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| Path: Main Street : Resources & Library : Research Articles : Feature Article |
Get real to reach new major donorsAugust 28, 1996; Canadian FundRaiser
Trends in major giving in North America are shifting from gifts of wealth to gifts of affluence, according to Judith Nichols, and if gift planners and fundraisers want to maximize their effectiveness in the future, they should begin to focus on reality-based donor models instead of fantasy giving. Nichols made her remarks at the Canadian Council for the Advancement of Education (CCAE) annual conference earlier this summer.
Until now, there has been an assumption that the most major dollars are the best dollars to solicit. After all, most fundraisers make money only on the top 30 per cent of people in their database. They break even on the next 10 per cent and lose money on the bottom 60 per cent. According to Nichols, this loss in the bottom half of the database is largely a result of not asking, or not asking properly.
To maximize donations from all levels, fundraisers must learn to rethink major donors. This change involves three components. First, fundraisers must look at affluence rather than wealth, and consider annual income instead of just assets. Next, major donors must be evaluated in terms of cumulative giving rather than single major gifts. Finally, we should think in terms of planned gifts and bequests rather than sacrificial gifts of capital.
Demographic shifts show need for changing tactics
Nichols bases her conclusions on the demographic shifts that are taking place in North American society and the parallel trends in giving that are taking place as a result of these shifts. In an increasingly competitive charitable marketplace, it is more difficult to generate million dollar gifts. In fact, in the United States last year, there were only 350 gifts from individuals of over $1 million. Of these, 110 went to educational institutions and 70 per cent of those went to ony 40 schools. In Nichol's words, "we must shift our focus from fantasy giving to a reality-based model" that recognizes a major gift as somewhere in the $25-50,000 range.
With the shift in focus to smaller major gifts, several advantages emerge. It becomes easier to find prospects because there are, statistically speaking, more of them. Prospects may give more willingly because the amount is not as great. It is easier to find people to make the ask, also because it is for a smaller amount. Finally, smaller gifts are easier to acquire without restrictions.
Targeting more broadly for major gifts
To target households for this type of giving, statistics show that households making over $30,000 have some degree of discretionary income. Approximately 12 per cent of Canadian households have an income of $75,000 or more and the average discretionary income of these households is $10,000 a year. The discretionary amount decreases with household income, but the majority of Canadians (approximately 70 per cent) still have income levels that will support a certain amount of charitable giving.
In soliciting affluence rather than wealth and cumulative gifts over sacrificial ones, fundraisers have an excellent opportunity to build solid long-term relationships with donors. Strong stewardship of these smaller major gifts may lead to more significant single gifts in the future, or larger planned gifts if they see that their donation is being well used and is making a difference.
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