What's the basic idea? Meet the Pareto Principle
Charity researchers have known for at least 15 years: a relatively small percentage of your donors will ultimately account for most of your giving.
One often-quoted ratio: 12% percent of your donors yield 88% of your charitable income over time. These are your "committed" donors. I'll get back to that concept in a second, because commitment is crucial in high-octane fundraising.
But you want the history lesson first, right?
The 12/88 Rule in fundraising is a variation of the Pareto Principle, as you probably recognized.
Introduced in 1906 by Vilfredo Pareto, an Italian economist and engineer, the principle seems to encompass pretty much everything and anything. For Dr. Pareto, it showed up even in his garden, where 20% of his plants produced 80% of the peas. Weird. And now? The Pareto Principle applies across our modern world:
- Today's marketers know that 80% of their sales will come from 20% of avid customers;
- Today's managers know that 80% of the work will be done by a self-propelled 20% of the team;
- Today's programmers know that 80% of purchasers will use just 20% of a software's features (certainly true for Word and Photoshop in my case).
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Still reading? Then you're probably just the kind of smarty-pants fundraising over-achiever we hope will hive with us for a day ... in either Baltimore, Kansas City or Seattle.
Yes, we absolutely promised you can "DOUBLE your donations" if you learn these "commitment-based fundraising principles."
So YOU should wonder: Are we guessing when we say that?
No, we're reporting ... on careful, peer-reviewed research conducted since 2013 by Dr. Jen Shang and Dr. Adrian Sargeant, partners in The Philanthropy Centre (based in the UK; with international clients in China, Australia, the U.S., and Canada).
- You might know Adrian: Sargeant is a classically trained marketing professor, with all the hocus-pocus and algorithms. Early in his academic career, Adrian turned his attention to fundraising ... trying to figure out why nonprofit persuasion tactics lagged 50 years behind the commercial world's.
- Sargeant will co-present (with copywriter Tom Ahern) this one-day Intensive MasterClass.
- You might know Jen: Shang is a Chinese-born research psychologist, educated in the U.S. The New York Times recognized Jen as the world's top researcher into the diverse motivations that cause humans to act philanthropically (instead of, say, killing each other).
- Shang will NOT be there. Her discoveries, though, will be there. See, bit of a story: she and Adrian got married. They have two splendid kids, pre-adolescents. Jen lost the coin toss regarding this tour.
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Dear Ambitious Fundraisers and Also You Astute Donor Stewardship Pros: Trust us ~ there's a lucrative reason you'll want to identify your charity's "high commitment donors" ASAP; and that reason goes back to the Pareto Principle
To repeat: 88% of your charitable income comes from 12% of your donors. Are we talking "major" donors? Not really.
We're talking about personally committed donors ... and their Lifetime Value (LTV) to your organization.
In May 2019, Nick Ellinger, VP of Marketing Strategy at heavyweight, data-dominated DonorVoice, shared what his firm had learned: "...mid, major, monthly, and planned giving donors are all high commitment donors. High commitment donors give, on average, 131% more in lifetime value...."
And that's just a start. Your organization might gain far more.
We've audited thousands of donor communication attempts over the years, by charities big, small, specialized, international, health-related, advocacy, animal rescue, whatev; digital and print.
About 90% of these donor comms, despite a flooding abundance of good intentions, were unwittingly built to fail.
As approved by boss, board and committee, these donor comms simply could not succeed ... for an abundance of well-tested reasons.
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What's different about "high commitment donors"?
With "high commitment donors," you need to talk in a way that connects with their personal identities. And there are SO many identities — 10 at least, as measured by Dr.s Shang and Sargeant.
In study after study, they PROVED that charities which spoke directly to their own donors' various core identities could easily DOUBLE giving.
Ordinary, annual giving doubled.
Giving to newsletters doubled.
Monthly giving doubled.
Campaign giving doubled.
Legacy giving doubled
At a minimum.