gift fundraising… imagine seeing the benefits a year from now of $500,000, or $1 million – or even $5 million, depending on your donor prospects. It often only takes a few donors to reach these totals.
You may not yet even know how much potential there is! You could be sitting on a “gold mine,” but without the staff resources or tools to make the most of the potential… it just sits there, untapped.
This means you likely have donors with potential who continue to go uninspired, without the meaningful discussions that lead to meaningful gifts, without the conversations that move people to make a difference.
What does ROI in major gifts look like in a real fundraising office?
Here’s what Brenda Riehl shared with me after investing in our Major Gifts Intensive.
Gail, I’m happy to share the ways we’re benefitting from the Major Gifts Intensive program.
To date, we’ve seen a return on investment of 18:1! That’s $18 raised for every dollar invested in your program.
That was the success she was crowing about when she was with the Lancaster Health Center – an ROI of 18:1!
Wouldn’t you like to present that kind of radical return on investment to your Board?
Fundraising is a revenue center, not a cost center.
It’s so important to remember that fundraising expenses are not a black hole.
In fact, it is what the financiers call “investment spending” – investing more to earn more. They are investments that generate new money to serve your mission.
And done right, it becomes very sustainable, as donors ready to step up to major and mega gifts are more often ready to give year after year.
This means that your organization’s fundraising staff and programs are a revenue center, NOT a “cost center.” Fundraising pays for itself many times over.
Major Gift fundraising is the most efficient and effective way to raise money.
It’s efficient because you get a higher return on your investment of time. This is where the largest gifts are.
You could devote two solid days a week to major gift fundraising and raise millions vs. staging events that take vast amounts of time and raise much less.
What happened with our board member friends that I mentioned earlier?
Yes, one board member wanted to back off.
But the rest of the board members took a business-like, analytical approach. They studied the financial projections. And they decided they were confident that their fundraising and consulting teams could deliver.
Yes, they went for it – made the investments and ultimately saw dramatic increases in revenue for their mission.
Bottom Line: Major Gift fundraising has an impressive ROI and you should invest now.
The more resources you invest in fundraising, then the more you will exponentially raise.
Major gift fundraising has a very high rate of return. Think of fundraising costs as investments that will pay back over and over.
The Major Gifts Intensive program closes on February 15!
If you want to develop the systems, mindset, and processes for a long-term productive major gift program that will deliver measurable results for years, then consider joining us. Find out more at majorgiftscoaching.com.
Even more, if you want to expand your organization’s major gifts, right now, then join us for this 4-month structured training and coaching program.
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