Who is a Major Donor?

From an older blog-site - but worth a repost:

A new client recently asked who fits the “Major Donor” category. Not the first time I’ve been asked this question, I realized how difficult it sometimes is to define certain terms used in the fundraising world. While there is no specific one-size-fits-all formula, a few considerations could help to determine what constitutes a major gift for your particular institution.

First and foremost, you must determine why you need a ‘major donor’ designation.

Will you thank a major donor differently – perhaps with phone calls or special event invitations? Will you approach them differently in solicitation or cultivation? Will you acknowledge them in some particular manner?

Secondly, what is your capacity to handle ‘major donors’ in these ways? If you have limited staff or a very small board, who will engage the ‘major donors’? Can you handle 20 or 100?

To create the framework for how to engage a ‘major donor’ and how many relationships you can effectively manage, you might also consider certain eligibility criteria:

Financial ROI. What is the Return on Investment (ROI) to obtain the gift? Do you employ direct mail, phone solicitation, or an in-person meeting? What expenses are connected to these solicitation avenues? What then, would be the return on investment? Is a $1000 gift in response to the annual fund letter, costing about $1.40, with an approximate ROI of $1000 considered equivalent to a $1000 gift resulting from four 2-hour lunches with the Executive Director, who makes $65,000 a year, for an ROI closer to $700? Are both ‘major gifts’?

Impact. What impact does the gift have on the ability for your organization to fulfill its mission? How much does it cost to feed the homeless for a day, a week, a month? Or educate a child for a year? Or provide services to a veteran? Will $1000 cover a particular designated cost? Or $5000? Or $10,000?

Your donor base. What is the average gift size for your organization? What is the largest gift your organization has ever received from an individual? How close is the next gift amount below that? Was that an outlier or is it repeatable? How many people give in the vicinity of these outlier gifts? Do you have a large number of lower-end gifts? Do these donors have the capacity to give at a higher level if cultivated?

No one-size-fits-all exists. Each organization must consider their donor base, their resources, and their target goals to decide who fits the 'major donor' definition and how the relationship with them will be developed, but every organization would benefit from taking the time to approach the issue strategically.