Welcome to this month’s newsletter, and thank you to those who reached out and complimented last month’s paper on managing major gift officers!
I had numerous requests asking if I could give more specifics on how major gift officers (MGOs) should manage their time with their prospects and offer specifics on how to measure critical factors that lead to a gift that can be measured and evaluated. So buckle up, and let’s get started.
Let’s set the premise with the basic concepts of traditional major gift fundraising.
- Major gift fundraising programs incorporate two general philosophies:
- Short-term, which focuses on solicitation with minimum cultivation. We call this low hanging fruit—hopefully, you have already picked it.
- Long-term, with greater emphasis on building a prospect’s relationship and involvement with your organization. This makes for the bulk of most major gift prospects.
- Prospect development progresses from short-term to longer-term strategies over time.
- Fundraising success traditionally has been measured by dollars raised and number of donors contributing—emphasizing short-term strategies.
- Major gifts often are not realized until long after the initiatives that influenced them have occurred—perhaps months or even years later.
- The timing of a truly major gift often is tied more to the donor’s life cycle and the cumulative effect of initiatives rather than a specific initiative or the institution’s needs.
Many CEOs have argued for years that counting dollars and donors in one given year is the only valid measure of success for major gift fundraising programs and the MGO. However, we believe that this is false and shortsighted.
Keeping track of initiatives with prospects is an equally valid indicator of success. It relates to the understanding of prospect development as a process and acknowledges that consistent, meaningful contact with prospects is the key to successful prospect development over time. An objective evaluation of success requires the consideration of both criteria.
Evaluating the effectiveness of “moves” with prospects require the following steps:
- Assess the prospect’s relationship with your organization.
- Develop an overall strategy to enhance that relationship, which will lead to a solicitation.
- Plan the appropriate “move” in order to advance awareness, understanding, caring, interest, involvement, and commitment.
- Coordinate the involvement of appropriate people associated with your organization.
- Execute the initiative.
- Evaluate the outcome.
- Determine appropriate next steps.
- Report and record the results.
Major gift prospects typically require a minimum of one move every quarter (four or more moves each year).
So how many prospects can an MGO effectively manage? Let’s do the math. It is my belief, give or take a day or two, that typical major gift officers will only take 26 weeks out of our 52-week year to devote to managing moves with their prospects. If that figure is correct, normal, personal, and business distractions will require 26 weeks of an MGO’s time.
Out of 52 weeks per year, 26 weeks should be dedicated to the following:
6 weeks paid leave,
9 weeks’ office time for planning, budgets, reports, special projects, acknowledgments, administrative meetings, and other indirect fundraising work.
9 weeks for special events, testimonials, VIP visits, board meetings & public/community meetings, etc.
2 weeks for training/professional development.
That leaves 26 weeks net per year available for moves regarding management and support.
We are assuming here that each major gift officer can support approximately 200 to 400 individual moves (defined as visits or other meaningful contacts that moves their strategy forward) each year.
- At least one full day per week will be spent on various meeting (e.g., prospect management and strategy development).
- 4 days remaining x 26 weeks = 104 days net available.
- 2 moves per day x 104 days = 200 moves per year.
- 4 moves per day x 104 days = 400 moves per year.
It is safe to assume that most of their prospects will take a long-term strategy—which requires at least 4 moves per year per active prospect.
- A full-time major gift officer can make approximately 300 “meaningful” moves per year.
- This figure suggests that a full-time major gifts officer can manage only 60 to 75 active prospects (including those in the cultivation and stewardship stages—each leading to a new solicitation in between several months out to three years).
- In addition, each major gifts officer would make approximately 50 “discovery” calls per year to add to the active prospect pool.
Discovery calls can be made on approximately 20% of identified “suspects.” That is, approximately 250 names must be identified who are qualified to make major gifts to generate 50 successful discovery calls. This activity may lead to 5 to 10 qualified prospects being added to the active pool.
So how can managers of major gifts officers determine if MGOs are performing adequately, especially in the early years of the MGO professionals’ tenure on staff (when gift income is usually sparse)?
If major gifts are the harvest of carefully sewn and tended fields, then the performance and overall value of individual major gifts officers can and should be judged on a small but critical variety of guidelines and not simply left to the hope of an accidental windfall gift falling into their lap.
In essence, the value of major gifts officers is not just the dollars harvested, but the quality of the seed, how effectively it’s been sewn, and the care and attention with which MGOs tend their fields!
So here are four simple guidelines that serve as a tool for the effective “quantification” of major gifts officers regardless of their length of tenure or professional development. I found something similar to these online years ago and have modified them based on my experience with major gifts and MGOs. These guidelines have been refined and distilled over the years in order to provide a remarkably potent snapshot of progress at any point throughout the fiscal year. As such, each index is “graded” on a 25-point scale and illustrates where major gifts officers might be behind in terms of their overall performance. Simply stated, this is where the “rubber meets the road”:
- Dollar Goal
- Proposals
- Contacts
- Quality of Work.
Dollar Goal – In my opinion, this is the least important of the four. Often, major gifts officers focus exclusively on dollars raised and devote their complete attention to two or three of their finest prospects in hopes of capturing the “mega-gift.” Make no mistake: mega-gifts are wonderful, but that tack is risky and does not serve the major gifts officer or management well. In fact, it’s a fool’s bet, especially in the early years of a major gifts officer’s professional development. The top prospects surely have to be carefully and strategically courted and solicited when ready, but not at the expense of the other three parts. Even first-year major gifts officers should be presented with a defined dollar goal of cash/cash pledges and planned gifts (trusts/annuities/bequests).
Solicitations/Proposals – A minimum number of approved solicitations/proposals should be generated each year—and at a minimum ask level. Major gifts officers should write or have written on their behalf compelling proposals, and if they are doing their job effectively, they will have a number of prospects at each of the major levels of “readiness.” This strategy will warrant proposals and/or outright solicitations.
Contacts – Major gifts officers must make contacts…period. As stated above, this, in my opinion, is the most important part of an MGO’s job. I remember that not so long ago, The Huddleston Group was doing a development audit. (We call these philanthropic operational assessments.) After five days onsite, the president of the foundation came into my office and asked me how it was going. I said, “I think I figured out your problem.” He said, “What is it?” I asked him, “You have four major gift officers and two planned giving directors, correct? He said, “Yes.” I responded, “Well, I have been here for five days, and other than going to lunch, none of them have left the building to meet with donors or prospects!”
A predetermined number of annual contacts should be established. A large percentage of them should be face-to-face with the remainder at the discretion of the individual major gifts officer. Contacts provide information, information fosters cultivation, cultivation leads to solicitation, and solicitation leads to accepted proposals and funding. Thus, the gifts officers have to be held accountable for making those 300 meaningful moves per year.
Quality of Work – This is the most flexible of the guidelines. Surely, other characteristics exclusive to the organization can be substituted in place of these, but the following four have worked well for me in a variety of nonprofit settings:
“Hit Rate” (5 points)
This means the ratios of yeses to nos in the proposals/solicitations submitted. This measure helps to prevent MGO’s, and especially new ones to the organization, from making shotgun proposals and asks that can cause damage to prospect relationships if the ask is premature or not justified.
Prospecting (5 points)
New prospects (cold calls) are critical to maintaining the success of development efforts. The vast majority of major gifts prospects/donors began as small- to mid-range direct mail/annual donors. As such, a predetermined number of prospecting visits should be factored into the major gifts officer’s goals at the beginning of the fiscal year. But remember, MGOs do not have a lot of free time for prospecting. That is why it is listed here.
Use of Management/Leadership (10 points)
Management/leadership’s participation in an “ask” is useful and should be encouraged. It sends the message to the prospect that the visit and ask is important, if not critical, to the wellbeing of the organization. Well-prepared major gifts officers plan their year to know when management and/or leadership will be useful. This not only serves as a reminder to have the prospect and management well prepared ahead of time. In addition, such planning will also afford the MGO the opportunity to book time on busy management calendars. More about this can be seen at the end of this report.
Budget Management (5 points)
There are certainly entertainment and travel costs associated with major gifts fundraising. MGOs should thusly be given a budget with which to work and plan accordingly at the beginning of the year as to how and when that budget will be expended. Hosting meals, outings, phone/cell charges, etc. should be estimated and factored into the budget at the outset.
The Evaluation Tool
Successful major gifts officers have to be active in their daily pursuits of major gifts. As already shown, their time is limited. They are creative entrepreneurs with well-defined goals and the autonomy to meet and exceed them. This simple yet effective system is based on a possible 100 points, in which an annual score of 80 or greater would illustrate above-standard performance and warrant a merit increase and/or incentive bonus.
Prior to the beginning of each fiscal year, major gifts officers, in consult with their supervisors, should be assigned quantitative goals in each of the four areas—dollars raised; major gift proposals submitted; bona fide contacts made with approved, written tracking reports submitted; and the overall quality of work, based on the four guidelines weighted below:
Here are the minimum expectations that a former client had determined:
- The MGO must earn no fewer than 75 points each cycle in order to register a “satisfactory” year but receive no incentive reward.
- The MGO must earn no fewer than 80 points each cycle to warrant the incentive bonus.
Here is an example:
Jared the Great, Associate Vice President, Major Gifts
This is a solid year and looks as if Jared is off to a good start. The best news is that his next year should be superb in that he now knows of his prospects, wrote 25 proposals (some of which might well be “pending” and potential income for the coming year), and clearly sees the value of devoting more of his time and resources to the cultivation stages! Assuming that Jared’s work ethic and productivity remain on par, he is a keeper—and will grow more and more valuable as the years pass and his knowledge of the organization and prospect base increase.
A score lower than 75 would be a strong indicator to Jared and his management that his techniques and practices need to be adjusted and refined. Immediately into the next cycle, following a substandard year, a formal evaluation of Jared should be conducted/documented—and a customized program devised by which he can improve. Should the pace remain off after six months into the new cycle following a “no bonus” year, Jared’s tenure on staff should be called into question.
In summary, this evaluation system is not intended to be a policing device. On the contrary, it clearly sets quantifiable, understandable goals for MGOs and their management in order for both to know what to expect. Often, successful non-profits with vibrant direct mail/annual programs will eagerly hire major gifts staff members assuming that, by their very title, they will raise “major” gifts. Expectations must thusly be clear to all participants.
Philanthropy is an art and science. Accordingly, this tool is designed to help define a scientific approach (“x” number of contacts, proposals, etc = “x” dollars of income) for all involved.
Leadership – Healthcare Chief Executive Officers, College Presidents, Agency Executive Directors
You have a major role and stake in the success of your advancement program, and unfortunately, The Huddleston Group has observed over the years that many of you take a passive role in this endeavor and only act when asked. We encourage you to be more proactive and insist, even with your busy schedules, to be involved in the process.
Whether you are a CEO of a billion-dollar healthcare organization or the executive director of a million-dollar environmental organization, you both should at least be doing the following on a monthly basis:
- Spend an hour a week thanking a major donor that has given to your organization.
- Spend an hour a week meeting with a major donor prospect about an area of their interest that can make a significant difference to the mission of your organization.
- Spend an hour or two a month with your advancement team and/or volunteers soliciting a major donor that has shown significant interest in a program or service of your organization.
This is not too much to ask. We believe that if you insisted that these three things be done consistently, your major gift program would flourish even more than it is now.
Remember, these donors are making significant financial decisions based on your dreams and aspirations that you and your board have for the organization. It is your plans they are funding, so get involved, stay involved, and be a part of the magic that philanthropy has to offer.
I hope that this was helpful. If you have any questions, please do not hesitate to reach out to me.
The Huddleston Group is a full-service management, consulting and training firm specializing in philanthropy (i.e., campaign counsel, audits, feasibility studies, and creating a culture of philanthropy), opinion research (i.e., donor satisfaction surveys, focus groups, and marketing research), and organizational management (i.e., board transformation, strategic planning, and capacity building).
Visit us at www.thehuddlestongroup.com for free newsletters, a blog post, and videos.
Good Luck
Ron Huddleston, FAHP, CFRE
President
