How to Focus Your Fundraising Strategy Between Grants and Major Gifts
Major Gifts or Grants? How to Focus Your Fundraising Strategy for Maximum Impact
Thriving nonprofits should always be in pursuit of funding sources. The question is, which types of funding should you prioritize when it’s time to fund a large project or new program?
When you’re ready to look beyond small individual donations to larger sums, there are two primary options for nonprofit leaders to consider: grant funding and major gifts.
In recent years, I’ve witnessed grants pulling ahead as the preferred method for nonprofits in search of a funding boost. And I’m not surprised. It’s so much easier to write a proposal asking for funding than it is to go up to an individual donor and ask them to write a check.
Data also confirms that foundation giving is up, spurring the flow of grant dollars to nonprofits. According to Giving USA, foundation giving was up 2.5% from 2021-2022. During that same period, individual giving dropped 6.4%.
Yet, there are significant advantages to asking donors to write that check. Unlike grants, large gifts typically come with fewer strings attached and with more flexibility in how funds are utilized.
When it’s Time to Boost Funds, Consider the Benefits of Grant Funding Versus Major Gifts as You Determine Your Fundraising Strategy.
There are pros and cons to both grant funding and major gifts. Choosing which type of funding to go after comes down to the type of work you’re funding, your current donor network, and your organization’s capacity to fundraise.
Here’s a breakdown of grant funding vs. major gifts so you have a full picture before diving headfirst into the pool of big-dollar fundraising.
What are the Key Differences Between Grants and Major Gifts?
Grants are financial boosts provided by foundations, government agencies, or corporations used to fund specific projects or programs. They typically require a formal application process where the nonprofit provides specifics about how the funds will be used and the anticipated benefits.
Major gifts are significant contributions from individuals, families, or organizations and are typically secured through personal relationships between a nonprofit and a donor rather than a formal application. Major gifts almost always include a donor with a strong connection to an organization’s mission or goal.
How Does a Nonprofit Solicit Grant Funding versus a Major Gift Donation?
Grant funding won’t land in your lap. If you decide grant funding is right for you, your team will need to research and identify eligible grant opportunities and then put in the work to write and submit the application.
Similarly, major gifts aren’t achieved overnight. They require you to build and maintain strong donor relationships. Landing large gifts requires a near-continuous reminder to your donors about the value of your organization’s work and a direct ask at least once a year.
What Amount of Funding Do Grants and Major Gifts Provide?
Both grants and major gifts can vary widely in size, depending on the scope of the project and the capacity of the donor or funder.
Larger grants often come with more rigorous guidelines and reporting requirements, so make sure your team has the capacity to fulfill all requirements before you take the time to apply. Stewarding large major gifts can also require additional reporting or acknowledgments. Usually, these elements are identified as part of the conversation leading to the gift.
When Are Grants and Major Gifts Awarded?
Each grant typically has its own schedule for deadlines and awards. By researching grant opportunities on a regular basis, you can begin to build a calendar to track your applications and potential award dates to anticipate possible future funding better.
A check for a major gift, however, can happen at any point during the year. This is where your personal relationships with donors come into play. Cultivating close relationships will allow you to keep a pulse on when it’s appropriate to ask and when major gifts may arrive.
What Levels of Reporting and Accountability Do Organizations Owe Donors?
Grants come with strict guidelines, requiring organizations to provide progress reports and documentation to the funder.
Reporting to major gift donors, however, is typically much less formal. However, even if they don’t ask for a detailed progress report, keep your major donors aware of the work being done with their dollars and show the impact their gifts are making in the lives of the community you serve. It’s this impact that will keep them contributing in the future.
Gifts or Grants? Which Fundraising Strategy is Right For Your Organization?
Admittedly, I tend to be a big fan of major gifts and the generous people behind them. That’s because, when cultivated well, individual donors tend to be an organization's most “ride or die” group of supporters. If you treat them well and earn their loyalty, they’ll be more ready and willing to write a check when your organization has an urgent need or new opportunity.
One conversation with a major donor can lead to a significant contribution to your mission in a matter of days. With a grant, you have to meet or submit a letter of inquiry, then write the proposal, and then wait for the proposal to be reviewed. That process can take months - or even years.
On the other hand, it is becoming increasingly difficult to connect with people in meaningful ways in order to build the types of relationships that result in major donations. If you’re still building those relationships or if individual donors aren’t quite ready to embrace your request, grant funding makes a lot of sense. And, when approached correctly, grants can be quite sizeable.
A tip if you go the grant route: working with an outside grant writer on proposals will make life easier and is well worth the investment. On the major gift side, you should not contract with someone outside your organization to manage your personal donor relationships.
Pursue a Mix of Grants and Major Gifts to Fully Fund Your Mission
A balanced fundraising strategy is key. Healthy nonprofits pursue a mix of grants and major gifts to steady their sails.
If your strategy is a bit off-balance, make this the year you expand your strategy to include both grants and major gifts. By doing so, you’ll help ensure that you’re maximizing your fundraising efforts to create the largest impact. And if you’re looking for some help getting started, I’m here!
Happy fundraising!
Dani
About The Author
For the past 25 years, Dani has helped nonprofits at local, regional, and global levels find sustainable solutions to tricky growth and funding issues. She works with leaders and teams to optimize their approach to fundraising, strategic planning, marketing, and more! Dani is passionate about helping motivated people build vibrant and effective nonprofit organizations—so they can make a meaningful impact in the world!