Nonprofit Fundraising Pyramids Are Not Built from the Top Down

Posted on January 7, 2010. Filed under: Customer Service, Fundraising, Leadership, Non-profits |

Fundraising Pyramids Are Not Built From the Top Down
By Bill Huddleston,
http://www.cfcfundraising.com

It is a physical impossibility to build a pyramid, including a fundraising one, from the top down. That fundamental fact seems to have escaped many of the non-profit professionals who emphasize the “80/20” rule—the one that states that 80% of a non-profit’s funds will come from 20 percent of its supporters. While this may be true (and often is) what’s ignored in that formula is the idea that you can determine in advance just who the people are in the twenty percent category, without having to “bother” with the other eighty percent.

It doesn’t work that way.

What happens in the fundraising world is very similar to the steps that a farmer deciding to plant an apple orchard goes through. The farmer acquires a selection of seedlings, (from a nursery or other orchards), and then plants them, weeds them, waters them, prunes them and keeps pests away. Over the course of the first several years, some of those initial plants will die regardless of the best efforts of the farmer, others will grow to be a decent apple trees, and some will end up being a stupendous producers—with more apples, tastier apples, and just lush specimens compared to all the other seedlings that existed at the start.

There’s no way to tell which of the seedlings (donors) will be in that top twenty percent. It doesn’t happen overnight and it’s impossible to predict which seedlings (donors) will be the dead or diseased seedlings (lapsed donors) or the decent seedlings (multiple year donors to the annual fund, with modest increases over time). The fact that some seedlings turn into the stupendous producers (the major gift donors) is tremendous—but it is impossible to predict which seedlings (donors) will turn out to be the major gift donors. And here’s where the 80/20 model breaks down—you have to cultivate, weed and water ALL the seedlings for multiple years before you learn which ones have become the stupendous producers.

On its face, the fundraising pyramid is a pretty good model for what it shows, which is that a smaller percentage of the non-profit’s supporters will provide a larger percentage of its funds. With the emphasis on the 80/20 rule or the 90/10 rule what can be easily glossed over is the fact that in order to have the 20% percent, you also need the 80% base. No pyramid has ever been built from the top down, it’s a physical impossibility. You have to deliver excellent customer (donor) service to all of your supporters, including volunteers, donors and others who just call and ask a question about what you do. Over time, some of these first time contacts will become your major donors, but there’s no way to tell at the beginning of the relationship which ones will develop into your biggest supporters.

Regards,
Bill Huddleston

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2 Responses to “Nonprofit Fundraising Pyramids Are Not Built from the Top Down”

RSS Feed for CFC Treasures by Bill Huddleston Comments RSS Feed

I like your perspective. I agree wholeheartedly – all supporters should be considered “major donors.” Additional attention should be given to those who give larger amounts, but not to the exclusion of the rest of the audience.

The massive response to the Haiti earthquake is a great example. “Micro donations” of $5-25 have added up to millions. All of those donors gave for a reason. As the nonprofits live up to their promise to help the people of Haiti they could be gaining thousands of not just one-time donors, but ongoing support as well.

Sandra,
Thanks for your comments, I think that sometimes there is such an emphasis on “fundraising results” that management can forget that it takes time for a supporter to become a major donor, and that there are many factors along the way, some that the non-profit can influence, others that are completely outside any action by the non-profit (e.g. unexpected family expenses, etc.) that definitely affects the possible outcome and the possible timeframes.

For anyone who is not familiar with the StepbyStepFundraising website, Sandra has an excellent selection of products on how to run successful special events and direct mail campaigns.

Take a look.

Regards,

Bill Huddleston
http://www.cfcfundraising.com


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