You’ve probably heard about the “donor pyramid.” A donor pyramid is a graphical representation of your donors (either all of your donors or a segment of your donors), broken down by giving level. This means you’ll have a smaller number of major donors at the top, all the way down to a large number of low-dollar donors at the bottom, as in this example:
You may be wondering whether the donor pyramid is a useful tool for your non-profit’s development program… and if so, how to create and use one at your organization. The goal for this article is to answer those questions and show you how to effectively utilize the donor pyramid at your non-profit.
Is the Donor Pyramid a Useful Tool?
There’s been a lot of talk recently about how the donor pyramid might not be all that useful of a tool for your non-profit. For example, you can read Jeff Brooks’ take here and Claire Axelrad’s take here.
I think, to a certain extent, that Jeff and those who question the value of the traditional pyramid are right… at least when applied to your organization’s fundraising as a whole. It’s not particularly useful to take all of the donors to your organization and map them out on a donor pyramid. Nearly every non-profit has the same distribution of donors: lots of small dollar donors, fewer mid-level donors, and a small number of major donors.
That being said, creating a pyramid for your entire organization can be helpful as a way to show how you segment your donors. As a smart non-profit, you’re focused on fundraising ROI, and you know that you don’t have the time, money, or bandwidth to cultivate every donor the same way. You’ll need to segment your donors and know how much time energy you can spend cultivating each level of donor. A donor pyramid can be a helpful graphic representation of those segments.
Using Pyramids in Fundraising Campaigns
Where donor pyramids really shine, though, is when it comes to all of your specific fundraising campaigns. The plan for every campaign you run – including capital campaigns, annual campaigns, crowdfunding campaigns, and everything in between – should include specific goals for various giving levels. These goals can take the form of a donor pyramid or of a gift range chart, which is basically just another name for a donor pyramid. Either way, you need to know exactly how many donors you need at each giving level in order for your campaign to succeed.
Honestly, one of the reasons why donor pyramids and gift range charts are so important is because most board members and executive directors underestimate the importance of very large gifts to the success of your campaign. Gift range charts and donor pyramids can help fundraisers show the rest of their non-profit’s management team that big campaigns aren’t feasible without big donors.
For example, if you’re running a small capital campaign, an annual campaign, or even a gala fundraising event, and your goal is to raise $100,000, your gift range chart may look like this:
Gift Size Number of Gifts
If you decided to put this gift range chart into a donor pyramid, you would likely combine some of the levels, like this:
Either way, as you can see, for the $100,000 campaign to be successful, you’ll likely raise 60% of the money from the top 4 donors, and 92% of the money from people giving $1,000 or more (which represents just 18 out of a total of 148 donors to your campaign).
Donor pyramids help your team see just how top heavy most campaigns are… meaning that when the board suggests a $100,000 campaign, you can point out that in order to be successful, you need to have a $25,000 donor, a $15,000 donor, and two $10,000 donors ready to be asked… you likely won’t be able to raise that $100,000 with thousands of small $40 gifts.
The Donor Pyramid vs. The Donor Funnel
One important thing to note is that a donor pyramid is not a donor funnel, and vice versa. The donor funnel is the process you walk people through to move them from brand new prospect to lifelong donor to your non-profit. It is a process of engagement – meaning that it shows the lifecycle of the donors at your non-profit. Your goal with the donor funnel is to put lots of prospects into one end, and then cultivate them, ask them for money, and steward them so that they become lifelong givers to your organization.
You can read more about the donor funnel in this article: Using the Donor Funnel to Raise More Money at Your Non-Profit.
The goal for the donor funnel is the same for every donor at every level – you want every single prospect to move through all four phases of the funnel. The same can not be said for the donor pyramid. Many non-profit fundraisers think that the goal for a donor pyramid is to get donors to start small and to move them up (through a process called upgrading) until they reach the top of the pyramid.
It would be nice if every donor could do that, but obviously not all donors have the capacity to become major donors. You should be upgrading your donors, but for the most part, your donors will only move one or two rungs up your donor pyramid, even if you steward them perfectly. As I noted above, this is because most donors have limited capacity.
How to Create a Donor Pyramid
So how do you create a donor pyramid for your non-profit’s next event or fundraising campaign? I use a three step process for creating pyramids for the campaigns I am working on:
Step #1: Use a Gift Range Calculator
The first step is to use a gift range calculator to help you figure out the right giving levels based on your overall fundraising goal. Gift range calculators aren’t perfect, but they will help you get into the right ballpark. I like to use the calculator created by my friend Marc Pitman from Concord Leadership Group, which you can find here.
Just put in your total fundraising goal for the campaign or event at the top of the calculator, and it will tell you how many donors you need at each of a number of giving levels (as well as a suggested number of prospects at each level… based on the rule of thumb that you need 5 prospects for every 1 gift at each level.
Step #2: Simplify Your Levels
The next step is to use the data from the gift range calculator to simplify your giving levels. For example, the calculator may tell you that you need 1 $25,000 donor, 3 $15,000 donors, and 5 $10,000 donors, but you may not want to have 3 levels in that range. That’s ok… simplify your chart. Maybe instead, you can get the goal of having 1 $25,000 donor and 8 $10,000 donors, which equals the same total fundraising amount. Go ahead and play with the numbers to get the right number of levels for your fundraising campaign.
As you play with the gift range calculator, remember that you’ll also generally want to include a number of small dollar donations in your donor pyramid, which the gift range calculator won’t include. For example, if you enter $1 million as your goal into the calculator, the lowest gift level it will give you is $2,500. My suggestion would be to lower a few of the donor goals in the mid-range and then include a goal for low dollar donors (for example, you may say that you want to raise 500 gifts in the $1-$1,000 range).
Step #3: Create Your Donor Pyramid
The final step is to create your donor pyramid or gift range chart for your upcoming fundraising campaign. Use the levels you created in Step #2 and lay out your pyramid or chart. Remember that you’ll need multiple prospects for every gift at every level. Thus, if your pyramid says you need to have 1 $50,000 donor, but you only have one prospect at that level, your fundraising goal may be over ambitious.
A donor pyramid can be a great tool for help you map out your strategy for your next fundraising campaign or event, but ultimately, the success of your campaign will rely on the work you put in identifying, cultivating, and asking donors for gifts.
If you have any questions about donor pyramids and how to use them at your non-profit, click here to send me an e-mail!