Vilfredo Fedrico Damaso Pareto is best known now for the 80/20 rule. He originally said 80% of Italy’s land was owned by 20% of the population. Now this 80/20 rule is used in healthcare (20% of patients use 80% of resources), criminal justice (20% of criminals, 80% of crimes), income distribution, and so on.

And we use it in fundraising. Mid-major donor gurus will talk about how 20% of donors give 80% of gifts. They’ll also talk about Pareto-squared: 4% of donors give 64% of gifts.

It’s a simple and memorable talking point. But is it true?

Not quite.

Enter the data from the Fundraising Effectiveness Project. In fact, the average organizations giving is even more skewed, with only four percent of donors giving 76% of donations and the top third of donors giving 96% of revenues.

(click on the picture to enlarge;
thanks to the Fundraising Effectiveness Project.)

So it isn’t the 80/20 rule any more. It’s the 76/4 rule. Or the 96/33 rule. Either way, giving is more concentrated among larger gifts than even those who focused on larger gifts thought.

What does this mean for those of us who get the gifts under $250 that represent a sliver of the pie? Is it time for us to retire and take up golf?

Not hardly.* After all, those $250 plus donors weren’t born above-average donors – they were made. Direct marketing acquired and cultivated these donors in most cases. Even for major donors, direct marketers often loosen the pickle jar for major gift officers.

That doesn’t mean we can continue business as usual, however. You are probably wasting your time if you are re-acquiring a lapsed $15 donor who has no cause connection with a premium, for example. See, for example, what the U.S. Olympic and Paralympic Foundation did to refocus on their best donors here.

Any potential donor of significance is likely to:

• Have an identity that lines up with your most profitable identity. They or someone they love suffered from your charity’s disease. Your hospital treated their child. They adopted one of your shelter pets. You are core to who they are.
• Be heavily committed to you. People don’t make their largest gifts to their sixth favorite charity. As Andre Gide put it “It is not enough to be loved — I wish to be preferred.”
• Care about the effectiveness of your programs. It is said it is the death of response rates to talk about the data behind your program effectiveness. And it is, for the small donor. However, Karlan and Wood found that this changes for the most committed, $100+ donors – they want to hear that Yale University validated what you are doing.

Note that I did not mention wealthy donors. This is because:

• Wealth screening doesn’t impact your mail results as much as you might think.
• You don’t necessarily have to be wealthy to give a $25 monthly gift, which is what we are talking about here.
• Even your $10 donors may be able to make significant gifts. ASPCA had resolved to focus on higher-value donors. They realized they’d cut off their 70+-year-old, $10 donors who were their best planned giving prospects. These donors were committed and their identities were animal people, but they had saved to give a legacy after they’d passed.

You are not in the attracting-wealthy-donors business. Nor are you in the getting-gifts business (which is what I’d thought for most of my career). When we live in a world where two-thirds of your donors give only 4% of the gifts, you are in the learning-about-your-donors and catering-to-their-interests business.

* Especially now that we know that golf is a serious distraction from important causes like disaster relief.