What makes a "major donor"?
Click here to read on Philanthropy Daily.
By RENEE IRVIN
Major donors are the people who give the most money to a specific nonprofit. The amount they must donate to attain that status varies, depending on the nonprofit's budget.
If you gave US$500 to your neighborhood food pantry, you would probably become one of its major donors. With a large university, hospital or any other nonprofit with a multimillion-dollar budget, however, it may take an annual gift of $100,000 to land in its top tier of supporters.
The largest category of giving posted on a nonprofit's website is a good way to see what it considers a major gift. These levels often have splendidly pompous names. The Seattle Opera designates donors with "Visionary Circle" status for giving $1 million, for example. The Pittsburgh Opera considers donors giving $3,500 or more to be members of its "Galaxy Society."
WHY MAJOR DONORS MATTER
In addition to amassing many donors who give on a monthly or annual basis, fundraisers consider major gifts a huge priority for campaigns centered around a big project, such as the acquisition of a new building. These campaigns rely on substantial gifts from the very rich people who fundraisers and bankers call ultra-high-net-worth individuals.
In the past, fundraisers would anticipate seeing 80% of campaign gifts coming from 20% of all donors. What they used to call the 80-20 rule of thumb has changed, however, in tandem with growing economic inequality. Today, nonprofits raise closer to 90% or more of their funds from roughly 10% of their donors.
[Over 110,000 readers rely on The Conversation's newsletter to understand the world. Sign up today.]
Researchers have found that other people may follow the lead of a major donor. That is, when a major donor makes a huge donation to a fundraising campaign, smaller donors become more likely to support it, too. And they tend to make larger donations than they otherwise would have.
The 0.1% of U.S. households with income exceeding $2 million annually donate approximately 30% of all the money given to nonprofits each year. This trend is bound to continue because billionaires are becoming even wealthier.