Did you know that 80% of funds donated to your organization come from 20% of your donors? This 80/20 rule, called the Pareto Principle, has its roots back in 1906 when an Italian economist, Vilfredo Pareto, found that 80% of property in Italy was owned by 20% of the country’s population.
It turns out the Pareto Principle holds true in many disciplines, as outlined in this About.com article. In a nutshell, the 80/20 rule means that 80% of the outputs result from 20% of the inputs.
What the Pareto Principle Means for Fundraisers
If you apply this rule of thumb to fundraising, you’d estimate that 80% of your funding would come from 20% of your donors. In fact, some organizations say it’s more like 90% of funding from 10% of donors and a few claim it’s as high/low as 95/5!
Stay with me…
80% of your corporate sponsorships comes from 20% of your corporate relationships
80% of your grant funding comes from 20% of your grant proposals
80% of your board’s impact comes from 20% of your board
80% of your results comes from 20% of your time and effort
Consider that last bullet – if 80% of your time and effort is yielding only 20% of your results, wouldn’t you be better off focusing your efforts on the 20% of work that leads to big results?
Focus on Activities That Will Raise Money
To start, don’t try to do everything! If your goal is to raise money, focus on the activities that will raise money. For example, you probably don’t have the luxury of spending unlimited time on say, social media, if social media doesn’t bring in money.
Sure, Facebook posts can raise awareness for your organization. And increased awareness certainly supports fundraising efforts, but for measurable gains, try spending your time creating an annual fund campaign or, better yet, scheduling a meeting with a major donor.
Costs per dollar raised vary widely depending on the fundraising tactics applied. Capital campaigns/major gifts have the highest return on investment (ROI), costing only 5-10 cents to raise a dollar. To help you plan how to spend your time for greatest results, try calculating your own ROI for each fundraising method your organization employs. Also, review the ladder of effectiveness to help inform your decisions about where to spend time.
Tune in next week when I’ll share how to prioritize the folks on your prospect list to be sure you’re spending the majority of your time with the minority of high-impact donors… the ones who can have the biggest impact on your mission!
How do you decide where to spend your fundraising time? Please share in the Comments box below. Your fellow fundraisers and I thank you!
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