As a symbol of the Southwest, the sombrero always evokes good feelings of fun and festivity. The sombrero as symbol for your donor distribution file should evoke a very different feeling. Many of us in fundraising like to refer to the donor pyramid as a symbol for a healthy distribution of donors. The donor pyramid has many donors at the base, fewer larger gifts at the top and theoretically something in between for the middle. But when I look at many organizations’ donor data, more often than not I see a collapsed middle that makes the pyramid appear more like a sombrero than a pyramid.
Now before you call in the mariachi band to cheer us all up, there is some very good news. Hiding under the brim of that sombrero is a gold mine of opportunity. Let me explain by way of dramatic example.
What if the big boss of your nonprofit marched into your weekly meeting and declared: “I need another $1.5 million dollars before the end of the next fiscal year and within current budgetary constraints”?
After everyone picked themselves up off the floor, I am sure a healthy conversation would ensue. The major gift officers would be declaring that their portfolios are full and likely already dedicated to capital projects or other kinds of giving designations. Identifying, qualifying, cultivating and soliciting current major donors is certainly a full-time job. When you add other organizational responsibilities into the mix, major gift leadership would probably find it incredibly difficult to find the time or extra million dollars within their existing prospect pool.
So what about annual giving leadership? They might argue that with budget remaining static, sending more mail, email or making more phone calls to acquire, retain or upgrade donors to reach that additional goal would also be impossible. Add to that the reality that more of any of those things does not necessarily make a good strategy, let alone a successful one.
So what is a nonprofit to do?
In a recent organizational case study, donor distribution was as follows. Let’s see if there are any answers to our problem in the data.
As you can see, the vast amount of donors come from the annual fund, while the vast amount of dollars comes from the major level. That’s no surprise. But what is interesting is the relatively small but potent group of donors in the middle who are averaging $3800 each. That is incredibly significant when you consider the average gift at the annual level is only $41 in this case. The sad news is those donors who are averaging $3,800 and some individuals giving up to $9,999 annually are likely receiving the same cultivation or stewardship experience as those who are averaging $41. They are not going to receive personal, face-to-face stewardship until their giving kicks over $10,000. Does that make sense? I don’t think so. It is just the reality of organizational staffing capacity.
What that means is this: the annual leadership would need to acquire an additional 36,585 donors at an average gift of $41 to achieve the $1.5 million goal. We already noted that major giving is likely not going to be able to find the time, prospects or strategy to reach another $1.5 million in major gifts, but it would need to identify, qualify, cultivate and acquire 44 new major givers at an average of $34,200 to reach the goal. This sounds at least daunting if not completely impossible.
Here is what a number of forward-thinking organizations have been doing for almost a decade. They are flipping fundraising on its head by applying major giving tactics to nondonors and current high-end annual donors. They are making appointments and personally visiting people who have a high linkage, ability and interest in the organization and they are seeing dramatic results in personally soliciting the right people in the right way.
Based on the metrics we have seen for the last 8 years, with organizations attacking the middle of the pyramid with personal face-to-face solicitation strategies, here is what this organization could experience by applying the same strategy to this example:
- Two gift officers, two years
- 1,000 visits in two years
- 450 new mid-level donors (45% close rate on average)
- $3,800 average gift
- $1.71 million in revenue
Certainly this is an overly simplistic example, but I think you get the idea. More email, mail and phone calls are not the answer. More mid-level donors and by extension more major donor prospects are the answer.