What Motivates Nonprofit Donors?

What Motivates Nonprofit Donors?

By Tom Wilson Major Gifts Guru

With more than a quarter-century in philanthropic fundraising (wow, that makes sound really old, I guess I’m getting there) there is a constant debate between “transactional” fundraising and “philanthropic” fundraising. How many benefits do we need to give a donor to encourage a gift? Does public recognition of giving really help?

A recent article in Advancing Philanthropy: Ideas & Strategies from the Association of Fundraising Professionals (July / August 2009) by Russell N. James III of the Institute for Nonprofit Organizations at the University of Georgia reports on a recent research study cited in American Economic Review that showed the following differences between:

  • Extrinsic motivation – where donors receive a reward or benefit fro donating (tax breaks, tickets, auction items, gifts

  • Image motivation – visibility that signals a donor’s philanthropic spirit or wealth
In one study of students at Princeton there were two groups involved in a Click for Charity project. One group did their work in private. The other group shared their results publicly with others in the group. “. . . those in the public group gave more effort and, ultimately, raised more money for charity . . . . image motivation.”

The next step of the study was to provide compensation for results. In the private group, those compensated did do better. In the public group compensated students actually did worse than their more altruistic colleagues. “. . . introducing compensation (extrinsic motivation) reduced the image motivation.”


So what does that mean to us major gift fundraisers?

First – think about donors. Getting a reward for giving is fine but is seen as a private reward and not a public gesture. For donors, image motivation through donor walls, annual report listings, special ribbons at events, and focused recognition at awards events can be very powerful motivators. Most of us are on the right track.

Second – think about fundraising volunteers. This research implies that you shouldn’t have prizes for the best volunteer phone caller at your telethon night or a donated stereo system for your best annual fund volunteer for the year. But rather, nontangible recognition in front of their peers. This image recognition will motivate the honoree to do more in the future and to serve as a role model to others.

For one of my clients we are implementing a quarterly “Golden Glove” award to the highest annual fundraising volunteer. It will be fun, slightly tacky, totally unique, and awarded at our quarterly meetings where 50 to 75 of our volunteers are in attendance. We’re also going to highlight the Glove winner in our newsletter.

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Fundraising Training Conference in Nebraska


Fundraising Training Conference in Nebraska

by Tom Wilson Major Gifts Guru


I'm from Nebraska (grew up in Omaha and went to college in Lincoln) so when AFP Nebraska contacted me to be the keynote speaker at their Give & Gain fundraising conference day I was delighted.

I will lead two general sessions in the morning.

Session #1: The Tough Get Going – major gifts & planned giving fundraising in a tough economy

  • Times are tough, donor assets are down . . . we’ll review and reinforce the techniques that are critical basics of major gift fundraising and elements of planned estate giving. After surviving two other downturns during his more than quarter-century in philanthropic fundraising, Tom will share his survival tips and stress the essential tools for success in major gifts and/or planned estate gift fundraising.

Session #2: Listening to Donors – an essential skill in Winning Gifts

  • Good listening can lead to gift requests that inspire donors. Based on Tom Wilson’s book Winning Gifts: Make Your Donors Feel Like Winners, we’ll focus on people centered fundraising – their values and motivations for giving. And, we’ll zero in on the use of “The Six I’s of Philanthropic Fundraising” process to ensure we harvest the gift at the right time. Tom’s Tools of interactive listening techniques will sharpen your skills to make you a more effective philanthropic fundraiser.

In the afternoon, I will teach a breakout session: Every Campaign Comprehensive – how to integrate the role of planned estate giving through the triple ask

  • You know what a capital campaign means – know how do you make it comprehensive to include planned estate giving? We’ll examine how to make the complete case statement for a comprehensive campaign, how to test your case to find community campaigns for each aspect of it, and how to make the triple ask to secure an annual gift, the major gift, and a planned estate gift all in one call (well, most of the time).

For more information on this 9/15/09 conference click on the AFP Nebraska link above.


Image thanks to legendsofamerica.com


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Major Gift Donor Retention (part 2 of a series)

Major Gift Donor Retention

By Tom Wilson Major Gifts Guru


Stephanie – Do you have information that would be beneficial to someone who is just starting to look at starting a donor retention program?

Part 1 of this article discussed the importance of bonding first-time donors to your organization to boost their renewal rate. Now take the same process steps for your multi-year, habitual donors.

Have you done a personal discovery call with all of your top 25 major gift donors this year?

If not, get busy.

It’s amazing when I ask people why they give to an organization. “Joe asked me to.” “I don’t remember, I’ve been giving for 7 years but I’m not sure why I started or what your organization really does.”

Especially in this tough economy it’s important to interact with donors so they can remind themselves about why they give.

Share stewardship stories to show donors the impact of their giving.

We’re hearing from some donors that instead of giving 10 major gifts this year, they’re going to keep giving but to only 5. You need to get on this short list.

Never, ever lose a donor.

Start the renewal process at 10 months after their last gift by sending a friendly reminder.

Keep sending reminders every 3 weeks until you get a response. Once the donor is one month over due on their anniversary of giving, get on the phone and try to connect personally. Two months after the anniversary start to get worried and have some of your great volunteers check for people they know to help save the gift.

Of course all of this is easier if you or someone on your staff makes a concerted effort to see each major donor once a year.

Other ways to help the renewal process are brief, bimonthly quick-read newsletters showing how your organization is benefiting the community.

Supplement this written information with longer stories on your website, a major donors’ blog (see a previous post for more on this topic), and by inviting donors to attend quarterly on-site cultivation events with all of your other donors.

Let major gift donors see your organization in action – feature a physician, a faculty member, a program leader so donors begin to understand the depth and breadth of your organization. Staff’s job is to put on great programs, get the invitations out, and work with volunteers to ensure good attendance. As you get donors coming to these events and then reading about them in your short, frequent newsletters, they begin to build relationships with other donors. These new, interesting friends with a common interest in helping your organization are another benefit of giving to your cause.

If a donor does tell you they can’t renew their gift, try to conduct an exit interview. Is this just a timing issue? Do they really understand your organization? Did something screw up the relationship some how? Would paying monthly be easier than writing a single check? Could you revisit their decision in the future? What could your organization do better to communicate with donors? Listen hard, take their advice no matter how painful.

Bottom line, unless a donor dies, moves away, goes bankrupt, or has a major personal catastrophe, you need to gently pursue their gift renewal. Try to boost your first-time donor renewals from the 50% national average to 80% -- and boost your multi-year donors from the national benchmark of 80% to 95% (or better).

Donor retention through a good thank you system, frequent communications, personal visits, appropriate recognition, and evidence of stewardship and gift impact take time and money. Educate your management team and board that fundraising isn’t all about asking for money and receiving gifts – it’s building a lifetime relationship.

This article is part of a series. To read the other article in the series, please click the link below:



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Fundraising from Inherited Wealth

Fundraising from Inherited Wealth


by Tom Wilson Major Gifts Guru

I do so much interviewing of people that when The Major Gifts Report called to interview me it was very interesting. The shoe was on the other foot.

I did get the lead article in September 2009 issue: "Refine Techniques for Approaching Heirs of Inherited Wealth."

Here are 3 points from the article about listening to inherited wealth's attitudes toward their money:
  • What is the heir's role when it comes to the inheritance? Does he/she want to guard it, share it, or grow it?
  • Is the heir the first person in the family to potentially guide family philanthropy, or does a legacy of giving already exist? Is a family foundation in place? Who are the trustees?
  • What are the heir's interests? Where do his/her passions lie? How are heir's intentions for wealth similar to or different from whom he/she inherited it?

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Mega Donor Values Warren Buffett (Part 9 of a series)

Mega Donor Values Warren Buffett (Part 9 of a series)

By Tom Wilson Major Gifts Guru

This article is part of an ongoing series of excerpts and insights from the recent biography The Snowball: Warren Buffett and the Business Life by Alice Schroeder. I encourage you to buy this book to get the full story.

“The newly enriched Gates Foundation was having a tectonic impact on the philanthropic world. Its ‘all-asset approach,’ which greatly resembled Buffett’s ideas about concentration – and indeed, his investing style – focused resources toward a short, carefully selected list of serious problems. That differed markedly from many other major foundations and community funds, at which a headquarters staff of philathropoids circled around a series of supplicants, playing ‘eeny, meeny, miney, moe’ as they doled out fragmentary sums.”

This is the end of this fascinating series of excerpts from Alice Schroeder’s book The Snowball. I heartily recommend that you buy it and read it to sensitize you to how your mega and major donors think, react, invest, and make philanthropic decisions. Warren Buffett is unique in many ways, but the stories of his friends and their giving discussions broadens the scope of this book.

You’ve got to read this book.

This article is part of series. To read the other articles in the series, please click the links below:


Permanent Link: Mega Donor Values Warren Buffett (Part 9 of a series)

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New Benchmarking Data from AHP

New Benchmarking Data from AHP

By Tom Wilson Major Gifts Guru

The AHP Performance Benchmarking Service is really starting to take off.

In the recent Advancing Philanthropy: Ideas & Strategies from the Association of Fundraising Professionals, a short article about AHP noted yearly benchmarking results for 2007 from 46 participating hospitals in the United States and Canada.
  • "High-performing, philanthropic fundraisers in charge of major gifts and planned giving programs were often the most effective and efficient fundraisers."
  • "Major gifts from individual contributors . . . averaged $55,000 per gift."
  • "The highest performing fundraising organizations put stronger, longer-term emphasis on cultivating major gifts, investing on average three times more than other surveyed organization but earning five times more in high-dollar gifts."
  • "Developing major gifts and planned giving is the type of fundraising that calls upon the skills of the most seasoned professionals, said AHP Board Chair Lisa Hillman, senior vice president and chief development officer for the Anne Arundel Health System, Annapolis, Maryland."
Remember this was 2007 data so things are different right now. This information is critically important to get to your CEO, President, or Executive Director. If you want more funds raised, invest in highly experienced major gift officers.

If you're in healthcare, get your organization to join the AHP benchmarking group (started in 2003). Sure the first year is expensive ($4,000 for members with each year afterward $1,000). But, this data will be enriched with your participation and the group data will be critically important to educating your CEO and CFO on the values and importance of philanthropy. Please note there are 74 participants representing 94 organizations participating in the AHP benchmarking group.

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Major Gift Donor Retention (part 1 of a series)

Major Gift Donor Retention (part 1 of a series)

By Tom Wilson Major Gifts Guru

Stephanie – I currently receive your blogs by email and really enjoy reading them. Do you have information that would be beneficial to someone who is just starting to look at starting a donor retention program? Thank you for your interesting blogs!

Thanks for this important question.

Even in a good economy it’s hard to get a new prospective donor to add your organization to their list of major giving. In tough times, wow. When you realize that it costs you at least 5 times more to acquire a new donor than retain a current one, you begin to focus on the importance of Stephanie’s question.

So, take the stance of a zero loss rate for current donors. That’s right – no tolerance for non-renewals. Of course we’re focused on major gifts here so you can afford to spend the time on retention. A typical renewal rate for first-time donors is usually 50%. People aren’t really donors until they’ve made more than one gift. So go all out for these first-time donors. Make sure they not only get the standard thank you note, but also a phone call of thanks from a board member or fundraising volunteer, and a special note from your president or executive director. Within the first three months after their gift, make a personal discovery call to get acquainted and to help bond the person to your organization. Your goal is to understand their philanthropic values and why they felt your organization was important to support.

Many first-time donors are brought to you through dedicated volunteers who agree to take names of their friends and secure their major gift. This is great. For many prospective donors, the only way to entice them into giving and secure this important first-time gift is through a peer request.

Now the staff needs to get into action and move the donor’s allegiance from granting a request of a friend, almost making an obligatory gift into one that excites the donor, a passionate gift.

So go listening. Start building a personal relationship and help create a sense of purpose to the donor’s giving.

Remember this is for first time donors.

More to come on renewing multi-year donors.

This article is part of a series. Click the links below to read articles also in the series:

Permanent Link: Major Gift Donor Retention (part 1 of a series)

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Mega Donor Values Warren Buffett (Part 8 of a series)

Mega Donor Values Warren Buffett (Part 8 of a series)

By Tom Wilson Major Gifts Guru

This article is part of an ongoing series of excerpts and insights from the recent biography The Snowball: Warren Buffett and the Business Life by Alice Schroeder. I encourage you to buy this book to get the full story.

“So I got very lucky, [in finding a partner with the Gates Foundation] because philanthropy is harder than business. You are tackling important problems that people with intellect and money have tackled in the past and had a tough time solving. So the search for talent in philanthropy should be even more important than the search for talent in investments, where the game is not as tough.”


This is a great quote for board members and nonprofit management to see. It’s a wonderful reason to invest in good organizational management and high-level fundraising talent for nonprofit organizations. Mr. Buffet’s comments also make it clear why it takes great people to be great major gift officers. Donor expectations are high. Donors are wealthy because they’re smart, tough minded, and dedicated to success.

Nonprofit organizations need to step up to the challenge of attracting and retaining excellent people. Major gift fundraising is a people-to-people, relationship business.

This article is part of series. To read the other articles in the series, please click the links below:

Permanent Link: Mega Donor Values Warren Buffett (Part 8 of a series)

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Blogging to Cultivate Major Gift Donors for Nonprofit Organizations

Blogging to Cultivate Major Gift Donors to Nonprofit Organizations
By Tom Wilson Major Gifts Guru



A few sessions back I wrote: "We’re discussing with a few clients how to get a major gift donor blog set up for their organization. Donor stories would be a great sidebar to your organizational blog."

Sam asked: "Tom, have any of your clients set this up? I'd be interested in seeing examples of this."

The only client use of blogging so far is one hospital CEO who is using a personal blog to internally communicate with staff and physicians (sorry I can't share it). This is a great idea and good way to communicate given more than 1,000 employees, two major hospital facilities, and several outlying clinics.

Why start a major gift donors blog for your organization?

You can write short articles summarizing newspaper coverage in your area and then link your short highlight to the full article.

Do feature articles on donors, staff members, volunteers. Convert all press releases to short blog notices tied back to the full press release on your website.

Take your annual report articles and summarize and link back to the full article.

Use your printed newsletter to provide short articles. The tricks with blogging are frequency and brevity.

Start small and build over time. Do one post a month, then go for one a week, then three a week.


Good luck everyone. Let me know if you see any or you need help in getting one started. After 19 months of blogging I know how to do it.

Permanent Link: Blogging to Cultivate Major Gift Donors for Nonprofit Organizations

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How to Enhance Efficiency of Major Gift Officers (part 4 of a series)



How to Enhance Efficiency of Major Gift Officers (part 4 of a series)
By Tom Wilson Major Gifts Guru

Question: Any particular advice on operations to enhance efficiency of the gift officers and to ensure prospects don’t fall through the cracks?

Why Face to Face Contacts?

The whole point of people-centered philanthropic fundraising is matching a donor’s interests with the needs of your institution. The major gifts officer’s job is to build a fulfilling, lifetime relationship between the prospective donor and the organization.

Relationships are about people. Don’t be efficient through your email, letters, phone calls, be effective through personal visits. You need to pick up clues and cues that can only be obtained through personal interaction.

As I did research for Listen chapter 3 of my book Winning Gifts, I found the chart above indicating that 55% of all communication is nonverbal. Now, this research is quite dated and a research study should be done to retest the information. But, that’s what we have.

And, that’s why email communications are so dangerous. There’s no body language to review. This is why it’s so easy to turn down a request by phone (major gift officers – please don’t make telephone requests).

Use your people skills, your empathy, your smile to build strong, personal relationships with your prospective major gift donors.

So remember this mantra, just as real estate is “location, location, location” – major gifts fundraising is “face to face, face to face, face to face.”


Permanent Link: How to Enhance Efficiency of Major Gift Officers (part 4 of a series)

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Tom Wilson Speaking at AHP International

Tom Wilson Speaking at AHP International

by Tom Wilson Major Gifts Guru


I've done a lot of speaking engagements at regional conferences for AHP (Association of Healthcare Professionals), and while I've led several Idea Exchange tables at recent International conferences, September 2009 will mark my first, regular-session, speaking engagement for AHP International.

Client Stephanie Cline, Executive Director of Harrison Medical Center Foundation, and I will present a session on Great Nurses for a Great Community: An Innovative Case for Care. We recently presented this case history at AHP Canada in Montreal. For more information on this concept and to view the campaign video click on the Harrison link above.

If you're at the conference in San Francisco, also look for my Idea Exchange discussion on Creating a Culture of Philanthropy.


For more information on the conference, click on the AHP link above. And, if you want a copy of our presentation just email me at TomWilsonMajorGiftsGuru@gmail.com.

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Giving Circles and Major Gift Fundraising

Giving Circles and Major Gift Fundraising

By Tom Wilson Major Gifts Guru


I've been hearing about giving circles for a few years now without really understanding how they work. A recent article in Advancing Philanthropy: Ideas & Strategies from the Association of Fundraising Professionals (July/August 2009) caught my eye.

The article summarized some of the research findings from "Giving Circles and Their Impact on Members" by Angela M. Eikenberry (University of Nebraska Omaha) and Jessica Bearman (Bearman Consulting of Spokane, Washington). This research was supported by the Aspen Institute, Center on Philanthropy, the Forum of Regional Associations of Grantmakers, and the University of Nebraska Omaha. The full 66-page report can be found in PDF format at Forum of Regional Associations of Grantmakers website.

In addition all types of information about giving circles including a national directory is at this website. It's just amazing to see how many giving circles there are in California.

Here are some report highlights from the survey work the research team did with 587 current and past giving circle members.
  • Giving circle members report more giving to more organizations in a more strategic way
  • They have increased knowledge about philanthropy, nonprofits, and community needs
  • The more members are engaged in their circles the more they have increased their volunteer services
  • "Giving circles may be particularly relevant in these tough economic times because donors can leverage their donations with others to have a greater impact on causes they care about" according to study co-investigator Jessica Bearman.
The information in their report and on the website is very helpful. I will try to follow up and find out more for a future article. If you have information you'd like to share, please contact me at TomWilsonMajorGiftsGuru@gmail.com.

Permanent Link: Giving Circles and Major Gift Fundraising

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Big Picture Financial Planning for Nonprofits (part 8 of a series)


Big Picture Financial Planning for Nonprofits (part 8 of a series)

By Tom Wilson Major Gifts Guru

Given the 7 steps of nonprofit financial planning:

  • Step 1 – Balance budget (no deficits allowed)
  • Step 2 – Establish contingency fund (5% of operating budget)
  • Step 3 – Rid short-term debt (debt negates endowment)
  • Step 4 – Build cash reserves (25% to 50% of operating budget – reserves are the key to financial stability)
  • Step 5 – Develop risk venture fund (10% of operating budget)
  • Step 6 – Fund special projects, equipment, and building needs (be sure to fund depreciation)
  • Step 7 – Strengthen endowment (to provide 20% of operating budget, donor designated endowments should retain excess earnings and market value)
The chart above shows how the financial model was applied to one of my clients a few years ago.

The good news, there was no debt. The bad news, their new building of 8 years prior was slowly strangling the organization.

The new building is really spectacular for this community and organization, but the operating costs were sucking all of the vitality out of the organization. Staff had been reduced, programs diminished, and visiting exhibits curtailed. They also needed a new warehouse of safe storage for their collections as well as a space to prepare exhibits.

We looked forward 5 years to estimate a $1.9 million operating budget. Then we started applying the stabilization financial model. To get between where we were and completion of the first phase of the plan we needed to add some bridge funding (cash that could be used until the endowment started producing more income).

The executive director also decided that the risk venture fund should be relabeled “artistic” and that a more aggressive target of 25% of budget established as more traveling exhibits were critical to driving membership and annual fund growth.

Because of the lack of many companies in town or the region, and the bare handful of philanthropic foundations capable of future funding grants, we decided upon a target of 30% of operating. $1.4 million of endowment was already on hand.

Given the vision for the organization, we then tested the financial objective of $17 million with donors to see what was possible (you can always hope). We came back after the philanthropic market research study recommending a phase 1 campaign of $6 million with a phase 2 long-term objective of the $17 million (the museum is involved with one billionaire). We shared both numbers with all board members, study interviews, and potential donors.

Donors got excited about the financial model; saw hope in the future; and the campaign was off and running. A couple of years later they are now over $4.5 million toward the phase 1 objective. Planned estate giving discussions are underway with long-time members so they understand the real long-term need of $17 million.

This is still a work in progress. It will be fun to see where they are 10 years after plan inception.

More to come – a large organization model.

This article is part of a series. To read the other articles, please see below:

Permanent Link: Big Picture Financial Planning for Nonprofits (part 8 of a series)

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Mega Donor Values Warren Buffett (Part 7 of a series)

Mega Donor Values Warren Buffett (Part 7 of a series)


By Tom Wilson Major Gifts Guru

This article is part of an ongoing series of excerpts and insights from the recent biography The Snowball: Warren Buffett and the Business Life by Alice Schroeder. I encourage you to buy this book to get the full story.


“On June 26, 2006, Buffett announced he would give away 85% of his Berkshire Hathaway stock – worth $37 billion at the time – to a group of foundations over a number of years.

“Five out of every six shares would go to the Bill and Melinda Gates Foundation, already the largest charity in the world, in a historic marriage of two fortunes for the betterment of the world. He was requiring that the money be spent as it was given, so that the foundations could not perpetuate themselves.

“Buffett divided the remaining shares, worth about $6 billion, among his children’s individual foundations, each of which would receive shares worth $1 billion, and the Susan Thompson Buffett Foundation [his late wife}, which would receive shares worth $3 billion.

“. . . he would establish no Warren Buffett Foundation, no Buffett hospital wing, no college or university endowment or building with his name on it. To donate the money without naming something after himself, without controlling personally how it would be spent – to put the money in the coffers of another foundation that he had selected for its competence and efficiency, rather than creating a whole new empire – upending every convention of giving. No major donor had ever done such a thing before.

“’It was a historic moment in the field of philanthropy globally,’ said Doug Bauer of Rockefeller Philanthropy Advisors. ‘It’s set a bar, a touchstone, for others.’”

“This was another classic Buffett no-lose deal. He had stunned the world by giving away almost all of his money by earmarking it, yet got to keep most of it until he actually transferred the shares. Nonetheless, in one stroke he had transformed a lifetime of grasping at money by committing to letting go – and had started to disburse it by the billions.”

To those of us who grew up in Omaha Buffett’s generosity was particularly amazing because he really wasn’t known in his home community as a big-time donor. After reading the book, I understand know that he, and particularly his first wife, did more giving over the years than any of us ever knew. This is another good example of the difference between the perception of generosity and the reality.

Permanent Link: Mega Donor Values Warren Buffett (Part 7 of a series)

http://majorgiftsguru.com/2009/08/mega-donor-values-warren-buffett-part-7.html

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92-year-old Makes 4 Year Pledge of $100 Million to Nonprofit Organization

92-year-old Makes 4-Year Pledge of $100 Million to Nonprofit Organization

By Tom Wilson Major Gifts Guru

We used to say philanthropic age ended at age 80. But people are living longer and longer. This short gift report really intrigued me.

From The Chronicle of Philanthropy (7/2/09):

"William P. Clements, Jr., a former Texas governor, has pledged $100-million to Southwestern Medical Foundation in Dallas. ‘My single goal is to help encourage and advance scientific discovery and innovation, prepare the next generation of physicians for Texas and the nation, and ensure the delivery of world-class medical care, which I believe uniquely happens at this academic medical center.’

“Mr. Clements, who is 92, plans to pay off his pledge over the next four years. This is not Mr. Clements' first donation to the medical center. In 2006 he and his wife, Rita, gave the center $10-million for a building. . . . and in 1998 they donated approximately $1.3-million to support new faculty members.

Mr. Clements made his fortune in oil.”

As I look through this article, I see a pattern of ever increased giving over the last 10 years as well as a pledge from a 92-year old. Philanthropic age may be less meaningful than ongoing discussions with older donors. As long as they are sharp and interested in your cause, keep approaching them for major gifts.

Permanent Link: 92-year-old Makes 4 Year Pledge of $100 Million to Nonprofit Organization

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Are Gift Annuities Still a Good Fundraising Tool for Nonprofit Organizations

Are Gift Annuities Still a Good Fundraising Tool for Nonprofit Organizations?

By Tom Wilson Major Gifts Guru

I know enough about planned estate giving to market all of the basics, to excite potential donors, and to call on outside expertise when a gift gets complicated.

I advocate that all major gift officers should know the basics of planned estate giving so they can hear gifting noises in this arena of fundraising. When you build a relationship with a donor they want you to handle all of their philanthropic needs within the organization.

I got first hand experience in planned estate giving Sun City West, Arizona for a year as a resident consultant for a hospital’s capital campaign. While we accepted some cash gifts, the basic marketing effort was oriented to securing planned estate gifts. I learned by doing.

As a reminder, the reassuring part of planned estate giving is that 87% of all gifts are done by simple bequest.

One intriguing tool that is more complicated is the gift annuity – a donor turns over a lump sum of money in exchange for a fixed return for the rest of their life. The percentage of return increases with the donors age and can provide an excellent return for donors in their mid 80s and 90s.

Nonprofit organizations have generally assumed 50% of the initial gift annuity would be retained after the death of the donor. With a strong stock market over the past 15 years, many charitable organization have done far better than that.

A recent article in The Chronicle of Philanthropy (7/2/09) did a great job of reviewing the value of gift annuities in our “new” economy. Here are some highlights.

Some annuities which have now suffered through two market corrections in the late 1990s and now in 2008 may end up with no charitable remainder, and even could be a risk to the nonprofit – by law the payments to annuity donors is guaranteed by the assets of the organization

The American Council on Gift Annuities notes that 4,000 charities in America issue annuities

  • Some organizations with large pools of annuities are no longer withdrawing assets upon the death of a donor, but leaving the remaining asset in the pool to protect the future of the organization (which of course defeats the purpose of securing these types of gifts)

  • For organizations with only a few annuities the general recommendation has always been to reinsure them by selling them to an insurance company. Now some organizations with large numbers of annuities are going the reinsurance route. This enables the nonprofit to get immediate cash from these gift instruments even if only 30% of the face value of the gift is realized (versus the long-held assumption of 50% or more).

  • Another organization reported that it is drawing 7.5% from the liquid pool of annuity assets (the remainder of funds after a donor passes away) leaving the rest of the remainder assets in the pool to help reinsure itself. This is a neat idea (although you may want to take it to 5% to treat the remainder funds as a virtual endowment as well as backstop to your other annuity risks).
Bottom line – if you’re offering gift annuities right now, look at all of your policies and consider reinsurance or retaining assets within your pool; or if you’re not offering gift annuities, maybe wait a year before starting to get into this aspect of planned estate gift fundraising.

Permanent Link: Are Gift Annuities Still a Good Fundraising Tool for Nonprofit Organizations

http://majorgiftsguru.com/2009/08/are-gift-annuities-still-good.html

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AHP Winning Gifts Book Review


AHP Winning Gifts Book Review

AHP E-Connect: August 2009 book review section had the following comments on Winning Gifts: Make Your Donors Feel Like Winners (Wiley 2008)

"Winning Gifts" is an ideal read for anyone considering a career in fundraising or for seasoned fundraisers who need a reaffirmation of why they chose this field in the first place. Wilson’s inspirational book elevates the self-view of the fundraiser from someone simply raising money to further their organization’s goals to someone with the unique power to give donors the reward of meaningful and fulfilling gift-giving experiences.

- Rachel Fournier, director of corporate and foundation relations, St. Mary Medical Center Foundation

Permanent Link: AHP Winning Gifts Book Review

http://majorgiftsguru.com/2009/08/ahp-winning-gifts-book-review.html

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How to Enhance Efficiency of Major Gift Officers (part 3 of a series)



How to Enhance Efficiency of Major Gift Officers (part 3 of a series)

By Tom Wilson Major Gifts Guru


Question: Any particular advice on operations to enhance efficiency of the gift officers and to ensure prospects don’t fall through the cracks?

Before measuring dollars, measure activity

While dollar productivity is the ultimate test of a major gifts officer and your fundraising program, over the years I have learned the hard way not to make dollar production the first measure of productivity, of efficiency.

Why? In pushing for immediate dollars to hit this month’s target, this quarter’s numbers, this year’s objective, you can rush donors into making quick gifts rather than big gifts.

I certainly found this in my career when I moved from annual fund major gifts of $1,000, $5,000, and $10,000 to capital campaign major gifts of $50,000, $100,000, and $1 million. The relatively quick cycle of the annual fund is replaced by the patient cycle of major gifts – many more meetings, and more lag time between a “stretch” ask and a final decision by the donor. If I ask for $5,000 I might get a decision at the ask meeting. If I ask for a million dollars, the donor needs time to think about the gift, discuss it with family and advisors. A quick response at this level means I asked for too little.

So, the first measure of a major gifts officer’s effectiveness is the number of their face-to-face (F2F), personal, relationship-building meetings with qualified, prospective donors.

Some of these visits are:

  • discovery calls trying to qualify donors for potential gift propensity and intent
  • site tours to demonstrate your organization in action
  • listening sessions to determine values, family situation, and life stage
  • reviews of the case statement to obtain reactions and probe for questions
  • prospect list reviewing (to find connections to other potential donors)
  • Kaizen calls (continuous process improvement to make your donor benefits stronger or your next special event more so)
  • designing door-opening events for other donors to become engaged with our organization
  • A $1,000 or $5,000 small major gift for the annual fund might involve 1 or 2 meetings. A major gift for a comprehensive campaign, a special project, or endowment 6 meetings – for a planned estate gift 10 or 12.
  • I require my major gift officers to do a minimum of 1 F2F (face to face) call a day on average monitored monthly. The visits don’t count unless a contact report is filed in our office. If they want to be seen as a “star player” then they should aim for 2 or 3 a day.

Get out of the office and interact with prospective donors and the money will come.

Of course, with less experienced major gift officers you will need to spend time on determining who to call so they get results. And, you’ll have to debrief sessions to see what they learned without knowing it.

This is why I like holding major gift officers exchange sessions every 7 to 10 days so they can share positive stories to help train each other. We spend time focusing in on next steps as we debrief contact reports so everyone knows the next steps. And, we utilize team brainpower discussing puzzling cases where it’s not clear what to do next or where it feels like there is a roadblock.

Permanent Link: How to Enhance Efficiency of Major Gift Officers (part 3 of a series)

http://majorgiftsguru.com/2009/08/how-to-enhance-efficiency-of-major-gift.html

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Mega Donor Values Warren Buffett (Part 6 of a series)

Mega Donor Values Warren Buffett (Part 6 of a series)

By Tom Wilson Major Gifts Guru

This article is part of an ongoing series of excerpts and insights from the recent biography The Snowball: Warren Buffett and the Business Life by Alice Schroeder. I encourage you to buy this book to get the full story.

"As Warren Buffett started to realize the immensity of the task of giving away 5% of what his eventual foundation’s assets, he began to train his children by funding their foundations every year, and by starting to think about Bill Gates as a trustee.

“Bill Gates is the most rational guy around in terms of his foundation. He and Melinda are saving more lives in terms of dollars spent than anyone else. They’ve worked enormously hard on it. He thinks extremely well. He reads thousands of pages a year on philanthropy and health care. You couldn’t have two better people running things. They have done incredible work, they’ve thought it through, their values are right, their logic is right.”

Earlier in the book there was a discussion of coattailing when investing. Watching someone you admire and copying their investment patterns.

“’He’s (Gates) got people in place. And if we gave some money to him, the last half of the money would be used as intelligently as the firt half. There would be very little falloff in utility of the last dollar versus the firs dollar. Giving money to other foundations, it’s not just what foundation like to do. But there’s nothing wrong with copying good people.’ Coattailing by giving some of the money to the Gates Foundation.”

This article is part of series. To read the other articles in the series, please click the links below:

Permanent Link: Mega Donor Values Warren Buffett (Part 6 of a series)

http://majorgiftsguru.com/2009/08/mega-donor-values-warren-buffett-part-6.html

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Another Big Estate Gift to Charity from an Unknown

Another Big Estate Gift to Charity from an Unknown

by Tom Wilson Major Gifts Guru

I’ve written about The Millionaire Next Door phenomenon before. This is a great book to sensitize all of us that anyone, even if they only seem to have modest means, could be wealthy enough to make a very significant gift.

The Oregonian newspaper reported on a bequest from Chuck Karsun who donated $3.1 million to the Oregon Jewish Community Foundation to support Jewish life and culture.

A fraud investigator with the Oregon Employment Department and drummer in the Chuck Karsun Trio, Mr. Karsun was a bachelor who had a jazz record collection of 15,000 records.

"He made his money through shrewd investing and frugal spending. He never bought a fancy car or flashy clothes. An investment club he started with friends only lasted 1-1/2 years because he insisted members stick with one strategy - buy stocks and never sell."


Thanks for your generosity Chuck.

Permanent Link: Another Big Estate Gift to Charity from an Unknown

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