6.7 Leveraging large gifts

Dear Kim:

I’m the Director of a small non-profit and I spend about half my time on fundraising.  We just got amazing news last week – a major donor just committed to giving us $40,000 a year for 3 years, with the assumption that she’ll renew after that.  Our budget is pretty tiny, so that large a donation for years to come is incredible to us.  We’re going to be able to hire a full time staffer!

I was wondering if you had ideas for how best to leverage this gift.  I’m trying to figure out the best way to announce it.  Are there ways to draw in new major donors or use the gift to encourage our existing donors?   And we don’t want to make it seem like we don’t need their support as well anymore.  The donor is very relaxed in terms of how she wants to be recognized or how it should be announced. Do you have any thoughts or ideas on this?

Thanks!  And thanks for all you do – I find all the resources at GIFT and in the Journal so helpful in my work.

~How to Get a Gift to Keep on Giving

Dear Giving Gift:

Congratulations on this wonderful news!  And thanks for your kind words about GIFT and the Journal.

I like that you want to leverage this gift—it tells me the donor made the right choice when she chose your organization for a gift of this size.  You have some options:

1)     Use it as a challenge gift for at least the first year.  Since the donor is so easy going, ask her if she minds if you use it as a dollar for dollar challenge—you would agree to raise $40,000 to match her $40,000.  Many donors like challenge campaigns and board members are often willing to ask their friends and colleagues for a challenge.   (If the gift is more than 1/3 of your budget, you are going to have to raise more money just to meet the IRS “test for a public charity” which says that not more than 1/3 of your budget can come from one person for more than three years or you are in danger of no longer being considered a public charity.)

2)    You want to use the money for a new staff person, but how about a campaign to get that staff person what she or he needs to really be successful?  Stuff like a really good computer, a database and training on same, health care benefits, etc.  Ask your other donors to help provide what is needed.

3)    Create a campaign built around the idea of becoming a bigger and more effective organization.  How much would that cost?  What is a realistic but more optimal budget?  Use her gift as the lead gift for a much bigger campaign.  Whatever caused her to give this large gift should cause others to give what are large gifts for them.

I wouldn’t worry about donors thinking you don’t need their money.  $40,000 is a lot, but is not so much that anyone is going to think you can do without lots of other donations.   In fact, donors will be happy to be part of a group than can attract these kinds of gifts.  This may only be the beginning of a number of major gifts.

Good luck!

~Kim Klein

1 Comment to 6.7 Leveraging large gifts

  1. June 7, 2011 at 5:55 pm | Permalink

    Another option is to tie the challenge to the number of donations received, rather than the dollars raised. In a local capital campaign, our lead donor offered an additional $15,000 on the condition that we identify 30 new donors in 60 days. The size of these gifts was irrelevant to him — he wanted broad participation. This challenge was very motivation to both our solicitors and prospective donors.

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