The Secret to Saving Yourself Time, Money and a Bunch of Headaches

picture of children sharing secrets return on investmentI’m going to describe for you the state of one organization’s major gift program, as we began working with them a few years ago. I think it will highlight what’s going on with thousands of other organization’s major gift programs… and quite possibly yours.

Okay, so here was the situation going in:

Overall it was a fairly large organization, a little over $20 million in revenue. Yet the major gift program was hovering around $1.8 million to $2 million a year over the last 4 years. The major gift program overall had been established about 12 years ago. This was not a brand new program.

The gifts of 1,200 donors made up that $1.8MM. The organization had six major gift officers who each had roughly 200 donors on their portfolios. The value of each of those portfolios was between $250K and $400K.

Now the cost to cultivate those 1,200 with those six MGOs was around $750,000 a year, including salary, benefits, travel and some shared admin help. The Return on Investment (ROI) was about 2.4 to 1.

For a major gift program that was 12 years old, that ROI was unacceptable. Yet because the organization “grew up” on direct-response marketing, no one seemed to take the time to examine this.

The result was that this organization had too many MGOs who were cultivating too many donors, producing too little revenue. Here’s what was happening with the MGOs:

  • They complained that their donors didn’t want to meet with them.
  • They could not get donors to engage with them on the phone.
  • They were frustrated because they couldn’t find projects and programs for donors to fund.
  • The MGOs had no revenue goals and little direction or management.

This left the MGOs frustrated and defeated. So when we went back to figure out the root cause of the problem, do you know what it was?

None of those 1,200 had been qualified! What this organization had done was that, once the donor met a dollar metric for giving, they immediately tagged that person as a major donor and put them on someone’s caseload.

So we knew, because of the work we’ve done with hundreds of major gift files, that there were roughly only 400 major donors that wanted a deeper relationship with this organization.

So here you have an organization which for years had been operating this way. Not only was revenue and ROI unacceptable, it created a toxic culture for the MGOs. Of course! Donors didn’t want to talk or meet with them… they didn’t even want that type of relationship… and the MGOs didn’t know why, because these donors were never qualified.

This is why Richard and I have repeatedly hammered home why you must qualify your donors. Yes, this is the secret to your time, money and headache problems.

To make a long story short, after one year of working with this organization here is what happened:

  1. We helped qualify their pool of donors. The result was 425 qualified donors (remember, there were 1,200 in the major donor caseloads). The rest of the donors went back in their mid-level program and their regular direct-response program.
  2. We put our Veritus structure to their program (tiering, goals, strategy, accountability, etc.).
  3. We let go four MGOs and hired one new MGO, leaving a total of three MGOs to cultivate those 425 donors.
  4. Those MGOs now started getting meetings and building relationships. Why? Because the MGOs were now working with donors who wanted that mutual relationship, and the MGOs had fewer donors to work with overall.

The result of all this was that by the end of just the first year of working with qualified donors, the organization brought in $2.1 million in major gifts from 425 donors (remember they previously had 1,200 donors giving almost that same amount) at a cost of $360,000 – or a 5.83 ROI.

Yes! This is MORE net revenue for programs!

Now after a few years, they are well over $5MM in total major gift revenue, with over an 8.0 ROI – and climbing each year. Eventually they will be getting a 10:1 to 12:1 return on investment.

And remember how frustrated those MGOs used to be? Now they are working within a structure with donors who want to be related to, and it’s made a world of difference for their morale and their overall success.

Why? Because now they are working with donors who want their passions and interests to be known by the organization, so they can help them change the world. This is the difference that qualifying your donors will make.

Jeff

P.S. – If you are now inspired to create or re-create your major gift program with qualified donors, you can click here and find out exactly how to do it. Or, if you want some help, send me an email.

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