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Donors

Pareto's Principle in Fundraising: An Interactive Example

Over the last few months, I’ve presented and written quite a bit about Pareto’s Principle in fundraising. Better known as the “80-20 Rule,” the idea is simple: Most of the money we raise comes from a small number of donors. This dynamic shows up in nearly every campaign I’ve worked on. Even so-called “grassroots” campaigns are heavily dependent on a small number of donors; just because we ask for small gifts doesn’t mean all of our donors contribute equally.

What is just as amazing to me as the math, however, is the fact that many people have trouble getting their heads around the idea. Even though most of us use donor pyramids and gift tables every day, it is often hard to understand how even massive programs are really driven by small percentages of donors.

This interactive graphic, built from actual campaign data, is designed to help illustrate Pareto’s Principle. Click on any gift level to see how many donors contributed at that level — and how much of the total revenue those gifts represented.

All of this begs at least two questions: Are you trying to grow large numbers of donors or are you spending time finding and cultivating donors who are connected to you? And do you treat donors equally or do you talk to them differently based on how important they are to you?  

Click to interact.

Click to interact.

Your vision: A considered purchase.

What are you trying to do at your social impact organization? You’re trying to change the world, right? Good!

So what are you asking your donors to do? Are you asking them to change the world — or give you $10? Are you asking your event participants to change the world, or to show up somewhere?

I’m working on a few different datasets right now and one thing I’ve seen in all of them is a disconnect between the expectations we have of our work and the expectations we have of our constituents. More specifically, we have much lower expectations of our constituents than what we have written in our vision statements.

Here’s an example. One fundraising program I’m analyzing has about 33% retention, meaning about 33% of the participants come back for a second year. (Yes, that’s right, meaning 67% do not come back. Unfortunately low retention is common in many types of fundraising.) Of the 1/3 that come back, nearly 80% perform at the same level or lower the second year. In other words, not only do most people not come back — the vast majority of the precious group who are engaged enough to come back don’t give at greater amounts. When you add onto this the fact that in event fundraising many constituents do not donate at all (it’s true; commentary here), you’ve got either a rather depressing picture or a rather huge opportunity to communicate our visions more powerfully.

I see this again and again: Our constituents will rise to the expectations that we create for them. When we tell our constituents that they can help change the world by texting us a donation of $5, they believe us. When we tell them that they can help change the world by just showing up at an event, they believe us. When we tell them that they can help change the world by buying mailing labels, they believe us. And the vast majority of the time, their subsequent behavior will follow the first expecations we’ve set.

But the thing is, we have higher expectations. Don’t we? We actually want to engage people in profound change. Right? 

Believe me, I understand the value of small gifts. And I understand that our asks and offers need to be tailored to different groups of constituents. In fact, I do a lot of work — and speaking — on both subjects. But effective segmentation is one thing; settling for the lowest common denominator is something else altogether.  

Don’t be afraid to paint a big vision and then ask for engagement commensurate to the scope of that vision. If you create reflection upfront, you might find that people slow down in their decision-making. But you’ll also find they will value their decision more once they make it.

You’re worth it. A better world shouldn’t be an impulse buy.