Thursday, January 12, 2012

Think PYRAMID When Fundraising

Todd Wurschmidt, PhD, CAE, CFRE
Senior Advisor, Plexus Consulting Group, LLC
Washington, DC

Just recently I heard (once again), “All we need to do is get our 100,000 Members to each give $1.00.”  Ah, if fundraising were only that simple!  It’s NOT.

If you take away one message from this Plexus Blog it would be:
Forget equal-share-giving; Think PYRAMID.”

Do you recall who Vilfredo Pareto was?  Ever heard of the 80-20 Rule?  The 80-20 Rule was derived from the work and writings of Vilfredo Pareto, an Italian man of many trades – engineer; sociologist; political scientist; economist; and philosopher.  Pareto observed that 80% of the land in Italy (circa early 1900s) was owned by 20% of the population.  Similarly:

-          80% of effects are largely derived from 20% of causes
-          80% of sales come largely from 20% of one’s clients
-          80% of sales are derived from the efforts of 20% of one’s sales staff
-          80% of the space in a company’s warehouse is taken up by 20% of the inventory’s products
-          80% of problems one encounters are largely derived from 20% of the range of defects identified

We could go on……. You get the sense.  And, yes, reality may sometimes have the percentage splits as 70-30 or 83-17 or whatever.  Pareto’s Principle still holds merit.  And, we could use Pareto’s mathematical formula to calculate these relationships, but that is less important for our purposes than applying this important “Pareto Principle” to your Association’s fundraising efforts…..large or small.

It is probably the most frequent and instinctive solution for someone on our Board, Committee, or Task Force to assert, “If we just get everyone to give $1.00 (or $5.00 or $100.00 each), we will meet our goal.”  I can only assume this flawed assertion comes from that fact that it is easy to conceive of this approach as “a strategy driving toward a solution.”  Equally, it’s easy to do the necessary math (#’s times $’s = Total $ Goal).  But, resist you must.  It doesn’t work.  Think PYRAMID.

In fundraising, 20% of your Donors give 80% of your Campaign Goal….. There it is, that pesky, insightful “Pareto Principle – The 80-20 Rule.”  And, thankfully, these top 20% of Donors have the capacity and wherewithal to give MORE per donation (i.e., larger gift amounts).  Thus, early-on in our planning process, we need to devise Gift Categories.  But first:

Spend your initial energies Identifying and Clarifying your Need(s).

Your first step does NOT involve money.  Your first step involves identifying and clarifying your Need(s).  Why are you thinking about raising money?  What do you want to accomplish?  Your Program and/or Service Objectives are paramount to framing the foundation from which you will springboard to achieving fundraising success.  If you don’t have a “Good to Great” cause, you aren’t likely to be successful.

1st)  Identify and Clarify your Association’s Need(s)
2nd) Calculate the Total Amount of Money you need to raise
3rd)  Derive some four or five Gift Categories that are based on your Total Fundraising Campaign Goal, and based upon your Donors’ ability and interest to give
4th) Construct a Gift Pyramid Chart w/ your Gift Categories set alongside the Number of Gifts/Donations you will need per each Gift Category in order to achieve your Fundraising Goals.

Below is a sample PYRAMID Gift Chart.  This sample PYRAMID Gift Chart has a variety of instructional pieces of information.  Please note:

1)      Five Gift Ranges listed in the First Column on the left-hand side

2)      The color PYRAMID w/ the Number of Gifts needed for each of the five Gift Ranges

3)      Third column which combines the first two columns to calculate the Sub-Goals and thus, the Total Campaign Goal

4)      Columns Four to Eight presents five years of historical data for this sample Fundraising Campaign for comparative analysis

5)      The box on the bottom gives insight into the number of Campaign Volunteers needed

Lastly, you MUST identify PROSPECTIVE DONORS that you believe your research shows might be able to donate at one of the five Gift Categories.  For this sample Campaign and this PYRAMID Gift Chart, we show our need to solicit 80 Total Gifts.  In order to successfully solicit 80 Gifts, we would need to make perhaps 200 to 500 “ASKS” (depending on this being our first Campaign or our having a collection of past (and hopefully Repeat) Donors.

As you can easily see, this is not “Equal-Share-Giving.”  This involves constructing a Pyramidal Gift Chart w/ multiple levels of Gift Giving.  This requires our spending more time Planning and then Implementing, but the planning time will be well worth your efforts.

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