It’s a serious dilemma.
The organization needs the money; they have the donors to deliver the money, but there is no major gift strategy in place to secure the money. This confluence of need, opportunity and planning usually results in a lot of impatient leaders.
Just last week I sat in a meeting where a manager was visibly upset at the slow pace of revenue generation. When I tried to explain that relationships take time, she brushed me aside and said: “Look, all you have to do is ask.”
And therein lies the organizational problem for many major gift programs. Management needs the money, and major gift people are told they need to deliver it “right now!”
This is a path to certain failure because the MGO, in this type of hostile and urgent environment, will focus on the money rather than helping a donor fulfill her passions and interests. And we all know that a focus on the money is a sure way to alienate a donor.
Reasonable managers and leaders know that good relationships take time – that you don’t just pounce on a donor and squeeze the money out of him. But these same managers often ask Jeff and me how long it should take to gain traction in a major gift program. “How long,” they ask, “does it take to have a fully functional program in place?”
We think it takes a minimum of 18-24 months to start a major gift program and have it become fully functional. Why so long? There are several reasons:
- The organization needs to hire the right MGO. This could take six months when you consider the time it takes to agree on the job description, get the proper authorizations, search for candidates, interview and vet the candidates and then finally hire them. I haven’t seen this process take less than four months. So let’s say it takes four months –although many times it takes longer.
- The MGO needs to qualify donors for a caseload. Why? Because only 1 in 3 donors who meet the major gift criteria will actually want to talk to the MGO. So the MGO has to go through a labor-intensive process to find 150 donors who will relate to him. This step alone will take 6-8 months. Let’s say six, even though that is being generous.
- Relationship building takes time. While the MGO will qualify donors early in her tenure with the organization, 8 to 10 months will have passed before she actually starts engaging seriously with donors. And building relationships (as you know) takes time – more time than most managers think it will take.
So the best way to anticipate a major gift program’s becoming fully functional is simply to say to yourself (and accept) that it will take the first year just to get set up and get started.
This is not to say that management will be wasting a bunch of money in that first year. No. In fact, there is an immediate economic benefit to all of this major gift activity in the first year.
The first-year engagement of the MGO with donors will cause the majority of those donors to keep giving at recent levels. Why? Because the donors will experience a new level of service and attention. And this will cause value retention. This one point is very important – please stop to think about it.
Left alone, without the personal touch of a MGO, the dollar value given by your current donors will decrease anywhere from 40-60% in the following year! This means that if you have 100 donors giving you $1,000 each last year for a total of $100,000, that same group of donors will give your organization $40,000 to $60,000 this year. This dynamic immediately changes as the MGO starts regularly reaching out to these donors. The value loss rate improves from 40-60% lost to only 7-11%. This is good news.
And it gets better from there. The first year – and I mean the first year after you have decided to get a MGO on board and you have the authority and funding to do it – should be considered a set-up year.
The second year is when the program starts to gain traction. The MGO now has a fully qualified caseload of 150 donors – donors who actually want to relate – and relationships are being built. Now you can begin to see some results and growth, although you should be cautious about expecting too much.
The second year is when the MGO uncovers those few donors (1 or 2 of them) who can give transformational gifts – but those gifts will take another year or two to cultivate. It is also a time when the MGO develops solid and lasting relationships with most of the donors on the caseload. I say “most” because 10-15% of those donors will likely need to be replaced in the second year as the MGO discovers that their interest is not what he thought it would be when he qualified them.
As you can see, starting a major gift program is not like holding an event or mailing out an appeal, where you get almost instantaneous results. No. It takes time.
So if you are a MGO reading this, please realize that all of this takes time. Give yourself a break. And if you are a manager, please give your MGO the time to develop solid relationships. Believe me, it will pay off.
PS — Want to learn more about donor value attrition? Need help figuring out what to do next? Watch the video on this page and let us know if you need more.