There are numerous tools used by advancement professionals to implement fundraising strategies. My previous blog examined the “fundraising cycle” as a tool for building relationships and engaging donors.
Another tool used by fundraisers to build long-term donor engagement is referred to as the Gift Pyramid or Fundraising Pyramid. The Gift Pyramid (my preference) serves as a model to visualize the successive giving levels through which a donor moves as their commitment and subsequently, investment increases.
Concept and Shape
The fundraising pyramid represents a concept as much as a shape. The triangular image reflects the donor’s path of giving, beginning with smaller gifts at its base and moving upward with larger gifts. As you can see, fewer donors emerge at each successive level of the pyramid. That is, there are many donors at the bottom of the pyramid who make small gifts and a much smaller number of major and legacy donors at the top who make substantial gifts. It’s called the Pareto Principle - 20% of the donors give 80% of the money contributed. An illustration of a simple Gift Pyramid with the “bottom up” fundraising approach is shown below.
Your fundraising team can use the Gift Pyramid for developing fundraising strategies and qualifying your donors. I urge you to provide cultivation and engagement opportunities at all levels of the pyramid to encourage upward momentum. And remember that the larger the gift, the more accountability and stewardship is required by the donor.
Pyramid Level 1 – Occasional Gifts: At the base of the pyramid is a large pool of first-time donors and occasional donors that make small gifts to your institution. They may be motivated to give due to an endorsement from an associate or friend, a quality experience with the institution, a direct mail appeal or a donation opportunity on the institution’s webpage. A sustainable fundraising program requires building this group of donors into consistent annual giving supporters through your cultivation strategies.
Pyramid Level 2 - Annual Gifts: These donors usually transition from the entry-level of the pyramid. Mostly consistent in their mid-level support, the upward momentum of your annual giving donors is essential to your fundraising success. You should work to deepen their relationship with your institution by emphasizing the impact of their financial support. Gift society membership, frequent communications, special events and other engagement activities build and sustain their relationship with your institution. When well stewarded, these loyal donors will often increase their level of giving over time. They become your best prospects for the next level of the Pyramid.
Pyramid Level 3 - Major Gifts: These leadership donors often support the institution’s capital needs, building projects and endowment funds. As shown in the Gift Pyramid, there are fewer donors with the capacity to give major support and who see the institution as a giving priority in their life. Often times, identifying major giving prospects is best accomplished through internal data mining of existing high level annual giving donors rather than through acquisition. These donors require thoughtful stewardship, including recognition opportunities, because their giving can be transformational for your institution.
Pyramid Level 4 - Planned Gifts: Donors at this level are at the pinnacle of the giving pyramid where their largest gifts are usually realized. These donors have decided that your institution has great significance in their life and that they want to assign a substantial share of their wealth or assets to make a difference and leave an enduring legacy. These gifts can include bequests, trusts, annuities and endowments. Individual stewardship plans may be best to properly steward these donors.
At each level of the Gift Pyramid there are opportunities to build a stronger relationship between your donors and the institution to ensure revenue growth. Fundraising expect, 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.” Therefore, it’s important to understand the motivation and expectations of your supporters so that you can determine what actions will keep them most engaged.
The Vortex versus The Gift Pyramid
A somewhat different approach to the Gift Pyramid is presented by Claire Axelrad, J.D., CFRE, development and marketing expect in her article, R.I. P. Donor Pyramid? She suggests that instead of a bottom-up Gift Pyramid, “what about a model that focuses … on the love and engagement? One driven not by fundraising, but by philanthropy. I’m thinking of a vortex — an energized circle. In the energized circle/vortex model, donors are not categorized solely by their contribution level” she says. “The vortex enables donors to freely enter and exit from various points on the circle.”
Let’s consider this idea. The Vortex model allows donors to move freely within the fundraising cycle as their circumstances dictate. The energy builds and moves donors toward the center of the vortex as their connection with the institution becomes stronger. You will find your most loyal donors at the vortex’s core instead of at a particular gift level. Fundraisers should meet these donors were they are and using technique that appeal to them. Most important is to provide experiences that strengthen their passions for your institution to encourage their philanthropic spirit. These donors may advocate for your institution and influence contributions well beyond what they are able to contribute. “No one is at the bottom of anything if they support your cause… People who make repeated small gifts are just as likely to leave bequests as those you force up to the top of your pyramid” says Axelrad.
When I compare the Gift Pyramid and the Vortex model, I see mostly similarities. Both methods offer strategies for donors to develop a deeper relationship with the institution, ultimately bringing them to your fundraising goals --increased revenue and donor growth. The primary difference is the donor’s journey. The techniques become more targeted and personalized as the donor ascends to the top in the Gift Pyramid. The Vortex model allows fundraisers to focus on and nurture the element (emotion) that draws donors close to your institution’s mission in a manner that is most comfortable for the donor.
So, I ask you, which method will you use to motivate donors to support your institution consistently and generously? The answer is simple. Choose the method that works best for your institution. I believe that fundraisers must be extremely diligent, even aggressive in engaging donors in a manner that ensures their emotional connection and makes them feel that they have a vested interest in your institution’s success. Again, I suggest that you use these time tested techniques in preparing your donors for a long-term commitment -- frequent and personal communications, donor-centered cultivation activities and meaningful stewardship. This is the approach that builds the most momentum. And trust me, you will reap the benefits!