Mark Rovner at Sea Change Strategies recently wrote that the "fundraising pyramid is a lie." He argues that most major donors are recruited into a nonprofit on a peer-to-peer basis, rather than being cultivated up the donor pyramid from initial small gifts.

From my experience, I think Mark is dead wrong on this. Lawrence Hence, managing director of Target Analytics, does a terrific job of rebuttal in this "must read" article. Two of his points:

• "…research shows that $1,000 gifts to organizations occur most frequently when that donor has already been giving to the organization for about 7 years. Many years of research with successful nonprofits also shows that those very same donors are approximately 900% more likely to make a major gift in their lifetime than individuals without that progressive history."
• "The primary reason that we do not develop enough major giving donors from our constituents is that many fundraising practices do little to promote transitional giving — the movement from annual giving donor to major giving prospect. Transitional giving prospects are often neglected in fundraising infrastructure and exist in "no-man’s land" between annual giving and major giving staffs."

But Mark also argues a much broader point about today’s mechanistic approach to "cultivation" in the realm of small gift fundraising. He takes a hard shot at today’s ham-handed approach to small gift donor cultivation, approached under the guise of "constituency relationship mangement (CRM). Says Mark:

""Many low-dollar fundraisers assume that our entire relationship with a donor can be programmed like a computer. I don’t need to talk to people, I just keep tweaking my algorithms and direct the right solicitations to the right people at the right time and the money will just roll right on in.

But people are people, not data, and people make a habit of being unpredictable. The algorithms never really get it right. So if you have some notion that you are creating a sense of community, of belonging or of emotional satisfaction by communicating this way as a fundraiser, well I’d like to have a little of what you’re smoking."

And on that point, he’s dead right.

To the extent CRM is about attempting to deal with individual donors — at any level — as uniquely as possible on the basis of their expressed preferences, prior giving behavior, and potential future value (based on empirical evidence), the theory is right. What I hear Mark challenging is the practice.

Implemented with touch — meaning with a feel for relationship building (which is a creative challenge as least as much as an analytic one) — CRM will yield major dividends in upgrading donors. And if coupled with the right institutional commitment to what Lawrence Hence calls "transitional giving," initial small gift donors can indeed be cultivated — in the best sense of the term — and emerge as major donors.

Read both articles … they’re well worth your attention.

Tom