December 06, 2007
Which Is Better: Lots of Small Gifts or One Large Donation?
Are small donors better than one big one?
The anonymous author of Don’t Tell the Donor thinks so. “Low-dollar donors provide an important endorsement that the nonprofit’s work matters. On the other side, all too often it can seem as if major donors are more interested in using their gift to avoid taxes on their wealth or to advance their own social status,” the fund raisier writes.
But Jeremy Gregg, author of The Raiser’s Razor, points out difficulties with small gifts, too.
Mr. Gregg, director of development at Central Dallas Ministries,
agrees that relying too much on wealthy philanthropists and their
sometimes fickle whims — “the tyranny of the donors,” as he calls it — can be a problem.
But given the administrative burden of sending receipts, processing, and depositing a lot of small gifts, he writes that receiving 2,000 $50 donations can cost at least $6,000.
“If I had to choose between $100,000 from one person vs. $50 from 2,000 people, I would realize that there would be far more
ramifications to my choice than simply the validation of my
organization’s mandate to exist,” he writes.
What do you think? Would you prefer a $100,000 contribution from a single donor or $50 gifts from 2,000 people? Click on the comments link below this post to share your thoughts.
—Ian Wilhelm
Comments
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Sure processing costs of the $50 gifts would be higher than the one $100,000 gift, but you have to look at why you’re raising the money. Over the long-run I would suspect that some of the 2,000 donors may give again, whereas if that one donor loses interest its a wrap on geting anything else out of them.
— Carlton Dec 6, 11:17 AM #
Smaller donors treated well now, will likely blossom into larger donors down the line. The cost of care and feeding of that larger donor has to cost far more than that of a smaller donor. If the cost of care and feeding of your larger donor is small, enjoy that $100,000 gift, because it’s likely going to be your last!
— J Fundraiser Dec 6, 12:58 PM #
I think the question is skewed. This is not an “either/or” deal; a healthy nonprofit needs both types of donors in the appropriate measure. Major donors require less paperwork but generally take up more emotional space and are more difficult to acquire. Small gift donors require more paperwork per gift, but are quicker to respond to an appeal and don’t ask for much in return. Both donor profiles are invaluable in the right proportion in a fiscally sound nonprofit portfolio.
— Susan Racanelli Dec 6, 01:50 PM #
Thanks for citing my post, Ian.
In response to some of the comments above, let me say that several of those issues are addressed in the the full posts that Ian linked to on both the Don’t Tell the Donor blog as well as The Raiser’s Razor blog. In particular, the issue of whether there really is a “choice” that fundraisers actually make.
Very few of us would turn down a six-figure gift or turn away 2,000 small donors. This was not the debate. What the aforementioned blogs were trying to portray were the considerations that fundraisers must make when pursuing either.
The real strength of any development program is its ability to move donors into more regular, significant gifts. Such programs require the $100,000 donors as well as the $50 donors. However, they also require fundraisers to be aware of the various costs of soliciting/sustaining the different sorts of donor relationships so that they can be good stewards of their own time/resources.
— Jeremy Gregg Dec 9, 02:45 PM #
Also, I posted a follow-up blog here to make some additional points:
http://theraiser.blogspot.com/2007/12/does-gift-size-matter.html
— Jeremy Gregg Dec 9, 04:03 PM #