Ask Kevin: “What is a breakpoint for a ‘major’ donor?”

In this series, I answer questions from my audience. To submit a question, email me at: [email protected]. You will get a prompt response, and in some cases, I will also eventually outline a more in-depth response on my blog. 

Question: 

I read your recent posts on major donors, and I was just wondering… What is the breakpoint for a “major” donor?

My Response: 

Great question! I will first answer your question technically, and then I will give you some unsolicited thoughts on major gift programs.

The “major” gift breakpoint will be unique to your organization. It may be $500, or it may be $500,000. It is major to YOU. I have mentioned before the 80/20 rule. You will see this principle playing out in many ways, but in this context, I want you to run a report on your last 12 months of gifts. You should see that 80% of your support comes from 20% of your donors. For many organizations, it’s 90/10.

In general, if I am asked to set a “breakpoint” for major donors, I will take that list and set the major gift threshold at or near that top 10-20%. When you list gifts from largest to smallest on a spreadsheet, total the number of gifts (say 500), and then look down the amounts to see if there is a natural breakpoint between the top 10-20% (50-100 in this example). This could be a “jump” you see in donations where you see 30 gifts of $1,000, but then only one or two gifts from $1,000 to $2,500. Right in this area is where you would look to set the threshold. Setting your breakpoint does not have to be a perfect science. The idea is to choose a level where you see one group of people who give significantly more than others. This creates “steps,” meaning you can ask the people below that amount to give extra to step up their giving. To confirm you’re going in the right direction when you notice a natural stepping up point, total up the gifts in that area and see if you get to 10-20% of your annual fundraising revenue. If it’s around then, you’re in the right direction.

Pro Tip: Be sure to consider your other asks throughout the year. For example, if you have a “sponsorship” program or underwriting levels for events, be sure to consider whether those fit into the term “major” or not.  

Why care about major donor programs?

Many times, when an organization approaches me for advice on major gift programs, I get a sense that they think if they “build a program,” they will get more major gifts. There is more to getting major gifts than defining a program (as I outlined in my four-part series). Check your motivations and define the donor program only when you have a plan to implement such a program.

I also find that many organizations hope to have additional materials, communications, etc., for major donors. However, in my experience with successful major donor programs, the opposite is necessary. Major donors in the best-run programs are often given fewer communications (they are just more personalized and consolidated). They do not get excessive emails; they may not even get anything by mail; they may only be given one communication per quarter. But, they get a phone call or an exclusive and genuinely personalized email with the newsletter attached.

So, what is a good reason to have a major donor program? To segment your donor database and have a plan for growing relationships with major donors. This may or may not include stepping up their gifts. If I were to build a major donor program, this might consist of more intimate events only for these donors, inclusion on “internal” (advice) related communications, early announcements, regular non-ask phone calls, etc.

A Word of Caution: Don’t Forget the Widow’s Mite

“Jesus sat down opposite the treasury and observed how the crowd put money into the treasury. Many rich people put in large sums. A poor widow also came and put in two small coins worth a few cents. Calling his disciples to himself, he said to them, ‘Amen, I say to you, this poor widow put in more than all the other contributors to the treasury. For they have all contributed from their surplus wealth, but she, from her poverty, has contributed all she had, her whole livelihood.’”

— Mark 12:41-44 

Major gift programs can tempt organizations to focus exclusively on the amounts of someone’s gift as a measure of their value to the organization. Do NOT fall into that temptation!

A donor who gives $25,000 per year but literally gives out of their excess without feeling the gift is a donor than the retired person living on a fixed income who sacrifices gives $20 each month.

This requires organizations to get to know their donors and what causes them to give. It also points to the necessity to have other ways for someone to get added to your major gift program even without giving (board members and volunteers who give a lot of time, highly engaged audience members, referral and community partners, etc.). Be sure when you are setting up your major gift program that you have a way to “manually” add people to your major gift program so they may benefit. This is typically done by applying “tags” in a CRM or donor management system that ensures they are tracked through your system.