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The Fundraising Pyramid and the Donor-life Cycle

Written by Amy Quinn on . Posted in Fundraising

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Find Your Supporters Wherever They Are!

The fundraising pyramid is a traditional starting point for defining the donor acquisition process. There are multiple versions of this pyramid (I found at least fifty images on Google). Below are a few variations which illustrate the same “bottom up” fundraising approach: Prospects and Supporters followed by First Time donors, Repeat donors, Transitional donors, Major donors, Capital Campaign donors and Legacy (or Planned Gift) supporters.

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#1 Karla-pyramid Philanthropy Watch

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#2 toobusyfundraising.com

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#3 Open Learn LabSpace

 

Ideally, each fundraising strategy matches the individual needs of the targeted audience; for example, an Annual Fund directed at prospects or a Major Gifts campaign for Established and Transitional supporters. One strategy in the pyramid is no more important than another. Rather, they are all connected in pursuit of revenue goals.

A common assumption is that development professionals seek to move donors “up the pyramid”. In addition, we must factor in the Pareto principle, that 80 percent of your gifts will come from 20 percent of your donors, as illustrated in diagram #3. This suggests that fundraisers should over-emphasize Major Gifts. Is this still true today?

Let’s examine some common assumptions of the fundraising pyramid paired with expectations of donors today:

First, I believe that “moving up” the pyramid is not as much the goal as is procuring the right mix of contributions in the different areas of the pyramid and or donor life-cycle to allow for a consistent revenue stream. Focusing only on Major Donors is shortsighted and ignores the Transitional donors, those that have demonstrated consistent giving for over five years. Further, a nonprofit needs to focus on the “long view,” sustaining a relationship over time so as to manifest a steady stream of lifetime donors, those that donate to your organization every year.

A Lifetime donor is a loyal supporter who contributes consistently over a long period of time, in addition to perhaps being involved in other activities such as volunteering or attending an event. The Donor Lifecycle better represents the relationship circle with a supporter versus segmenting based purely on the donation amount. Sarah Clifton created The Donor Life Cycle Map below that illustrates a donor’s journey:

clip_image011Sarah Clifton’s The Donor Life Cycle Map

Second, bring a donor firmly “into the fold”. Procuring first-time donors often requires huge staff effort and typically more marketing expense. Retaining donors, therefore, is that much more critical. Penelope Burk said in The 2012 Cygnus Donor Survey, “Fundraising profit is not improved by acquiring more and more donors through costly and hard-hitting appeals: it is improved by retaining a reasonable number of donors longer and by securing significantly more generous gifts from them over time.”

Third, each phase of donor development demands a valuable donor experience. All donors expect recognition regardless of the gift size. Thanks to social media, the “universe” of prospects is less anonymous than in the past. Sentiment of donors can be gauged and thanked with a variety of digital tools, emotionally connecting even the most disparate potential supporters to a cause.

Fourth, donor segments are interconnected, necessitating the need for integrating Major Gifts and Gift Planning within development efforts. Scott Lumpkin, vice chancellor for advancement at the University of Denver points out: “Gift Planning and Major Gifts are not two separate areas but rather represent different dimensions of a gift. ‘Major gifts’ suggest ‘size’ and ‘Gift Planning’ describes ‘how’ a gift will be made.” Especially with planned giving, a supporter deserves more than just a “cash in” outlook.

Fifth, if used strategically, a Social Constituent Relationship Management (CRM) system can be used proactively to manage and automate the engagement process. Regardless of the current fundraising model embraced by your organization, a nonprofit needs a robust CRM to keep accurate records. Data can then be analyzed to determine both the number and type of supporters, giving history and trends of donor segments. In this way, the role of a CRM can be pivotal!

Today it’s important to understand the different type of supporters at your nonprofit and then determine what actions will keep donors most engaged throughout a long, happy relationship, wherever they are on the pyramid or in the Donor Life Cycle!

Amy S. Quinn is a published author and freelance writer focused on innovation in the nonprofit sector.

Notes:

Pg. 154, Interview with Scott Lumpkin, Fundraising Innovators: Leaders in Social Enterprise Share New Approaches to Raising Money; Wise Media, April, 2012.

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Amy Quinn

Amy Quinn advises organizations on how to increase their social impact, revenue and authenticity with customers, donors, employees and management. She provides innovative engagement strategies for attaining goals. in August of 2012, Amy founded Fundraising Innovators LLC after publishing her book, Fundraising Innovators: Leaders in Social Enterprise Share New Approaches to Raising Money. She is also founder of Tech4Good Denver, which provides educational forums on leveraging technology applications in the nonprofit sector. A long-time advocate of medical research to cure spinal cord injury, Amy holds a Masters in Business Administration (MBA) from the Thunderbird School of Global Management and a BA from Bucknell University. For more information: http://FundraisingInnovators.com Or http://fundraisinginnovators.com/blog/


Comments (2)

  • Sarah Clifton

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    Great post, Amy! Thanks for sharing this concept with your readers. I also want to let you know that Deborah K. Polivy, Ph.D. has just written a great book examining these ideas with much more depth, and with case studies and research to help nonprofits apply the ideas in a practical way. The book is titled “Donor Cultivation and the Donor Lifecycle Map: A New Framework for Fundraising.”

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