Major gifts come with a bevy of benefits for nonprofit organizations. The most obvious is quantitative. The more money you raise, the greater the impact on the organization and those it serves. The ability to provide additional student scholarships is one example. There may also be a greater return on investment in staff time than the multitude of tasks that accompany special events. There are also qualitative benefits. A focus on individual giving allows the organization to build deep relationships with donors in which the donor learns more about the organization and its place in the community, and the organization better understands the donor’s passion for the organization.
The monetary threshold for what constitutes a major gift varies from organization to organization. For some, a major gift may be $25,000 or more; others may consider $10,000 a major gift. Regardless of your definition, savvy organizations and those newer to major gift fundraising may struggle with securing these high-level philanthropic investments.
One simple way to increase high-level gifts and ease the transition to major gift work is through pledges. Development professionals can maximize the philanthropic potential that already exists by asking for a multiple-year gift and documenting a pledge.
A pledge is a written commitment to making a specific gift investment over a set amount of time, typically three to five years.
For the donor, pledges can change the way they see themselves in relation to the organization. Their personal investment deepens their ownership of the organization’s success. Pledging can also consolidate the donor’s interests so they’re not constantly being peppered with requests. Additionally, less staff time requesting multiple smaller gifts means more time to provide a great experience for the donor through stewardship and conveying impact. It can also better honor their intentions and set recognition with one clear request and documentation at a higher level. A good example is a donor who intends to give $50,000 each year for five years. Without a pledge, your organization may recognize them at $50,000 annually. With a pledge, you would recognize them as a $250,000 donor to the organization, which could also inspire others to think bigger when considering their own support.
For the nonprofit, consistent income allows the organization to plan ahead. This is especially important as we remain in an uncertain environment regarding the COVID-19 pandemic and its ongoing ramifications. A solid foundation also provides the stability that organizations need to dream bigger and craft a vision for the next step. Additionally, pledges increase revenue over time because most donors only increase their support if and as they’re asked. The improvements to the donor experience will also serve the organization better.
Here’s an example of how effective a pledged multiple-year gift can be with the right process and stewardship:
|Donor Without a Pledge
|Donor With a Pledge
|Gives $5,000 (recognized at $5,000)
|Pledges $25,000, pays $5,000 (recognized at $25,000)
|$5,000 payment, gives additional $1,000 annual gift
|$5,000 payment, gives $3,000 additional gift
|$5,000 payment, gives $5,000 additional gift (now giving $10,000/year)
|Asked for and pledges $50,000
Raise More Money
When considering how to approach documenting more pledges, it is most helpful to look inside the organization at your closest supporters and friends. Although you can certainly build a relationship that leads to a major gift from a brand-new introduction, faithful donors are the people most likely to make high-level gifts.
A process outline follows:
- Identify regular donors, from direct mail, annual giving, and events.
- Evaluate if a pledge is right. It may not be the best strategy to make this request of a foundation that makes decisions on a year-by-year basis, or a corporation that keeps their sponsor dollars separate from their other giving.
- Inventory the donor’s giving interests from your records.
- Identify an initial potential request amount to help you prioritize your outreach. For example, a donor giving $2,000 each year could pledge $10,000 over five years. If you have not asked them for a specific pledge before, you may use the opportunity to stretch to a higher amount.
- Consider a blended gift, combining their interests into one request. This is a way to coordinate your approach, making it easier for the donor if they typically make a sponsorship gift in addition to a program gift. Also consider incorporating a planned gift request, if appropriate.
- Cultivate – don’t take the donor or their interests for granted.
- Solicit – make a specific request, ideally in person/by video with written support, based on their past gift levels, your research, and the conversations you’ve had to date.
- Document the pledge.
A final process tip: plan ahead. A major gift typically requires more staff time at the beginning to build an authentic connection with the donor and respect the investment they may make. Articles to help you take it from here include “Five Steps to the Big Ask: How to Prepare Donors to Receive a Big Gift Request” and “Top Five Tips for Creating Robust Major Gift Portfolios Using CRM Data.”
The Right Fit
There are many additional factors to consider when determining the right fit between a donor and their gift pledge. The following may be helpful:
Pledge length: Five years is recommended; you may lose two years of impact if you ask for a three-year pledge. Five-year pledges are also short enough, in most cases, to maintain urgency toward their fulfillment. There are a few caveats, however, for both shorter and longer pledges. For event sponsorship requests, shorter (2-3 years) may be a safer bet since the event may run its course or evolve significantly over just a few years. Pledges longer than five years should be evaluated on a case-by-case basis. Consider acceptance in circumstances where there’s a long-standing relationship with the donor or an extended timeline is necessary because of other gifts. An example of this is if a donor is committed to another organization but willing to make their pledge now. Payments may not begin until next year but the gift will inspire others and build momentum.
Documentation: For gifts with few components, pledge forms are clear and easy for the donor. A pledge form is typically up to two pages with the donor’s contact information, gift amount and designation, and payment details (don’t forget their preferences for pledge reminders). A simple letter may stand in for a pledge form if the donor prefers. Longer gift agreements or addendums to pledge forms are recommended for gifts with multiple designations or restrictions, or whenever naming is part of the donor’s recognition plan. For example, donors to scholarships may need an additional form to indicate award distribution timelines, or their preference for students with financial need or academic performance above a specific level.
Language: Consider using a different word, such as commitment or intention, if “pledge” is a culturally or individually sensitive term, or if it doesn’t translate well in the donor’s primary/preferred language.
An Example from the Field
Salt Lake Community College (SLCC) is a great example of the power of pledges. SLCC is the only community college in Utah and serves both students who intend to transfer and those in need of workforce training. It’s also the largest and most diverse institution of higher education in the state, with more than 60,000 students across 11 campuses.
SLCC is currently in a $40 million comprehensive campaign in support of its strategic plan. Faced with a significant goal to raise, their development team shifted focus from event fundraising to major gifts. Although fortunate to recruit and retain talented leadership and staff, this has not been a quick transition for SLCC.
Campaign success hinged on the first pledges to set the pace and inspire others. SLCC had many dedicated donors who gave each year, but who had not yet been asked to make a multiple-year commitment and document their pledge. An early conversation with a volunteer who had been giving annually led to a confirmed 6-figure pledge, which both motivated him to take a greater leadership role and ownership in the campaign, as well as inspired others to dig deeper themselves.
Make a Bigger Difference
Pledges for multiple-year gifts can help organizations raise more money and take donors to new levels of major giving. With more donor investments, nonprofits can have a greater impact and make an even more meaningful difference in their communities.