There was a rule of giving I learned early in my career: you will receive 80% of your charitable giving from about 20% of your donors. This draws from the Pareto Principle, first postulated by Italian economist Vilfredo Pareto. New studies indicate that as much as 98% of your charitable donations are now likely coming from only 2% of your donors.
Is this a good thing or bad thing? Why did this trend change? Most importantly, what can you do to adjust to this trend?
A century ago, it was the Rockefellers, Carnegies and other barons of industry who gave enormous sums of money to public universities, health initiatives and the building of public libraries. (Remember Carnegie Libraries?)
Ten or twenty years ago, giving was not just from the wealthiest individuals, but also from low- and middle-income givers, leading to the application of the Pareto principle or the 80/20 rule to fundraising results.
Today the upper class is growing disproportionately in North America. Combined with the pressures against the middle class, we are steadily returning to the 90/10 split and perhaps even greater disparity.
You can read or listen to this short 5-minute summary of the NPR report on philanthropy trends to learn more. Whether or not you think this is good or bad, it’s a reality.
This shift in giving has meant a more deliberate focus on major gifts: identifying, cultivating, soliciting and stewarding those major givers who are going to make an enormous difference in the mission application of your organization.
Do you know your top 20 donors – I mean truly know what motivates their giving? Are you invited into their living rooms? Are you in regular touch with them, making sure they understand how their giving is making a difference?
Frankly, I think most of you will likely answer “yes,” but the truth is more nuanced. Surveys show that most donors report they are not informed of the impact of their gifts. You may think you’ve shared enough, but chances are you can do more to make your donors feel that they are critical to your mission.
Where should you begin? Start this month with your top 5 donors. Make an appointment to simply visit and report exactly how they are making a difference. Make sure you have two or three individual impact stories to share. One hour is all it takes.
This isn’t a solicitation. Simply let them know how their donation is being spent. And then next month, add two more.
At the end of 6 months or a year, your top donors – who may be responsible for up to 90% of your total fundraising – will better understand why their gift matters and will understand your vision and mission in a deeper way.
