Principal gifts vs. major gifts

In advancement, every gift matters, but not every gift is equal. While a $50 check is meaningful, a $5M contribution is transformational, with the potential to shift the future of the institution and its students. A good fundraising plan welcomes both, but the best fundraisers understand that major gifts and principal gifts are the keys to advancing your institution’s mission and goals.

These large gifts are essential in advancement, yet many professionals struggle to differentiate them. As a result, they miss opportunities to inspire truly transformational giving. In this article, we explore the key differences between principal gifts vs. major gifts, and how the magnitude of these gifts requires different planning, cultivation, and solicitation strategies to not only secure the gift, but also additional gifts in the future.

What is a major gift?

Major gifts are the lifeblood of higher ed fundraising. These significant donations sustain programs and move campaigns forward. At a small liberal arts college, a major gift may begin at $5,000; at an R1 university or enterprise nonprofit organization, major gifts might start at $25,000 or more.

While smaller in dollar amount than a principal gift, major gifts typically make up a large percentage of an institution’s annual fundraising goal. They are typically given by engaged alumni, parents, and friends who have high capacity and a strong affinity for the institution. Many donors in this category start as active annual fund supporters and move into major giving after cultivation by a major gift officer.

Major gifts often support and sustain named scholarships or fellowships, endowed faculty chairs, capital projects, and programmatic initiatives. They are given in a variety of ways, including cash or check (or multi-year cash pledge), real estate, planned gift, or stock. They may be received through donor-advised funds, family foundations, or directly from an individual.

What is a principal gift?

Like a major gift, a principal gift is a large donation, but where major gifts are significant, principal gifts are transformational. These investments—often starting at $1 million or more—can help to shape the trajectory of the institution.

Principal gift donors are typically alumni or philanthropists with a deep and personal connection to the institution. They have a high net worth or access to large resources through family foundations and funds, and want to make a significant impact with their contributions.

Principal gifts often align with the university’s strategic priorities, underwriting endowed colleges, schools, or departments; flagship buildings or research institutes; large-scale scholarships and access initiatives; and systemic projects intended to elevate institutional reputation and rankings.

It’s common for a principal gift to be delivered as a multi-year cash pledge. Other frequent principal giving vehicles include complex non-cash assets (such as business interests, real estate, or art) or planned giving options such as charitable remainder trusts or bequests. Some principal gifts include a combination of assets, such as a cash gift now with the promise of an estate plan commitment later on.

What about mega gifts?

Though less common, mega gifts—often starting at nine figures or higher—are not unheard of in higher ed. These massive donations often make national headlines, such as $100M+ commitments to medical research, new business schools, or comprehensive scholarships.

Mega gifts are usually given by billionaires or families with major philanthropic strategies, and they require years (or even decades) of thoughtful relationship-building and donor stewardship.

How to cultivate and solicit principal gifts vs. major gifts

Cultivating principal gifts, major gifts, and even mega gifts requires a significant investment of time and advancement resources. It’s not enough for a donor prospect to have the capacity for a large gift; they must be motivated to share their wealth with your institution.

Major gifts

The typical solicitation period for a major gift is 12-24 months. Many major gift prospects come from within an institution’s current annual giving donor pool, but some high-capacity donors can be solicited for a major gift as their first donation to the institution. 

Major gift officers or regional development officers typically take the lead on cultivating and soliciting these large gifts. Prospects may be cultivated through personalized engagement, alumni events, campus visits, and more. For larger major gifts, deans and program leaders may be involved, helping to support engagement efforts and speak to the needs of their colleges or programs.

Principal gifts

Securing a principal gift typically takes years of thoughtful cultivation and stewardship. This process is often led by high-level fundraisers, such as the chief advancement officer or a dedicated principal giving officer. The university president, provost, or other leadership may also be involved in the donor’s relationship to the institution, helping with the strategic cultivation of a gift.

Principal gifts require a long-term, highly personalized cultivation strategy that aligns a donor’s vision with institutional strategy. For many principal and mega gift donors, their donation is not just a gift, but an investment. It is partnership-driven, vision-focused, and legacy-oriented. Solicitation can require a multi-meeting process involving proposals, leadership, and sometimes board chairs—and it often involves multiple generations of the donor’s family too.

How to maximize major and principal giving at your institution

By being strategic about your prospects and donors, you can increase the likelihood of obtaining major, principal, and even mega gifts for your institution. Here are five key steps to bolster your major giving and principal giving efforts:

Strengthen your pipeline

Transformational donors don’t come out of nowhere; they often start giving at a much lower level and increase the amounts of their gifts as they deepen their engagement.

To cultivate future major and principal prospects, identify annual giving donors with a higher giving capacity than their gifts would suggest. Engage them early, thoughtfully moving these top donors toward major giving, and eventually cultivating them as principal-level prospects. A robust CRM and screening tools are both critical in this step to identify and set long-term cultivation plans.

Integrate academic and programmatic leadership

Deans, department chairs, and faculty often play a pivotal role in developing relationships with major and principal gift prospects and in articulating the needs of the institution and the potential impact of large gifts. These individuals play a key part in relationship-building cultivation efforts, offering personal insight into the prospective donors (often gained through alumni events or professional connections) as well as insight into the college or university that helps to engage prospective high-level donors.

Leverage naming opportunities

Every donor is motivated by different things, from the recognition that accompanies a major gift to the pure impact of their investment. The potential to name buildings, endowed chairs, scholarships, and centers are tangible vehicles that resonate with many donors. Identify, track, and use your knowledge of the prospect to understand the naming opportunities—or other means of recognition—that will most speak to them.

Invest in donor relations and stewardship

Cultivation of a major or principal giving donor often starts by thoughtfully and effectively stewarding an annual giving donor. As a high-capacity donor moves through the fundraising lifecycle at increasing levels of giving, stewardship efforts should both reflect their current level of giving and integrate with a long-term cultivation strategy to secure even bigger gifts.

At the principal level, white glove stewardship efforts are expected. Your institution should demonstrate the impact of the gift with data and storytelling, connecting the donor to their gift and its outcomes long after it leaves their pocketbook.

Be ready for complexity

Many major and principal gifts involve non-cash assets or sophisticated financial planning. Receiving these gifts isn’t just a matter of saying yes; it requires skillful coordination to ensure that the gifts are handled thoughtfully and effectively. Having legal and financial experts on your team or at your disposal is key to receiving and utilizing these large gifts. 

Special considerations for higher education advancement

Major and principal gifts are key to sustaining and transforming initiatives in higher education, but gifts should not be accepted (or even pursued) without thought and care. Here are three additional considerations for higher education advancement professionals to keep in mind as you identify and engage with prospective donors.

Reputational alignment

Large gifts permanently link the donor’s name to the institution—even if a naming opportunity isn’t involved. It’s critical to thoroughly vet the values and reputations of your donors and funding sources. Taking money from an undesirable source can be costly, causing other prospective donors to second-guess their own giving.

Faculty and governance

For donors interested in academics and research, large-scale gifts can affect curriculum or investigative research projects. It is critical to maintain academic and investigative integrity, upholding faculty governance and academic freedom while still honoring the wishes of the donor. It’s key to set clear boundaries with the donor regarding how the funds will be used and where their influence and input are welcome.

Operational readiness

As already noted, receiving a complex gift requires equally complex structure and knowledge. Accepting non-cash assets may require the establishment of new infrastructure and policies, along with risk management practices to minimize loss. Some institutions establish in-house teams of financial and legal experts to handle these matters; others rely on contracted services as needed. Either way, it’s critical to be ready for the possibility of complex gifts so that those contributions are used, managed, and stewarded well.

Establishing a principal gifts program for advancement

A principal gifts program centralizes cultivation and solicitation efforts for high-level donors. The team can act as active fundraisers, working directly with top donors. They often also serve as advisors, guiding other development officers in their cultivation efforts, and connectors, providing a link between advancement and university leadership. 

If your advancement team does not already have a dedicated principal gifts program, here are five steps to help you establish one.

1. Define thresholds: Establish clear levels for major, principal, and mega gifts at your institution.
2. Create a principal gifts strategy: Integrate a large gift strategy with your campaign and institutional priorities.
3. Engage top leadership: Make sure the president and board of trustees are equipped for cultivation and solicitation.
4. Build prospect lists: Use wealth screening, alumni data, and peer networks to identify key principal gift prospects.
5. Invest in stewardship: Plan for personalized reports, exclusive events, and ongoing engagement beyond the initial gift.

Final Takeaway

In higher education, major gifts sustain programs, principal gifts transform institutions, and mega gifts redefine the sector. By clarifying these distinctions and tailoring strategies to cultivate, solicit, and steward these large gifts, advancement professionals can maximize their philanthropic potential and shape their university’s future for generations to come.

Carolyn Wynnack

Carolyn is a nonprofit-focused writer with more than 10 years of experience in non-profit and higher education event management, program development and management, prospect development, training, and data analysis.

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