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Should the Pareto Principle Apply to Fundraising?

In 1906 Italian economist Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population. He also noticed 80% of the peas in his garden came from 20% of the peapods, if that gives you any insight into the kind of man he was. Since then, his "Pareto Principal" has been applied to almost everything under the sun.

This principle - that 80% of effects will come from 20% of the causes - seems to apply perfectly to the dilemma faced by most small-to-medium-sized nonprofits in regards to fundraising.

Year-End Fundraising

For a majority of nonprofit organizations, 80% of the dollars raised annually occur within 20% of the time in any calendar year. (Often, we also see that 80% or more of the dollars come from 20% or less of the donors in that same year.)

Vilfredo would be beaming!

Most of us fundraising veterans know this phenomenon is most likely not going to change for the 96% of all registered nonprofits with fewer than 5 million in annual revenue.

Therefore, we must be prepared to maximize our results this unique set of circumstances brings to the table.

Planning and Preparation

The infographic below beautifully illustrates what every nonprofit can do to maximize the dollars coming in during this wonderful, but oh so hectic, time of the year.

Year-End-Infographic-final670final

Here is a summary from the image above of the key steps to maximize your monetary return on the effort expended:

Step One: Prepare and Plan

Begin early; the best results are often the result of starting in the third quarter of the year. If you are new to this, consider using a seasoned consultant to assist. They will justify their cost within a week or two of your appeal(s) going out.

Your action items for this step revolve around the three words at the bottom of step one, which are assess, evaluate and outline.

Assess your year-end giving from prior years. Compare what has worked well and what has not.

Evaluate what caused prior successes and/or failures to happen. Such evaluation will be invaluable, as you lay out the specific steps next. This analysis can also guide the segmentation you will be doing in your database.

Outline the changes you will be making to previous year-end programs. Outlining will be important in lining up the steps you need to take to make your revised year end programs come to life.

Step Two: Craft a Compelling Story and Integrate Your Communication Channels

Every fundraiser realizes donors give from their heart based upon passion for the mission. Not every fundraiser knows that passion is kindled via compelling stories delivered via multiple communication channels. This passion can be even higher if the message can be delivered those individuals directly touched by your mission.

Here are specific action items to make this particular step come to life.

Step Three: Elevate Your Campaign for a Strong Year-End Push

Most of us who have made donations at year-end have probably made at least one of them on the last day of the year. This is especially true in the age of on-line donations where such transactions are a breeze.

We are not alone!

Be prepared for and ready to initiate that final week of last minute gifts. They can make a huge difference!

A few action items coming to mind here are both logical and create a big return on the time invested.

First, take the proper steps to optimize any on-line giving sections of your web site. The landing pages should carry the same exact message as your written and electronic communications so there is NO confusion to the donor.

(Now is the time to find a way to KEEP them on YOUR website if your on-line donation function takes them away. Why? Because as many as 80% will opt out when they are taken away!)

Next, make your final messages of those last two weeks as clear and as compelling as possible. If you are emailing, consider multiple messages based upon your activities in Step One and Step Two above.

Most of us have found Vilfredo Pareto to be right many more times than wrong. The actions outlined above can allow you to fully reap the rewards of that year-end 80% giving phenomenon seen by so many nonprofit fundraisers.

Arrivederci!

Jay Love, Co-Founder and CEO of Bloomerang Jay Love, Co-Founder and CEO of Bloomerang

The preceding is a guest post by Jay Love, Co-Founder and CEO of Bloomerang, which helps nonprofit organizations to reach, engage, and retain the advocates they depend on to achieve their vision for a better world. A veteran of the nonprofit technology sector, Jay is a founding member of the AFP Business Member Council and chair of the AFP Ethics Committee.

Topics: Fundraising
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