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Hey you, it's Ria Wong. If you're listening to Nonprofit Load On, I'm pretty sure that you'd love my weekly newsletter. Every Tuesday morning, you get updates on the newest podcast episodes. And then interspersed, we have fun special invitations for newsletter subscribers only and fundraising inspo because I know what it feels like to be in the trenches alone. On top of that, you get cute dog photos. Best of all, it is free. So what are you waiting for? Head over to riawong.com now to sign up. Foreign welcome to Nonprofit Lowdown. I'm your host, Rhea Wong. Hey friends, Rhea Wong here with Nonprofit Lowdown. All right, we are heading into the end of the year and I know that all of y'all are out there trying to close gifts before the end of the year because after all, 30% of giving is done in the last week of December, we as a sector bear some responsibility in terms of training our donors to wait until the very last minute. But be that as it may, I know y'all are in the thick of it. I work with fundraisers in my group coaching program, Big Ask Gift, and one of them asked a question today which I thought was a really interesting one. I wanted to recap it here for you. So today I want to talk about the distinction between annual gifts and major donor gifts. And I think that the mistake that we make is that we don't recognize the fact that the strategies, the performance metrics and the approach are completely different for these two distinct group of donors. I'm not going to talk about mid level donors because I'm going to assume that most of the nonprofits out here listening may not have a mid level giving program. So for the purposes of this conversation, let us just make a distinction between small annual gifts. So maybe the donor who gives every year at giving Tuesday versus the major donor who might be giving upwards of five, six, maybe even seven figures. Now here is the mistake that I think a lot of folks make. Understanding this different can unlock the secret, secret sauce to building a balanced, thriving fundraising strategy. So whether you're hustling to meet your annual fund goals or cultivating the elusive transformative gift, this episode is for you. Let's get into it. Let's talk about why the distinction between the two matters. Let's talk about the difference between an annual gift versus a major gift. It's the difference between fundraising stability versus transformative growth. Now, I'm sure y'all are out here having heard stories of, let's say, for example, Mackenzie Scott, who provided a transformative gift to an organization. Now here's the thing. Both types of gifts have a place in in funding stability. For example, your annual gifts provide the bread and butter. They ensure operational stability. These are a small dollar, repeatable, usually unrestricted gifts that come, say at the end of the year or giving Tuesday or your big annual appeal. Major gifts are the game changers that drive big projects and long term impact. So gifts like the Mackenzie Scott gifts or gifts that you may have received from longtime board members or longtime donors, both of these are essential. But the management and the strategy behind the two are completely, completely different. Let's dig into the mindset. What is the mindset of an annual donor versus a major donor? An annual donor is largely transactional. They're motivated by convenience or community. They think of you when they get your annual giving campaign or what have you. Major donors are much more mission driven. They see the work of your organization as aligned with their identity and who they believe that they are in the world. They're seeking alignment and they're seeking personal connection. Now let me give you an example. So my brother every year asks me to donate to my niece's after school program. I don't have children of my own. Frankly, though, I care about education. An after school program in San Francisco is not necessarily where I'm going to commit my time, but every year, because he is my brother, because I love him and my nieces, I just give at a small dollar amount, a hundred, a couple hundred dollars a year. Now, when I look at my other philanthropic priorities, I give at much more significant numbers to organizations that I'm on the board of, organizations that I've been personally involved with, like my alma mater, like my previous nonprofit that I ran because they speak to who I am. The problem is when we are chasing down gifts that in my mind are transactional, but we believe that they are major gifts or we keep hoping that they're major gifts. But this is one of my favorite things. Hope is not a strategy. Now if a fundraiser were to somehow find me online, do a wealth screen, whatever it may be, and they saw that my giving capacity, or perhaps they saw that I was giving bigger gifts to other organizations, they might spend a whole, whole lot of time trying to chase me down, to ask me for coffee, to ask me for engagement, in my mind, I'm only giving because of my brother. In the mind of the fundraiser, because they're relying on hope, they may be trying to chase me down in order to increase the gift. This is a failed strategy because it is a waste of their time, there's no indication that I would give a bigger gift, even though that they've identified that I could give a bigger gift. Now. All to say that perhaps there is a world where I might be receptive to a phone call. But if there's no deeper engagement, if there's no alignment with who I believe I am as a person, I likely will not give a significant enough gift that it will make it worth it for the efforts of the fundraiser, it's important to think about what is the mindset of our donor now. Certainly there is a world in which I might start off as a transactional donor and be moved into being a large donor. Because you, as a fundraiser, have aligned the nonprofit's mission with who I believe I am. However, I think in a world of constrained resources, it's probably a better use of your time to find people who already believe, so to speak, who are already aligned with the cause versus trying to transform someone into a major giver that really just isn't there. Which leads me to my second point. I want to talk about the key differences in the donor profile. So when we think about small annual donors, they tend to give smaller amounts, often recurring, maybe every year. Maybe if you have a monthly donor program, the motivation is loyalty, or maybe they're just used to it, or there's a specific appeal that resonates with them. The interaction tends to be minimal and it tends to be broad based. Newsletters, social media, email. When we think about major donors, it looks like fewer donors contributing large high impact gifts. Now the motivation here is different. Whereas the motivation for your small dollar donors might be loyalty, habit or specific appeals, your major donor is really about passion for the mission, a desire to leave a legacy, or alignment with their identity as a person. The interaction that we should be thinking about for major donors is highly personalized and relationship driven. The problem that we make as fundraisers is that we misread the signs. What I mean by that is oftentimes we treat our major donors like small annual donors, which. Which is to say that we rely very heavily on things like broad based communications, the emails, the social media posts. We're so reluctant to pick up the phone. Major donors require a higher level of touch point. Now the problem that we often have is that we misread the signs. We so want a small annual donor to be a major donor that we're chasing them down to have coffees with us, to come on site visits, to do the fireside chats with the CEO, and they are simply not interested. This points to the fact that we cannot make somebody ready before they are ready. And instead we need to read the signs. Are they actually opening our emails? Are they returning our phone calls to show that they are sending us signals that they are open to further collaboration and further communication? When we use HOPE as a strategy, we keep reaching out, we keep inviting them for coffee, and they're simply not ready or they're not interested. It's the same as continuing to ask somebody for a date who just is not interested. At some point you might wear them down, but is that really where you want to be, using your resources instead? How can we truly differentiate between a small annual donor who could give more but maybe isn't there yet, versus a major donor potential who is screaming to to be heard, who is screaming to get your attention if you just read the signs, right? Let's talk about the third piece, the tactics that we use for each of these. So for annual gifts, we use tactics that are focused on scalability. So things like automated emails, crowdfunding campaigns, recurring giving programs like monthly giving. Some of the metrics that we use to track our donor retention, average gift size, and acquisition rates. Simply put, the tactics that we use are different for major donors. So while the annual gift is focused on breadth, literally how many folks are we getting into the pipeline and how many can we convert? Our major gifts are focused on depth. So one on one meetings, exclusive events, how have we moved the relationship forward? How are we building trust? Does each touch point engender trust? The metrics that we're tracking for major gifts are pipeline conversion, the average gift size and lifetime value of a donor. And so you can see that annual gifts breadth, major gifts depth. Let's talk about storytelling and stewardship. So once you get the gift, here are some ways in which annual donor stewardship is different than major donor stewardship. So annual donor stewardship is using broad impact stories that show collective contributions making a difference. For example, your $10 a month keeps the programs running. We talk about collectively how we make a difference. When we think about major donors, we use highly specific personalized stories demonstrating the individual impact and how it is aligned with the thing that they believe themselves to be in the world. When we are giving major gifts or major gifts for us, it is because we tell ourselves a story about who I believe I am in the world and the impact that I want. And so when you're stewarding that gift, you must close the story loop for people to help them to tell themselves the story of who they believe they are at the End of the day, when I lay my head down on my pillow at night, I. I tell myself stories about, oh, I'm the kind of person that cleans oceans. I'm the kind of person that helps kids get to college. And so the more you can help me to affirm my identity and who I believe I am in the world and the impact that I make, the more I'm going to be loyal to you. So some examples of that might include something like, your $100,000 gift funded the new community center. You're showing me the impact that I believe that I wanted when I first engaged. And this brings me to the next point that I want to talk about. Oftentimes, I hear this all the time with donors, which is donor retention is a major problem. And when I think about giving, when I think about people who give a $10,000 gift or $100,000 gift or a $10 million gift, my first question to fundraisers is, how have you created a $10 million experience for this donor? Because at the end of the day, we are all buying something. I used this example recently, and I think it's a good one. So for those of us out here who have ever been to Disneyland or Disney World, I think we can all agree that the feeling that we have about Disney is one of magic. So when you have a lasting impression of the Disney experience and all you remember is magic, you forget about the fact that you spent a lot of money. You forget about the fact that you were hot and waiting in line and you were thirsty and the parking lot was a million miles away from the front door, because the minute you entered, you felt magic. And so my question to you all is, as you're thinking about your donors, how are you giving them the Disney experience? How are you leaving them with a feeling such that it is commensurate with the amount of money that they have given you and or greater than the amount that they're giving you. Because when we really think about it, the people who are giving major gifts are usually people who have significant wealth. They can buy anything that they want. What they are buying when they give to your organization is they are buying a sense of purpose. They are buying good feelings. They are buying the story that they are telling themselves about who they believe that they are and the impact that they have in the world. When we are thinking about our donor retention, how are we giving them an experience that is commensurate with their gift? And oftentimes. And this is the big flag I want to highlight for everybody. Is what is valuable for them, not for you. And so a a lot of times we are in our little bubble and we think people will definitely want this impact report and they'll definitely want an invitation to this thing. Is that true? Do you know that to be true? Let me give you another example. I have teenage nieces and nephews and I think we can all agree for the grownups out here that what we think is cool is not necessarily the same as what teenagers think might be cool. And so every Christmas I ask them for a Christmas list because I am not going to guess at what I think is cool. They are going to tell me what they think is cool. I usually just give them money because then they can buy what they think is cool. But the point I'm trying to make here is that it is highly specific and if you haven't asked the question, if you don't know what is of value to them, you're just shooting in the dark. The final thing I want to talk about is how to balance both. Because the truth of the matter is you need the annual gifts for basic operations and you need the big transformative gifts in order to take it to the next level. Here are a couple ways that you can balance both things. 1. Segment your donor base Understand the difference between your donor groups Understanding the difference between the donor groups will help you to tailor your approach without exhausting your resources. So how you might do that is you might look at your CRM system and you might segment your donors into tiers. Small donors, mid level donors, major donors. You then can assign dedicated strategies to each segment of your donor base. And remember, you can automate where possible for annual donors while you reserve your manual effort from major donors. Why this is important is scale is key in order to manage a large pool of donors. And luckily for you, we live in this brilliant world of AI where AI can actually help you to automate at scale. You can invest in tools like your email marketing platform and recurring donation systems. You can use your automations like Zapier to pre schedule emails, thank you notes and updates. You might, for example, automate developing a donor journey map for new annual donors to move them towards regular giving. One way that I used automation in my major gift work is is I had an app in the background that gathered up a list of major donors over a certain threshold that I had not touched base with in six months and it delivered it to my inbox at 8am every morning. Another way that you might think about using AI or automation is drafting personalized emails to your donors. This is not an episode about AI, but we could talk about AI and the ways in which you can use it to personalize at scale. 3. Prioritizing major donors Now While smaller donors sustain your operations, major donors have the potential to drive transformative growth. So here's what I would recommend that you do. And by the way, take a moment to listen to last week's podcast about time management. One block time weekly to focus exclusively on major donor relationship building. 2. Use your board members and high level stakeholders to help build connections with potential major donors. 3. Host exclusive events or one on one meetings to deepen relationships. Another way that you can make sure that you are using your time effectively is to use data to make informed decisions because data driven decisions help optimize your time and effort. What does that look like? It looks like Tracking engagement metrics to identify annual donors with major gift potential. Some of these engagement metrics might be things like opening and clicking on emails, attending events, replying to emails, sharing social media, coming to an event. You want to think about constantly monitoring donor behaviors such as increased giving amounts or event attendance to flag for further cultivation. And finally, and this is my favorite strategy, conducting donor surveys or feedback sessions to understand motivations and preferences. I've done a whole training on the use of donor surveys to create feedback loops for for potential donors. The truth of the matter is that donors know better about what their giving capacity is and their timing and what all is going on in their life better than you do. And so if we are just leaning on things like wealth screens or Google searches to tell us whether a donor is a major gift potential, that is a data point but insufficient data point. Because again, to my point about my niece's after school program, just because I could give a bigger gift does not mean that I'm going to give a bigger gift to you. And again, this survey strategy is very specific. If this is a survey strategy that you would like to consider implementing into your own fundraising operations, definitely consider applying to the Big Ask Gift program. In the program I will help you both both learn the framework and in implement this strategy into your operations so that you are not flying blind. Now one of the things that I want to talk about is that there is a theory out here that every major donor starts as a small dollar donor. And I don't think that's true because in my case I certainly have had money fall out of the sky that I had no idea about that people who were not previous givers, these are people who had not been identified as Potential major donors in my donor pool. However, I think one thing is true is the first gift is often not the biggest gift. So when most major donors begin their journey, they start with smaller contributions to test the waters before making a more significant contribution. So that means that you should treat every donor, regardless of the gift size, as a potential future major donors. And you're always thinking about how to create pathways for further engagement, further communication and other upgrading a gift. What that looks like is showing impact early and often. Because when donors see the impact of their contributions, they're more likely to continue and increase their giving. The first question is, what did you do with my money? The second question is, would I be better off giving to a different organization? And the third question is, how do you make me feel good or bad? And it's that simple. And so knowing that these are the three questions in the mind of your donor, you should be thinking about how you can answer those questions for all of your donors, regardless of the size. We're also thinking about how we create opportunities for engagement. So the donor who comes to a volunteer event or comes to a fireside chat or comes to a site visit is much more likely to upgrade. As we know, building relationships and trust requires consistent touch points and meaningful interactions. So that looks like inviting donors to events, volunteer opportunities, or behind the scenes tours. Providing opportunities for direct interaction with your leadership and asking for input through surveys or focus groups. One thing that we should be very careful about is continuing to chase people who are not receptive. As they say, you gotta dance with them. That brung you. So if you're not getting a high level of engagement or interaction, I would ask you, what value are you providing to your donor? The mistake that I see, and this happens because we are out here living and breathing our work every day. But too often we come from the perspective of taking, not of giving. What that looks like are emails that say things like, susan, I'd love to tell you more about what we've got going on and to invite you to come along this journey with us. What's in it for me? What value have you added for me? Susan the donor, all you said is that you wanted to invite me a coffee so you could talk about yourself. Why would I agree to that? I have a limited amount of time when you're thinking about communications, when you're thinking about invitations, when you're thinking about anything that you're putting out in the world. The first question that I would always ask is, what's in it for me? How are you adding value to me as a donor, how are you making me feel value appreciated and and that I made a difference in the work that you do. I want to point out the fact that the way that we think about small dollar donors is different than the way that we should be thinking and acting and treating major donors. Now the trick of course is that we don't necessarily know who in our small dollar pool could be major donor potentials. The most reliable way to see who is willing to be upgraded into a major gift and to invite them on that journey are things like using a survey or other feedback mechanisms or even one on one conversations to see who actually wants to raise their hand to be on that journey. And the mistake that we make and the ways that I see fundraisers burning out is that we constantly chase after people who have not indicated that they want to be on that journey with you and so you end up wasting a lot of time, energy and you frankly get burnt out on all of that because it feels like a rejection. And the last thing I want to say is if you are not getting any traction in that way, it is likely that you have not provided sufficient value to the donor or articulated for them what's in it for them such that they are going to take time out of their busy schedule to engage with you. Here's my takeaway. Fundraising is an art and a science. So by balancing small annual gifts and major gifts, you're creating a strong, sustainable foundation for your mission while pursuing the transformative impact that major donors can bring. If you're ready to up level your fundraising game, let's connect as a resource to this episode. In the show notes you can find a chart that lays out all of the ways in which annual gifts and major gifts differ. So download it if you've enjoyed this episode. Don't forget to subscribe and leave a review. And if you need help to take your major gift fundraising to the next level in 2025, then check out my Big Ask Gift program which you can find@riawong.com and Bubba Paul love to talk to you. Hey fundraisers. Looking to n Big fundraising asks, check out my Big Ask gift program@riawong.com bag. Say goodbye to uncertainty and hello to confidence with my program. Get expert strategies and personalized support to secure those game changing donations. Don't let fear hold you back. Join me and take your fundraising to new heights. We're enrolling now@riawong.com bag. That's riawong.com bag. So if you like big asks and you cannot lie. I'll see you in the program.