The right volunteer asks the right donor for the right amount at the right time to support the right project with the right approach.

— The Six Secrets of Big Gifts

What's the money for?

Making a large donation requires more than average commitment. How can you get prospects sufficiently interested to part with several hundred or thousand dollars? One of your first steps is to have clear answers to the question, “What's the money for?”

Look into this before you start talking to prospects. It is tempting to skip ahead in your eagerness to begin. Please don't make this mistake.

Don't ask the prospect to give you money for your general budget — it's not exciting or motivating. Avoid asking for support to cover core costs or deficits.

Major donors are more likely to give to achieve something specific than to support an organization's overall budget. They want to feel the satisfaction of knowing what their money accomplishes. They do not want to feel that their hard-earned cash merely helped to bail out one bucketful (however large) from a sinking ship.

The question you must constantly ask is this: What part of our work might inspire this particular donor to give more?

Fundraiser Gordon Cressy provides this example from the University of Toronto capital campaign:

They approached Helen Gardiner Phelan for a donation, after careful preparation. Mrs. Phelan is a U of T graduate who has led an active life. She has been chair of Toronto Arts Productions, now called the Canadian Stage Company. She was on the board of Women's College Hospital for over 20 years (four of them as chair of the board), and on the Lyndhurst Hospital board as well. She has also served on business boards, including Confederation Life and Scott's Hospitality, which operates the Kentucky Fried Chicken chain, where her brother was chairperson. Her husband, Paul J Phelan, is Honorary Chairman and Director of Cara Operations Limited, the food service company that provides many airline meals, and operates restaurants, including Swiss Chalet and Harvey's Restaurants, as well as Grand and Toy, the office supply retailer.
Mrs Phelan gave U of T $200,000. That is a lot of money. But Johnny Wayne and Frank Shuster, the TV comedians, were on the fundraising committee at the time. They remembered her from the days when all three had gone to University College (a division of the University of Toronto) together. She had been in the UC Follies in 1938, '39 and '40. They decided to go back to her again, for help renovating the UC Playhouse.
They arranged a lunch with Mrs Phelan to ask her to help renovate the playhouse. As she later said in a telephone conversation, “There were a lot of top people there, which helps… They gave me lots of `outs' and said they felt embarrassed to be coming back to me. But I wanted to do it. I believed in these people; I'm interested in acting; and the theatre was in terrible condition.”
She and her husband together donated another $1.2 million. “It felt extremely good. I had just recently made out my will leaving money to a very few charities I support, and I had been thinking it would be nicer to do it in my lifetime. Nothing as major as that ever occurred to me.”
U of T had a dinner in her honour, of course. At the dinner they gave her a seven-foot-high photo of herself from the 1938 Follies.
Since then, the Helen and Paul Phelan Foundation has also contributed $1 million for a Chair in Dermatology at Women's College Hospital.
Before you rush to put her on your list, you should know that Mrs Phelan stressed the importance of knowing the people involved, and having a long personal association with the group. She also said that “the money's exhausted now. People assume that if you give a large gift you can afford the world. You can't.”

The lesson? Knowing the right project transformed a $200,000 gift into a $1.2 million gift. While you may have to knock a few zeros off, the principle remains the same.

This is donor-centred philanthropy. It focuses on the donor's interests and needs far more than the organization's. Lyman Henderson would agree:

What gets to us? First of all, it has to be something we are or could be interested in. That means you've got to do a little research. If you're going to go after me for five hundred, a thousand, or more dollars, it's worthwhile spending a little time and not giving me the `Dear Friend' kind of approach, but knowing what I'm interested in. They're not going to get very far, for instance, in trying to interest us in supporting a jazz concert, but if it were a ballet performance, that's sort of our cup of tea, and you might just find something in that.

Funds for Buildings, Equipment, and Direct Services Are Relatively Easy to Find

Campaigns for buildings are by no means all that major donors support, but they are familiar to most people, so let's begin there.

At the largest level, you may be familiar with campaigns where donors gave a school a science lab or athletic centre. They might give a hospital an intensive-care room for newborns, or even a whole new wing. It could be a theatre, or the lobby of a building.

In grassroots building campaigns, the same principle applies. For a community centre, for example, larger donors might like to contribute by giving something specific and durable, like a daycare centre, a kitchen, a shelf of books for the reading room, or the bench for the home team.

All these are tangible and visible. Their value to the people who will use them is unquestionable.

Equipment campaigns are also common. Donors provide CAT scanners, wheelchairs, or vans. They may buy a painting for a gallery, a piano for a musical group, or toys for a daycare centre.

Programs for people are also very easy to fund. Donors may give the money to provide food for the hungry for one month, a week of summer camp for a needy child, or one performance of a concert for an artist on tour.

Some Needs are Harder to Fund — Overhead, Endowments and Other Tricky Problems

Unfortunately, it is very difficult — almost impossible — to get money for core costs. Few prospects want to pay an organization's rent or telephone bill. Salary and overhead are equally hard to fund.

The first step is to clarify that overhead is only a hidden cost in providing a direct service. For example, insurance and maintenance are the hidden costs in buying a van. Without them, the van can't operate. If there is no van, there is no need to pay for auto insurance or maintenance. In reality, both the hidden cost and the capital cost are integrated. Don't separate them in the fundraising campaign.

Similarly, there are a variety of other hidden and indirect implementation costs involved in running a van. Passengers have to be able to arrange rides. This may require someone to answer the phone — as well as a phone to be answered, a desk and chair, office rent and so on. Even then, there are still more costs. A publicity campaign may be needed to let potential passengers know a van is available. This may require a brochure. A brochure, in turn, costs more than the price of printing. People may have to be paid to write, edit, design and distribute it — and these people, too, carry overhead costs. All these so-called core costs are required to make use of the van.

In fact, the van itself may be only a small portion of the costs of offering a transportation service.

Similarly, unglamorous equipment behind the scenes, such as office computers, copiers, and furnaces are also difficult. Leaky roofs, improvements to insulation and all the rest are seldom popular. Yet they are necessary to providing programs and services.

Endowment funds are usually unpopular as well, with some exceptions. It is a fantasy to expect to go overnight from poverty to having large investments and living on the interest. Many donors will support an endowment fund. However, it is often done by leaving money to the group in their will. While they are living, they generally (but not always) prefer to see their money spent on short-term needs.

While campaigns for buildings are usually popular, this is not always the case. Office space, for example, is essential, but it seldom excites donors.

How do you solve the problem? You can't eliminate the need just because prospects don't find it appealing. Often the answer is in the phrasing. Here's how Frank Whitley, president of a major community fundraising firm in the US, describes the solution:

In one case, one of the needs was described as “Renovation of second floor of 3000 square feet, with activity rooms, offices and toilets, new lighting and furnishings for childcare facilities.” We revised the description, to reflect the public's needs: “to provide additional childcare space to double our present facilities, so that 75 welfare mothers secure taxpaying jobs.”⁷⁷

Solution: Include Core Costs in Programs

The solution is to include the costs of all the unpopular necessities within the more exciting programs.

Note that this does not mean always starting new projects to interest prospects, while you struggle for funds for your central mission. Instead, present all aspects of your work as related to programs. This is an honest and accurate way to motivate donors to care about core costs.

You may also be able to redefine some administrative work as a public service. For example, if you spend time talking to the public or answering letters about your work, can you legitimately call this a “Public Awareness Program”? If so, include not only the salary of the person who talks to the public, but related overhead expenses.

The same thing applies to capital expenses. Even a cause as popular as a children's hospital, for example, might find it difficult to get a sponsor for the furnace room — even if they offer to hang a big plaque on the door. Instead, the cost of the furnace is included in the costs for other rooms.

A senior citizens' or a disabled persons' group might campaign for a `Mobility Program', instead of just the van mentioned in the earlier example. The Mobility Program budget would include all the related costs as well. These include direct costs, on-going costs, and implementation costs.

Direct costs would include:

• the van
• special equipment for the van

Ongoing costs include:

• drivers' salaries and benefits
• supervisor's salary and benefits
• insurance
• gas and oil
• regular maintenance
• parking

Implementation costs include a fair portion of salary, benefits and overhead for:

• a receptionist to answer the phone and book rides
• a brochure writer
• a brochure designer
• a brochure distributor
• an executive director
• a bookkeeper
• etc…

It is legitimate to include all these real costs in calculating the value of a program. Nothing should be left over to be labelled `core costs'. Although some government funders insist on the artificial separation of so-called `direct costs' from overhead, most donors understand the reality.

Ultimately an organization's budget should have a column for each specific program. Each of these should show a fair share of all costs.

Long-term repair and replacement costs should also be included. All equipment, from a van to a roof, has a limited life-span. It is relatively easy to predict how long it will be before they will require major repairs or replacement. A portion of these costs should be included in each year's budget, in advance. The alternative is an emergency situation that could easily have been prevented.

Action: Break the budget into bite-sized pieces.

The result of including the full, real costs of the program may be that the total needed seems to be too large. It often helps to interpret this in terms of the number of people who will be helped over the lifetime of the program.

Sponsoring a concert at $2500 is a lot — until it is clear that 500 people will see it performed. The cost per person is only $5. A new display in the gallery or museum may cost $100,000 and be seen by 25,000 children on school tours, at $4 each.

A mobility program may cost $50,000. But it might carry 1000 passengers on trips over the course of a year. Some may travel just once; others, more frequently. This brings the cost down to $50 per passenger per trip.

Still too high? Since the $50,000 includes a van that will last five years or more, the full five-year costs should be pro-rated against total passengers. This may display the true cost of $10 per passenger per trip.

This, too, may be further reduced by noting that the average round trip totals 50km. The actual cost is 20cents per passenger kilometre.

This is referred to as the unit cost. Calculate a unit cost by taking the following steps:

PROGRAM NAME: ________________________

a. Full cost of program, including all expenses (direct, hidden overhead, indirect and implementation): __________

b. Number of participants: __________

c. Cost per participant (a ÷ b): __________

d. No. of times each participant uses the service: __________

e. Cost per use (c ÷ d) __________:

f. Average duration of each use(time/km/etc.): __________

g. Cost per unit (e ÷ f): __________

Take `Market Value' into Account

Because you have determined the true cost per unit, it does not necessarily mean that each prospect should be asked to contribute only to the limit of that amount.

In every programme, some parts are more popular than others. People contributing to the more popular elements might happily give more than the actual cost. This will be used to cover the costs of other, less glamorous aspects.

For example, a hospital may need funding to construct a new wing containing four areas. Each area is about the same size. If the cost of the building were simply divided by square meters, each area might be worth $15,000.

However, one of these areas will be a furnace room in the basement. Although people's lives will depend on the smooth operation of the furnace throughout the winter, this is probably not a need that will excite any prospect. As a result, the $15,000 cost must be divided among the three remaining areas. They will effectively cost $20,000 each.

Two of the areas will be side-by-side. One will be used for a critical care unit for newborn babies, and requires expensive equipment. The other will be used for long-term care of the terminally ill. While some prospects might be interested in funding each area, it will probably be easier to find prospective donors who are interested in the babies. It is reasonable that the donor sponsoring this area be asked to give $25,000 or more, even though the raw cost will be only $15,000 and the adjusted cost (including the furnace room) will be $20,000. The difference will help subsidize the long-term unit.

The core cost is not the determining factor. People will give more if something appeals to them. Making the area cheaper does not make it more fundable.

The third area will be a front lobby. No one will actually receive care in this area; however, everyone will pass through it. Some prospects will be attracted to it because of the added recognition their donation could bring them. It may be the prestige or the publicity that they like. Because of the added value in the prospect's mind, the area may be `worth' more money. The prospect may be asked to give $50,000 or $100,000 for the right to be sponsor of the lobby, even though the adjusted cost is only $20,000. The extra money will subsidize other aspects of the hospital's work.

The same example could be applied to a theatre, an educational facility, or most other buildings. It also applies to non-capital programs.

Churches, for example, know that parishioners will pay for a new furnace, for instance, if the old one breaks down. Getting the funds for maintenance before it breaks down is harder, though. Overhead expenses also seem unappealing. If, instead, the focus is placed on their ministries, each including a portion of the overhead costs, fundraising then becomes much easier.

A 17-page booklet that will be useful to all groups struggling with this problem, whether they are religious in nature or not, is A Declaration for Mission: Your Congregation's Budget, by Lynne Geddes (produced by the Canadian Inter-Church Stewardship Committee, 1987). It is available from:

Here's how to calculate your figures:

The amount you ask a prospect to give should include the full costs of the program or item. But don't stop at the immediate out-of-pocket costs. Overhead and hidden core costs are legitimate expenses, too.

Then, consider whether a particular program or item might be exciting or prestigious enough to be worth a donation of more (or less) than the actual costs. This is the `market value'.

It is difficult to assess the market value of a portion of a program. Prospect research is the best way to determine the answer to this.

Some nonprofits are concerned that asking more than the actual cost is unethical. They are concerned that prospects will feel abused.

Honesty is important. A donor who gives $50,000 to a hospital lobby should not be misled into believing the lobby costs more than it does. A donor who gives $250 to have a brochure printed should be told the money is not only going to pay the printer's bill. If you explain fully and properly, the donor will likely appreciate the reality.

A large part of market value depends on the recognition you can offer. While not all donors want their names in lights, many do. Those people are willing to give more, if you give them more.

The right to name a program, for example, almost always goes to the single largest donor. However, that person may have given comparatively little. Roy Thompson Hall, the major concert venue in downtown Toronto, was named in honour of the single largest donor — a man who gave 10% of the total cost of the building. Similar decisions have been made in naming major buildings all across Canada. The same principle applies to small programs.

It is essential that organizations move beyond simple mathematics in calculating how much to ask for a given program. This leads to undervaluing a potential contribution.

Divide the Campaign to Reflect Different Interests

The campaign should also be divided into many different aspects that might appeal to different prospects. Research will help determine the prospects' most likely interests.

For an arts group:

• One prospect's donation may depend on knowing how many schoolchildren come to concerts.
• Another might be primarily interested in the number of pieces you will perform by Italian (or German or French) composers.
• Still another, equally committed to the arts, will want to know if you are encouraging Canadian performers, or playing outside the major cities.

For a hockey rink:

• One contributor may want to know about the championship games and the potential that his donation might support the next Wayne Gretzky.
• Others might want to know how many girls will be playing.
• Some might wonder whether time will be available for figure skating, families, or oldtimers' games.
• Others, who love technology, might want to purchase the ice-surfacing machine or the scoreboard, and have their names right on it.

If you can find out who will care about which aspects, you will raise more. Be prepared to answer all of these questions, and to attach dollar figures to each of the program areas.

Some of these overlap. Schoolchildren outside a major city may hear a piece, composed by an Italian musician, performed by Canadian artists. Four different contributors may each feel they `own' that event — and happily donate to it. Give each a piece of the action.

Add Human-Interest Stories

One of the oldest and truest sayings in fundraising is “People Give to People”. No matter what their field of interest, the prospects will be more excited if they understand more about the people who will ultimately benefit from the program.

This is as true in the arts as it is in human services. It even applies, to some extent, in campaigns to save trees or animals.

Human interest stories, of the sort that frequently appear in the media, will help make it clear how the prospect's gift will help people. Statistics are also important, such as how many will be helped, and what it costs to help each one. However, even more important is who will be helped.

Gather stories. If necessary, change names to protect people, or compile a composite — but if you do, be sure to say you have done so. Testimonials from people being helped have a very strong impact.

Outline the consequences of not funding the work. Who will be hurt? What difference will it make to their lives? How many people who needed you will be left out?

For example, an arts group might say:

Without the Gallery in The Schools program, the Gallery will have to turn down requests from 25 teachers a year. These 25 teachers represent 750 students. While it is hard to know for certain what impact this has on young lives, one Grade 4 student named Jennifer recently wrote to say, “I never saw anything as beautiful as the painting you brought to our class. I want to be an artist, and my mom is giving me lessons for my birthday.”⁷⁸

Action: Prepare a `Shopping List'

You will require a `shopping list' of programs that will excite prospects. Show what can be done with various amounts. Give options to reflect different prospect interests.

Choose amounts that mirror how much your prospects have to contribute. For example, a major capital campaign for a hospital or school might well display items ranging from $10,000 to $1,000,000. A mid-size program, such as a hockey rink for a community centre, might range from $1000 to $10,000. A grassroots program, such as a daycare centre or a small arts group, might range from $100 to $1000.

The Shopping List is an internal document. Never show it to prospects. It is tempting to take the Shopping List to prospects and allow them to select their own level of giving. However, this usually results in lower donations.

Prospect research will help you determine which item on the Shopping List you should present to the potential donor. If that is refused, it may be appropriate to then present others. More about this later.

Now, prepare your Shopping List.

• Cover several different aspects of your work.
• Include human interest stories that make the programs exciting.
• Calculate the full and complete costs of each program.
• Determine the “bite-sized” unit costs for various portions of each.
• Estimate the market value of each.

Match the Project with the Prospect

For truly large gifts, it is not appropriate to talk about donations for general purposes. Different prospects will have different interests. Based on what you know about them, choose items from the Shopping List that might interest each particular prospect.

Avoid the Tail Wagging the Dog

Care must be taken to avoid `the tail wagging the dog'. If the prospect's interests will require your organization to add major new projects that are not on your priority list, don't do it.

Much more could be said. To avoid repeating myself, however, I recommend you see my earlier book, Everything You Need to Know to Get Started in Direct Mail Fundraising, pages 33 to 40. It's available free from the same government department that provides this manual.

Decide if Designated Gifts Will Be Allowed

Some prospects will want their contributions to be used only for their favourite projects. Or they may want them used for anything except programs they hate. Will you allow this donor-directed option? Will `ear-marked' gifts be considered as an addition to the project's budget, or as a component part?

For example, let's assume the Shoes for the Sasquatch Society (SSS) gets a $1000 donation from a donor who wants to provide sandals (size 25EEEEEEEEEEE), but not running shoes or boots, which he considers anti-free-toe.

Scenario #1: SSS had already planned to spend $5000 on sandals. Does this $1000 go into that budget, so there is only $4000 left to raise? Or is it additional, so the budget is now $6000?

Scenario #2: SSS hadn't planned to buy sandals, because it gets cold up there in the mountains. Do they turn the donor down? Accept the money and buy $1000 worth of sandals? What if sandals that big cost $1500 a pair — is SSS now forced to find another $500?

Scenario #3: The donor is persuaded to let the money be used for any kind of footwear the experts recommend. However, he wants the shoes to be for a Yeti he met in climbing the Himalayas in Nepal. SSS has never worked outside the Rockies. Should they set up a branch operation?

Scenario #4: The donor agrees the money can be used any way and anywhere the SSS wants — except he wants the shoes to be built in his factory. He'll give you a good price, but this is definitely tied aid.

These examples may be silly, but the dilemmas they illustrate are not. The time to think about them is before a donor offers this money, and a volunteer has to figure out what to do.

I can't tell you the correct answers. You must decide what is right for your organization.

II. How do you find out what interests the prospect?

Some people new to this type of fundraising want to solve the problem by making a list of all their projects and programs and showing it to the prospect. This is a bad idea. A long list can overwhelm and confuse a prospect. In addition, the prospective donor may focus on an item in a price range far below what you hoped she or he would give.

It's much better to choose one project, based on your best guess of what would interest that prospect. Have one or two others ready as your back-up, in case your first choice does not click.

But how can you know which to offer?

Some of this information may be revealed by the person's past gifts to you and other charities. Were they motivated by appeals that emphasized particular types of work?

People who know the prospect may also be able to comment on his or her interests.

Stories in the media also provide useful tidbits. In addition to popular media, fundraising magazines and newsletters are particularly good sources. For example:

Actor Paul Newman has a food company called Newman's Own which donates 100% of after-tax profits to charity. “Newman's Own donated more than $7 million to 460 charitable groups in 1992”, said company spokesperson Linda Rohr. Causes supported include medical, children, education, help for the needy, substance abuse, environment and emergency relief…
In 1988, Newman founded The Hole in the Wall Gang Camp for children with cancer and other serious blood-related illnesses.
“[Newman] is very involved”, Rohr explained. “These recipes were his own recipes. He personally selects the charities and reviews all grants. He signs the checks.”⁷⁹

See if you provide services for the prospect. If so, that can be revealing. This may be confidential for social service and health groups, but not necessarily for all. For example:

• Schools, sports groups and religious institutions might note the interests the prospect shows (or showed) while attending — or the interests of the prospect's children who attend.
• Art groups, theatre companies or musical groups might note which productions the prospect attends.
• Information services might note what questions the prospect asks.

You can even gather information by asking the prospect directly. Surveys and interviews can provide a wealth of information. Frank Whitely, president of consulting firm Brakeley Community Venture, explains:

When the Venture does a study, we ask respondents: “What do you think is the most important about the case? Why do you think someone would consider a major gift?”
Invariably, the answer are entirely different from what the organization suspects. For example, one client saw the empowerment of women as the case for support. But major donors were more moved by the organization's role in the economic redevelopment of the downtown area. In the campaign process and with the funds raised, women would be empowered. But the original case would not have created a basis for major gifts, according to the study respondents. Instead it would have divided the donor base.
It is also important that the case not be misrepresented by the organization. Often an organization is too close to its programs and services to perceive their principal value in the eyes of the potential supporters.⁸⁰

Even when you have no direct information, you might make an educated guess based on the individual's personal history. It can be useful to know if the prospect (or someone in his or her family) was an athlete, politically active, religious, or in a particular business. It's dangerous to assume too much about their interests based on limited information, of course, but this can be a useful starting place.

In the next few pages is a form you can adapt that may help you determine the prospect's interests.

Not all the following information is essential. The more details you know, however, the easier it will be to prepare for a discussion relevant to the prospect's interests.

Knowing the names of the prospect's children, for example, is entirely appropriate where the kids are involved. This might include fundraising for a school, a camp, a religious group, sports, arts, cultural societies and so on. In those cases, it is reasonable to know not only the children's names, but also ages and special interests.

If the organization has no direct involvement with the children or the prospect's family life, that information might be irrelevant. However, it could still be useful in casual conversation.

In some situations, of course, it would be highly inappropriate to acquire that information. Use your best judgement.

Prospect's name:

Personal Preferences
(If there are more details than will fit here, attach them.)

What aspect of our work might the prospect like best? Why?

What (if any) aspect of our work might the prospect dislike? Why?

Prospect's age:
Birthdate:

Spouse's name:
Birthdate:
Special interests:

Child(ren)'s name(s), age(s), connection(s) with us (if any), dates involved with us (if any), special interests; any other applicable information:

Personal Profile

Interests, hobbies, travels, active sports, or known sporting interests:

Other groups or clubs the prospect is active in (list any known positions held):

Schools attended/degrees/dates:

Any awards received for service, etc.:

Political leanings:

Religion (specify the degree of observance as well as the denomination, since someone who goes weekly may have different attitudes than someone who is “lapsed”):