Soliciting Blended Gifts

Posted on 05/27/2018 - by Dan Allenby

Many people think that soliciting a donor for a major gift is bad news for the annual fund. But nothing could be further from the truth. In fact, when properly planned and coordinated, major gift solicitations can be very beneficial for an annual fund.

At the University of Pennsylvania Law School, the dual ask or blended gift (i.e., including both a major gift and annual gift) has long been a regular part of their strategy. Laura Tepper, Director of Development, notes that there are several things that help to make their approach successful.

The first is to communicate often and openly. At Penn Law, the development staff is relatively small, so there is a great deal of regular contact among the annual giving staff and the major gift staff. But even in larger offices, regularly touching base with team members is crucial for succeeding with blended gifts.

Not only should annual gift and major gift staff talk to each other and share information about prospects and conversations, but they should also regularly update call reports in their digital systems so that anyone in the office can keep track of donor progress. Penn Law’s development staff holds joint meetings with representatives from both major gifts and annual giving to make sure everyone is on the same page and discuss why a particular donor should give to both the annual fund and the major gift fund.

Tepper says it’s also important to frame the “proper pitch.” When Penn Law’s development staff has agreed that a certain donor would be a good prospect for a dual ask, the team works together to determine the best way to approach that donor. For instance, in some cases, an annual gift staffer may have a long relationship with this person, so the annual gift staffer may be the best one to make the ask, even though it includes a request for a major gift.

Sometimes, Penn Law development professionals hold joint meetings with a donor, in which both annual and major gift staff are present. Development leaders have learned that the most important thing is to do whatever will make the donor feel comfortable and informed.

In addition to setting up the meeting with the right personnel, Penn Law development staffers take time to determine how they will frame a dual ask. For instance, they make sure the prospect understands that maintaining annual giving every year is important. The annual fund relies upon the consistency of its givers and for most schools, annual giving is the funding that fills the gaps. At Penn Law, the annual fund fills gaps for financial aid, and in many cases, a grant from the annual fund is what it takes to get that superstar student.

Often, a major gift donor is a consistent donor to annual giving, so to lose that regular annual gift would be difficult. To avoid that situation, Penn Law development professionals relay to the prospect that a major gift is their opportunity for a lasting legacy at the school that will have an impact every year—but continuing their annual gift will help sustain the law school and make an immediate impact.

One technique that can be effective at securing a blended gift is known as early activation. Typically, newly endowed scholarships or professorships don’t start “paying out” until they are fully funded. In other words, the beneficiaries of those funds (usually a student or faculty member) do not receive any funds until the pledge has been paid in full. In these situations, try talking with the donor about making an additional multi-year pledge to support current-use scholarships through the annual fund on top of their pledge to create an endowment, where the amount of the additional commitment is equal to the estimated payout of the endowment.

For example: A regular $5k annual fund donor decides to make a major gift in the form of a pledge of $100k to endow a new scholarship in their name. The donor agrees to pay $20k per year for 5 years; however, institutional policy stipulates that the fund will not be “active” until the end of the 5-year period. So the donor agrees to make an additional 5-year pledge of $5k per year to the annual fund in the form of a “term scholarship.” The total pledge becomes $125,000 (a 25% increase from the original pledge) and a student begins to benefit from the donor’s support right away, rather than having to wait 5 years.

Early activation blended gifts have many benefits to both the donor and the institution. First and foremost, the donor’s intentions and impact are realized right away rather than waiting until the pledge is paid off. At the same time, the institution receives a larger overall commitment and uninterrupted support for the annual fund. Be advised that each institution’s gift policies are different, so it’s important to check with your finance department first.

When donors understand the importance of both gifts and how they have a separate but equally significant impact on the school, they are often receptive. And when they are, development staff don’t neglect stewardship. When they achieve a blended gift, staff members from both annual giving and major gifts always thank the donor—even if they weren’t both in on the ask.

Want to learn more? CLICK HERE for AGN’s Webinar on Transitioning Annual Donors to Major Donors.