Are you trying to grow your major gift program? Have you finally figured out that one of the best ways to increase the number of your major donors is to create a mid-level program?
Good! I’m glad you are on board. Because right now, in your current database you have donors with great potential, waiting for you to challenge them to become part of your major donor program.
I’m going to tell you a story. Five years ago, we began working with a new client to restructure and manage their major gift program. In that time period we have grown that program from $4 million per year to $10 million per year. But I would say that this major gift program is STILL in its infancy.
You see, this organization is a $130 million non-profit. It grew with an aggressive direct-response program. So as you consider that, you may notice that their major gift program is small compared to the rest of their fundraising. But this non-profit knows the future. Acquisition is getting more and more expensive, and long-term values are decreasing.
What are they doing? They are investing in mid-level. Currently they have 25,000 donors who give between $1,000-$9,999 a year… $43 million in total revenue per year! Yet up until three years ago, they were treating these donors the same as any $10 or $25 donor. To be conservative, they were spending $20 a donor per year to cultivate them with direct mail, newsletters, on-line and telemarketing. So if they had a donor that gave $5,000 a year, the ROI (return on investment) for that donor was 250:1.
Pretty good, huh?
Too good. Let me explain. While they were getting great ROI from this group of donors, the attrition rate was over 45%. This meant that millions of dollars and thousands of donors were being lost every year. In addition, they had maybe 5 donors per year move up to major gifts.
Pathetic.
So here is what we did. We created a mid-level program that mimicked, as best we could, the successful major gift program. We put mid-level reps to work, cultivating, stewarding and soliciting caseloads of 600 donors each, encouraging their donors to give larger gifts. We thanked these donors, we reported back to them and solicited them through phone, email and personal notes.
We found out their passions and interests, we logged conversations into the database. And after a year of this work, we had moved 600% more mid-level donors into major donor gift portfolios than the control group that we tested against. Not just any donors, but qualified donors.
And we did this at a 1.5 ROI!
Now, when I tell this story to non-profits, the direct-response people exclaim, “Wait, we can’t accept a 1.5 ROI. This is a mid-level program – we have to make 4, 5 or 6:1 on this.”
In short, they want a miracle!
I stare at them in disbelief. Then, I remember that they are used to getting 50, 100 or even 250:1 ROIs with mid-level donors. But then I also remember the high attrition rates and the low number of donors moving into major gifts…
At this point I say, “look, if you want to make a bunch of net revenue, then you should mail 3 or 4 more direct mail packages to these donors… I guarantee you will get a ton more net revenue. But if you want to move more donors into major gift portfolios, you have to start treating these donors as if they are major donors.”
Here’s the thing: If you treat a $1,000 donor as if she were a $10 donor, she will act like a $10 donor; however, if you treat a $1,000 donor as if she were a $25,000 donor, she starts acting and GIVING like a major donor.
But that takes an investment. You are putting a human being into the equation to find out that donor’s passions and interests. You are connecting with that donor in a way that you never have before.
That takes time and money. Unfortunately, many non-profits don’t get that. Those non-profits are short-sighted. Fortunately, the non-profit I told you about did invest in mid-level and after just three years, they have moved over 200 donors into major gift portfolios. In another three years those donors will be giving over $6 million in revenue.
If you want to grow your major gift program, investing in your mid-level program is the best thing you can do. Read our white paper on mid-level programs that you can create yourself or outsource to others.
The point is that you have no time to lose. Now is the time to be bold and invest in these donors. They will reward you many times over.
Jeff