Too Many Major Donors?

Can you imagine being told that your organization has too many major donors? Why would anyone criticize an organization for having too much major donor support? Realistically speaking, they wouldn’t. However there may come a time when the major donors of the present might raise some serious questions about the future.

It is not unusual for major donors to represent a large portion of the total income expected each year. For example, ABC, a local nonprofit, has a $500,000 budget of which it receives $300,000 from group of 30 major donors. This is not unusual for smaller organizations and would not initially raise any concerns. The question lies in where the balance of the money comes from. If the remaining $200,000 is primarily generated through direct mail and annual events, we may not have anything to worry about. On the other hand, if the balance comes from a series of grants, ABC may be in trouble.

In order to fully understand the situation, let’s look at ABC’s past, present, and future.

ABC’s Past

ABC has generally raised funds through personal interactions and, most assuredly, relies on passionate individuals who are not afraid to ask for money in person. Because of the personal nature of most efforts, special events and direct mail (or alternative new donor programs) have never generated substantial income and, therefore, never warranted significant investment. The organization has essentially built a successful major giving program with the small staff and board members acting as development officers.

ABC’s Present

ABC currently receives generous support as a consequence of having established close and personal relationships. As is commonplace in major giving programs, strong relationships lead to strong giving. In a strong major giving program, donors move quickly towards their giving thresholds. Unfortunately, as is often found in larger operations, the primary constraint for a development officer is their capacity to establish and sustain new relationships. The staff and board at ABC have other responsibilities which limit the amount of time that they can focus on fundraising.

ABC’s Future

Looking ahead, the organization’s fundraising potential is limited by a mature major giving program without any successful new donor programs. Many of ABC’s major donors have reached their giving threshold which creates demand for more sophisticated discussions about deferred and legacy gift planning. Unfortunately, as current major donors mature into the final phase of the donor life-cycle there will be too few new donors to take their place.