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October 4, 2023

Understanding What a Major Gift is For You: A Quick Guide for Nonprofits

Guest Blog Writer

As a growing nonprofit, you understand the need to expand your fundraising efforts to target major donations. Maybe you’ve heard about the 80/20 rule—that 80% of your fundraising revenue should come from your top 20% of donors. However, you may not know what the major giving process will look like for your organization or even where to start. 

Don’t fret! Because every nonprofit is unique, every nonprofit has a different definition of a major donation. If you’re not sure what qualifies as a major donation for your organization, here’s what you can do to find out:

  1. Evaluate your past giving data
  2. Estimate your major gift threshold
  3. Adjust the threshold based on your funding needs
  4. Revisit what constitutes a major gift as your nonprofit grows

It’s important to make this determination accurately before you dive into major donor research and cultivation. You’ll want to be sure you’re targeting prospects who can give at the level you need. We’ll dive deeper into each step of the process to help you start your major donor fundraising off on the right foot.

1. Evaluate Your Past Giving Data

To ground your fundraising goals in reality, use your past giving data to inform your nonprofit’s major giving level. Even if you’ve never solicited a major donation before intentionally, it’s likely that you have earned donations that are higher than your average gift size. These above-average gifts are the perfect place to start determining what a major gift means to your nonprofit.

Donorly’s guide to finding major donors explains how you can use your existing data to create an accurate major giving level:

  1. In your CRM, filter your donations by year and sort them by gift size. Only looking at data from the last year will ensure your major giving level reflects recent giving trends. 
  2. Make a list of the largest donations you received in the past year. These should only be gifts from individual donors, so remove any sponsorships or donations from businesses.
  3. Define a range of the largest gifts. This will help ensure that one outlying gift doesn’t skew your data. For example, if you had a single donation of $15,000 but the second highest donation was $10,000, remove the outlier and define your range as $8,000 - $10,000. 

As you examine your data, note any other trends that jump out at you. Considering any shared characteristics among your highest donations—for example, that they were all made at the end of the year or by donors in a certain demographic—could come in handy later when you start prospecting. 

2. Make an Estimation of Your Major Gift Threshold

Next, use the largest gifts you found in your CRM to set a minimum amount that you would consider a major gift, known as your major gift threshold. 

You can estimate this threshold by finding the average of the range you defined in the last step. This likely won’t be the final number you use to define major gifts, but it will serve as a reasonable estimate that you can tweak as needed.

For example, let’s say that after removing an outlier, your range of largest gifts was $7,000 - $12,000. When you break it down, the top five gifts were $7,500, $7,700, $9,000, $10,000, and $12,000. The average of these five amounts is $9,240. Based on that number, you could estimate your major gift threshold to be $9,000.

3. Adjust the Threshold Based on Your Funding Needs

Now that you have an estimated threshold, determine whether you need to adjust it based on your current funding needs and goals. Major gifts are a vital part of any fundraising plan, but you may need to raise more from major gifts depending on the scale of the campaign you’re hosting. 

For capital campaigns, major gifts should cover about 60-80% of your total fundraising goal. If you’re planning a capital campaign, adjust your major gift threshold as needed to make sure you can reach your overall revenue goal with major gifts accounting for 60-80% of the funds raised. Using a fundraising plan template can help you visualize these numbers. 

Whether or not you’re hosting a capital campaign, you can take these steps to determine if you need to raise your threshold:

  • Calculate how many major gifts you would need at your current threshold to reach your fundraising goal.
  • Discuss finances with your nonprofit’s board to get the full picture of your organization’s current financial standing.
  • Consider the projected costs of upcoming programs and initiatives that you’ll need major gifts to fund.

It’s also important to review your budget as you consider your major gift funding needs. According to Jitasa, your budget should be at the center of all your financial activities, including fundraising plans. Along with considering your funding needs, take into account the resources you can devote to major gift research and cultivation. In the event you need to hire a major gifts officer or invest in prospect research software, verify you have room in your budget to do so.

4. Revisit What Constitutes a Major Gift as Your Nonprofit Grows

The major gift threshold you determine now shouldn’t stay the same forever. As your organization’s fundraising capacity grows and you get more familiar with finding and engaging major donors, it’s important to revisit your threshold and your approach to major giving. 

Each time you make a change to your major gift threshold, remember to use data strategically to inform your decision. Base changes on the size of major gifts you’ve earned so far, projected total fundraising revenue, and overall funding needs. 

Raising your major gift threshold is exciting because it means your nonprofit’s efforts are going well! Don’t shy away from reevaluating your threshold often to account for your progress and updated goals.

How to Move Forward with Major Donations

By following these steps, you’ll end up with an accurate picture of what major gifts look like for your organization. No matter what amount your major gift threshold is, major gifts ultimately mean success and sustainability for your nonprofit. Don’t be afraid to dedicate plenty of time and resources to soliciting major gifts, as they’ll be an integral part of your fundraising success. 

Sandra Davis | Founder & President | Donorly

Founder and President Sandra Davis leads Donorly with 30 years of fundraising experience and leadership. Sandra has consulted on numerous capital campaigns, led strategic planning and feasibility study efforts, and managed board development and recruitment efforts in addition to overseeing planned giving, special events, and annual giving programs. Under her leadership, Donorly has grown to support the fundraising efforts of over 75 clients to date.