(Major Gifts #6) What’s the Return on Investment from a Major Gift Program?
(Major Gifts #6) What’s the Return on Investment from a Major Gift Program?
Wish you could have been there. We were up in a New York City office tower, gathered in a big conference room, surrounded by 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 program.
Since they had solid donor prospects, all they need to do was connect with and nurture these donors even more. If they invested in their fundraising program by hiring more staff and giving them systems, training, coaching, and support – then success would be fairly easy to achieve.
In our presentation, we laid out a very clear chart with all the arrows heading 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. If the organization invested around $300k in new fundraising staff and training, they could expect to receive an additional $3 million a year from their major donors.
The board members were thoughtful. They were 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 $ return could 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.
Fundraising guru James Greenfield, in his many books on fundraising practices, found that the average cost per dollar raised from major gifts was $.05-$.10 per dollar raised.
The Association of Fundraising Professionals also concluded the same ROI. This means that major gifts fundraising has a minimum ROI of 10 to 1, or even 20 to 1. Spend one dollar and receive 10 to 20 dollars in return. That sounds like an excellent investment to us!
Major gifts are a likely source of untapped revenue for your organization.
You can almost certainly improve your fundraising bottom line if you had more time and resources to spend with your major donor prospects.
Many organizations hold endowment investments that are bringing in only a 3-4% return. Compare that to the potential from major gifts.
For example, your organization could invest $100k in major gift fundraising and could receive back $500k- $1 million – or even $5 million depending on your donor prospects. It only takes a few donors to reach these totals.
You are probably sitting on a lot of potentials, but your team may not have the ability to go after it. Could you be sitting on a gold mine of potential to fund your mission?
Here’s an example of a significant return on investment in major gifts.
Brenda Riehl, of the Lancaster (PA) Health Center, saw a ROI of 18 to 1 from her investment in our Major Gifts Intensive program a couple of years ago. Here’s what she told us:
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 spent on the program.
We are so pleased! I think what sets you and your team apart is that you get right to the point and get your participants doing the work and applying the principles quickly.
Fundraising is a profit center and investments must reflect that mindset.
It’s so important to remember that fundraising costs are not a black hole into which you pour money. Instead, they’re investments that generate new money to serve your mission. Your fundraising expenses end up bringing in a large profit to your organization.
This means that your organization’s fundraising staff and programs are NOT a “cost center.” Instead, they are a “revenue center” – a revenue generating machine.
Just like you invest in the stock market – and you expect a return, your organization is investing in fundraising strategies that produce a generous return.
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 can devote a day a week 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 group 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 Gifts Fundraising has an impressive return on investment.
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.
