Building a self-sustaining donor pipeline
Major gifts have grown in importance in recent years, bringing a laser-like focus on high-dollar acquisitions to university advancement. In this climate, too many advancement leaders forget that the major gifts on which they rely are cultivated over time in the annual fund.
Most major gift donors start out giving small gifts and upgrade consistently over time. Advancement divisions that chase one-off gifts from wealthy individuals with low institutional affinity instead of strengthening relationships with up-and-coming donors do so at the pipeline’s peril.
Institutions that fail to cultivate and advance their pipeline donors, especially those giving mid-level gifts (typically between $1,000 and $25,000), risk undermining their immediate returns from high-affinity donors as well as their long-term major gift prospects.
A poorly planned mid-level cultivation strategy creates a number of risks. Advancement leaders may miss major and planned gifts from mid-level donors with hidden capacity whom wealth screenings fail to flag. Unrestricted revenue returns falter as staff overlook the donors most capable of giving these gifts. Over time, inattention to the pipeline results in a depleted pool of major gift prospects and diminished cumulative donor value.
The primary outcome of an undeveloped pipeline strategy is donor inertia. Donors give loyally, but don’t upgrade, even though they could. Advancement leaders can overcome donor inertia and move mid-level donors closer to major gifts by taking an ambitious, targeted approach to upgrades.
Segmenting mid-level donors who are likely to upgrade and offering them a well-timed, compelling solicitation moves committed supporters up the giving ladder to higher-value philanthropy.
While upgrades increase the value of the pipeline incrementally over time, some mid-level donors have untapped capacity to give high-value gifts immediately. Institutions that deploy existing resources to qualify these donors and refer them for major and planned gift cultivation see big returns in the short term.
Discovery initiatives are key to an effective major gift strategy, yet they often come at great expense to the institution. The opportunity cost of assigning qualification duties to major gift officers is high, since their time is most productively spent cultivating and soliciting the institution’s best prospects.
Engaging students, alumni, alumni relations staff, and annual leadership giving officers in discovery and qualification achieves key divisional goals without distracting from direct fundraising work.
Unfortunately, upgrades and discovery alone won’t ensure the sustainability of the long-term major gift pipeline. Major gift relationships require well-executed stewardship to flourish over time. Yet most mid-level donors receive little more than gift society benefits, which do little to inflect future giving.
An overwhelming majority of donors care little about certificates, plaques, and other gift society touches. Yet donor relations continues to invest heavily in these offerings. Many advancement leaders have started to wonder whether their stewardship dollars could be spent more productively.
Advancement leaders must turn to stewardship strategies that are scalable, tiered, and targeted to deepen giving relationships and position mid-level donors to advance through the pipeline.
Extending major gift treatment to mid-level donors, especially by enhancing exclusivity and access to senior leaders, carries with it disproportionately positive returns.
Key strategies for enhancing exclusivity and access:
Demonstrating impact is essential to effective stewardship. Donors today take a more entrepreneurial view of their philanthropy, regardless of the size of their gift. They attach overwhelmingly to the direct change their gifts cause, and they grow disillusioned with organizations that do not communicate that change to them.
The rapid growth of the nonprofit sector across the past two decades caters to this need for impact-driven stewardship. Advancement leaders who fail to communicate the impact of gifts risk losing supporters to the extensive network of organization that do so.
Advancement leaders often struggle to communicate impact to donors due to resource and time constraints. Digital channels hold the potential to alleviate these pressures and facilitate transparent, impact-focused giving relationships with donors throughout the pipeline.
Donor relations strategies that give donors an inside look at the impact of their gifts on a regular basis transform supporters into partners of the institution. In addition to swelling the ranks of mid-level donors, they can also boost donor retention rates.
This library of tools will help institutions cultivate mid-level donors and advance them up the giving pipeline. Access now.
Essay: The Pipeline in Peril