2000
$100M Mike Lazaridis | The Perimeter Institute
Bridge to the Future
Throughout the pandemic, human generosity endured. This is a fact scholars will study in the context of historical trends in charitable giving. What, though, are the learnings for contemporary fundraisers? How are nonprofit operations and donor behaviours being shaped by the events of the early 21st century?
One of the trends we are paying close attention to is the increase in principal and transformational giving across Canada. The traditional donor pyramid is morphing into a space needle with 90%-95% of gifts coming from 5%-10% of donors. The first $100M gift in Canada was gifted in 2000 and things have changed drastically since then. In 2022, there were six gifts greater than $100M — including a record-setting $500M estate gift.
We asked 14 universities and 17 hospital foundations across Canada how they manage their organization’s top gifts. We appreciate the interviewees who shared insights into their current operations, their aspirations, and the trends they see in our industry. While organizations operate differently, there are common threads throughout the university and hospital sectors. In this study, we draw on the practices of top performers and compare similar cohorts.
Let’s Connect!
How does your organization manage principal gifts? We welcome your thoughts and are happy to schedule a time to talk through the challenges and opportunities in designing, managing and optimizing a principal gifts program.
Email us: info@martsandlundy.com
Call us: +1 201-460-1660
Download a Full Version of the Report
Contents:
Defining a Principal Gift
Throughout this study, we will use the term “principal gift” to refer to the top gift threshold at organizations. While the nomenclature varies between organizations, there are some common elements organizations in the study use to define the magnitude of a gift.
By Impact
With a single commitment, donors make significant changes for their community.
By Size and Sector
These are the top gifts to the organization. Often universities use the term principal gift for gifts of $1M and transformational gift for those over $25M. Hospital foundations typically consider all gifts over $1M to be transformational and do not use the term principal.
By Team
Given the size of the gift and the opportunity it unlocks for the organization, these gifts typically involve the President or Principal, Dean, or Chief who will be responsible for implementing the gift.
By Complexity
Increasingly, gifts are including an estate planning component. Donors may involve their financial planning teams and multiple generations when making their decisions. They also typically involve screening for reputational risk and extensive recognition requirements.
A note from our American neighbours:
Giving USA now defines a mega gift as a gift of $450M or more. These mega gifts totaled nearly $15B, or 5%, of giving in America in 2021.
Key Findings
What makes an organization more likely to receive a principal gift?
There are common traits among organizations that attract principal gifts. We identified nine top performing organizations, each of which received gifts greater than $5M between 2020 and 2022. Five of the top performers were universities, and four were hospital foundations.
The largest gifts are greater than $5M.
Organizational scale makes a difference.
Top performers are larger. Organizations with larger enrollments and a greater number of beds received more principal gifts. There are benefits to being part of a larger engine: More people are aware of and have accessed your organization, there is likely a stronger marketing presence bolstering advancement, and donors can equate the large value of their gift with the level of impact it can have.
The strategic plan serves as the guiding star.
Organizations with effective priority-setting processes use their strategic plan as the guiding star. Their strategic plan is institution-wide, inclusive, and prepared with the input of institutional, departmental, clinical, and faculty leadership. There was a perception among study participants that if the fundraising team, rather than the leadership group, was leading priority setting, it would be the tail wagging the dog. Instead, the strategic plan serves as the foundation for institution-wide fundraising priorities. And, since institution-wide priorities are bigger ideas, they in turn attract larger donations.
Higher sights elevate giving.
Top performers set their sights on higher gifts by raising principal gift thresholds and ensuring the policies, procedures, and resources are in place to prioritize principal gifts. This goes far beyond just a classification. Generally speaking, when organizations set their sights lower, it is harder to push thinking, ideas, and resources — both internally and with volunteers — to then inspire those top prospects who can make principal-level gifts.
Larger advancement offices raise more principal gifts.
Organizations with larger advancement offices realize more principal gifts. With more staff focused on giving at all levels, principal gift fundraisers can prioritize engagement and giving strategies that maximize a donor’s potential. This means these offices also have increased bench strength for the operations that help advance principal gifts, such as research and stewardship.
Principal gifts propel productivity.
In the chart below, gifts per advancement FTE includes every full-time equivalent on the advancement team, including back-office personnel in research, stewardship, gift recording, and events. Major gifts (that is, gifts of $100K or more) per frontline officer includes annual, major, and principal gift officers. $1M+ gifts serves as a proxy in this chart for principal gifts. All three measures of productivity are superior among top performers. Organizations that have more resources are able to focus more on their principal gift activity, including leadership and volunteer activation. As a result, principal gifts enhance the organizations’ return on investment, and top performers are able to raise more money per gift officer.
Institutional leadership is engaged.
The use of a designated principal gift officer is more common in academic institutions and was rarely used by the hospital foundations in this study. Regardless of structure, the top performers all shared a common trait: Principal gift fundraisers have access to leadership at their organization.
Top performers ensure that fundraisers with principal gift responsibilities are at the highest hierarchical level, which helps establish the importance and priority among leaders beyond advancement, including presidents, deans, clinicians, and volunteers. In organizations where principal gift prospects were divided among major gift portfolios, the manager acknowledged the importance of providing access and support to these top connectors.
Organizational structures in which principal gift officers report to the Vice President or President and in turn have routine relationships with the Board and CEO are more likely to have effective principal gift processes and outcomes. Principal gift officers build relationships and collaboration with institutional decision makers when they have direct and routine contact.
We heard from one interviewee that they are hiring an Implementation Officer, dedicated to principal gifts. Beyond just a stewardship role, this person is responsible for ensuring the donor’s wishes are fulfilled internally and the impact is effectively communicated back to that donor. Given the intense requirements to build internal consensus, comprehensive budgets, and articulate top priorities, one organization uses a Director of Strategy to build internal alignment before the gift is solicited. This allows the fundraiser to focus on donor strategy to inspire the gift.
Two Successful Organizational Models
Top performing universities were more likely to have a dedicated principal gifts team. This team is typically responsible for building strategy and deploying the university’s top leadership and volunteers to engage prospects. We found that there were typically two models of staff organization, and the two models are not very different. Model One has dedicated staff for principal giving whereas Model Two disperses principal giving among portfolios.
Model One:
The principal gifts team is a central coordinating unit across the organization. Sometimes holding portfolios, they support leadership in managing their portfolios, and also manage cross-faculty priorities and/or the relationship with the President.
Top performing hospital foundations did not engage a separate principal gifts function. Instead, prospects are spread across the organization with strong prospect management from foundation leaders. Typically, principal gift donors to hospital foundations prefer to engage with their clinician and not necessarily the hospital’s leadership.
Model Two:
There is not a dedicated principal gifts team. Prospects are spread across all portfolios.
Gifts of $100M+ in Canada are on the Rise
2003
$105M Michael DeGroote | McMaster University
2014
$130M Rogers Family | University of Toronto, University Health Network, and Sick Kids
$100M Geoffrey Cumming | University of Calgary
2017
$100M Peter Munk | Toronto General Hospital
2018
$100M Anonymous | CAMH
2019
$100M Heather Reisman & Gerald Schwartz | University of Toronto
$100M Peter Gilgan | SickKids
$100M Charles & Margaret Juravinski | McMaster University, Hamilton Health Sciences & St. Joseph’s Healthcare Hamilton
$200M John & Marcy McCall MacBain | McGill University
2021
$250M James and Louise Temerty | University of Toronto
2022
$100M Joan Snyder | Calgary charities
$100M Chip Wilson | BC Parks Foundation
$100M Chip Wilson | Solve FSHD
$105M Peter Gilgan Foundation | Trillium Partners Foundation
$150M Fondation Courtois | Universite de Montreal
$500M Miriam Bergen | Winnipeg Foundation
The future of principal giving is bright but may be different.
We asked interview participants what they predict for the future of principal gift fundraising. Four key themes emerged:
How do cohorts compare across dimensions of the study?
Medical Doctoral Universities outperformed other cohorts in their principal gift activity. MDUs raised more per year, an achievement derived from gifts of $1M or higher. In our study of cohorts, we also examined gift thresholds, gifts of $5M+, range of largest gifts, campaign status, staffing, and productivity.
We invite you to download the full report to explore our findings on cohort comparisons.
Let’s Connect!
We welcome the opportunity to talk with you about your organization’s approach to building principal gift and transformational gift programs.
Email us: info@martsandlundy.com
Call us: +1 201-460-1660