Introduction to Major Gifts: What is a Major Gift?
The journey to securing major gifts can be scary, difficult, and stressful at times, but it can also be very rewarding if you successfully receive major gift funding and it can also serve as a teachable moment even if you don’t secure the major gift you were hoping to secure. So, let’s go over some basic knowledge and tips that can help you achieve your goals in securing major funding. Major gifts are an essential component of successful nonprofit fundraising programs today.
Define Major Gift Amount by Size or by Purpose
What is a major gift? Major gifts can vary and it depends on what your organization considers to be a major gift. Most organizations consider $25,000 or more as a major gift. It is up to management or the development staff to define and classify the amount that works best for the organization. Probably the simplest way to define a major gift is by size of the gift. It is useful to look at the historical dollar levels of annual gifts made to your organization when setting the entry dollar level for your major gift program. Most organizations count on a large number of small annual gifts, paid within a fiscal year by cash, check, or credit card, to keep their programs running. Study the pattern of these small, regular annual gifts in order to determine the highest level typically given within a normal year by your top group of annual donors. Ignore any unique, large, one-time gifts or grants that skew the regular gift pattern and then set the entry level for your major gifts program at a dollar level from 5 to 10 times above this “normal “giving cap.
Defining Major Gifts by Purpose
Many major gifts are given for a specific purpose, further distinguishing them from the annual gift, which is usually unrestricted for current operations. Major gifts are likely to be given in a restricted manner to accomplish a specific purpose valued by the donor. Gifts can be solicited for specific purposes, based on both the organization’s needs and the donor’s stated preferences. Most major gifts are given in order to further the stated mission and goals of the nonprofit, but it is up to the nonprofit’s leadership to determine if a specific gift is appropriate for the organization’s needs and future goals.
A major gift can be made for any of these purposes:
Unrestricted gifts- Unrestricted gifts can be used within the current fiscal year to meet the needs of current operations, such as salaries, ongoing programs, overhead, utilities, maintenance, facility upkeep, and the like, as identified within the organization’s budget process.
Restricted gifts- A restricted gift is a gift where the donor places a restriction on the use of the funds, such as when, where, and how the money can be spent. An organization is legally required to see that the funds are used as the donor requests.
Capital gifts – Capital gifts are restricted by the donor for use in a specific capital project; usually in response to the stated need of the organization, such as construction of a new facility, renovating a facility, buying land, or other one-time capital outlay.
Programmatic gifts-Programmatic gifts are restricted by the donor to initiate or support ongoing programs that serve the mission of the organization, such as educational outreach, or to provide specific services, such as delivery of food to the homeless.
Gifts for endowment- Endowment gifts are those wherein the principal gift amount is invested and preserved, and only the interest income is spent on a purpose identified by the donor. Endowed gifts may be restricted or unrestricted in nature purpose, depending on the donor’s stated desires.
Defining the Base Level Major Gift
Set the entry-level major gift 5 to 10 times larger than the highest annual gift typically received by your organization.
If Your Highest Level of Annual Gift Is:
Set Your Entry Level for a Major Gift at:
$2,500 to $5,000
$5,000 to $10,000
$10,000 to $25,000
$25,000 to $50,000
$50,000 to $100,000
$100,000 to $250,000
$500,000 to $1,000,000