Often, Sharpe consultants are asked about various gift metrics, such as the average size of a major gift or bequest. Over the years, we have responded that the answer depends on many factors, including the age of the charitable organization and number of donors or members, as well as the donors’ ages, wealth and other data points, rather than citing a national average like $25,000, $50,000, $100,000 or more.
In reality, oversimplification and the use of “averages” can lead to misleading metrics that reveal little useful information about the gifts being measured. Back in the 1960s, Sharpe Group examined current and deferred gift revenue streams by categorizing gifts as small, medium and large. Then, Sharpe consultants could devise “donor profiles” based on staff-reported surveys and actual giving behavior using the client’s own definition of small, medium and large contributors.
What’s average for one may not be average for another.
It became readily apparent that the results were quite different for large national charities whose primary fundraising was through direct mail or special events, as compared to private or public universities supported by alumni and friends, or other sectors such as religion, human services, arts or environmental and animal causes. The donor profiles and average small, medium and large gifts even varied dramatically within the charitable mission sectors.
Consider religion, for example. There would be huge differences between gifts and giving patterns of individual churches, denominational foundations or religious orders. Back then, giving patterns in higher education were highly skewed to a small number of private universities when compared to all other colleges and universities.
Over the decades, by examining differences in giving patterns by many types of nonprofit organizations, we came to realize that the best measurements were based on actual gift revenue trends of our clients instead of benchmarking against some national average.
Not all bequests are the same.
Charitable bequests typically average around 10% of an organization’s total annual charitable giving, according to the Giving USA Annual Reports, but many charitable organizations regularly receive little or no bequest revenue, and a small number with robust mature planned giving programs receive 20% to 30% of their individual gift revenue from bequests each year. Relatively few fall into the “average” figure.
A better approach is to consider mathematical means, medians and distributions of gifts. The mean is the average gift. The median is the midway point of all the gifts, and the distribution analyzes the breakdown of gifts by size, such as small, medium and large.
Suppose you have eleven bequests—most are small, some are medium size, but very few are large. Seven are under $25,000; three are in the $25,000 to $100,000 range; and one is $100,000 or more. Let’s say the small bequests total $87,500, the three medium bequests total $150,000 and the larger bequest was for $350,000. The total bequest revenue for the year is $587,500. The average is just over $50,000, at $53,409, which is very close to often-cited national average of $50,000 to $75,000. However, the vast majority are small bequests under $25,000, and the median bequest is less than $25,000.
But what happens if we leave all figures the same except the one large bequest, which we’ll change to $1 or $2 million. In this case, the average jumps to between $112,500 and $203,409. The single or very small number of large bequests has a huge impact on the “average.” “Mean”while, the mean bequests remain the same. The same is true generally in both mass and major gift fundraising, where most gifts are small, but a small number of very large gifts drives up the fundraising total and “average.”
For example, some studies indicate that most charitable gifts are $999 or less, but gifts of $1,000 or more account for 85% of the funds raised. In the major gifts and campaign world, success usually depends on a very small number of very large gifts, often grouped by the top 10, the next 100 or so and then all the rest.
Is it time for a new perspective?
Working with your program closely each day may make it difficult to grasp the overall view and plan effectively. If you might benefit from a third-party review, consider contacting your Sharpe consultant to discuss your needs. Reach out to us at 800.342.2375 or email@example.com. Click here for more information about Sharpe Planned Giving Program Assessments.
By Barlow Mann, JD