Tag Archives: prospect development

Is 99-1 the new 80-20? And, if so, how do we deal with this?

Most of us have heard of the Pareto Principle, or the 80-20 rule (80% of production comes from 20% of the resources). For years, philanthropy experts have used this economics principle from Vilfredo Pareto to explain why so much giving comes from so few people.

Of course, for many¬†of the “best” fundraising organizations, that ratio is more like 99-1. That is, in many cases, single, sometimes 9-figure gifts dramatically shift the fundraising landscape for an organization. These great gifts are frequently transformative and non-repeatable, making the replacement of such big gifts a driving and often maddening force for fundraisers. And, such huge gifts may have the unintended consequence of diminishing future, smaller donations from others whose future in the 1% is yet-to-be-determined.

How should you deal with your organization’s experiences with this rule? Here are two angles of approach.

First, your team (researchers, analytics folks, prospect management professionals, gift officers, etc.) need to know wealth, and particularly your organization’s profile. How is it generated? Who has it? Who had it? Who can get more of it, so big gifts are reasonable? Who has so much that they’d like to leave a legacy instead of being the richest guy in the graveyard. A great set of articles in the NY Times (click here) puts some perspective on how new wealth is being generated. Your team needs to know these trends, your constituent’s sources of wealth, and stay on top of it.

Second, and slightly related to the other 99-1 “Occupy” messaging so prevalent in 2011, your team needs to understand that the enormous gap between the super-rich and the rest of us has big ramifications for your programs and your mission. Sure, we need to devote more time to our best prospects. But, you cannot just focus on the super-rich, because it’s a fluid and sometimes cloaked group. And, for many nonprofits, mass-effort, grassroots fundraising pays the bills, even if less efficiently than 7- and 8-figure gifts seem to. So, your team should work hard to treat all constituents well, while employing effective annual giving, analytics and other tactics to maintain base building efforts that help the best bubble to the top.

So, our fundraising efforts need to efficiently direct energy toward the 1% while conscientiously engaging the 99% as valuable near-term partners, some of whom may matriculate into the 1% (or are already there!).

UPDATE: CASE provided some great data on this topic. Here you can see the impact of the top few percent of donors on campaigns. It appears this is a little more like the 70:1 rule, but the lessons are the same:

3 Solutions to Prospecting Problems

After 1,000’s of discussions with gift officers and prospect development professionals around the world, I’ve come to a simple conclusion: we could all be doing more. More research. More discovery. More proposals. More prospect management meetings. More data entry and tracking. More, well, fundraising. What I have mostly learned, though, is that doing more through better partnership is attainable using three easy-to-remember tactics.

The Obstacles:

Discussions with prospect development professionals in research, prospect management and analytics typically include sentiments like:

  • “Sometimes I hear back from the fundraiser, but I usually don’t.”
  • “I don’t even know if they read the profile.”
  • “The meetings we hold are so frequently canceled or ignored, I don’t know why we bother.”

From frontline fundraisers, I hear all too often:

  • “I’m increasingly just using Google…”
  • “Prospect management meetings and other parts of the process really have nothing to do with how I operate.”
  • “It’s tough to be subjected to a barrage of questions from folks who’ve never asked for a big gift.”
The reality is that both sides are partly right and partly wrong. To move forward to deliver really extraordinary results, your team needs to overcome these obstacles. Here are the three ingredients to the solution:

The Solution

There are three simple tactics that address these issues:

  1. Respect: All sides bring value. Respecting each other’s strengths does not diminish our own. Instead, all parties need to celebrate what they do best and bring to the table. Every great organization succeeds through an effective division of labor, so make sure all divisions are respected in the process.
  2. Discipline: Neat and nifty tools and options are a distraction. So, new predictive models, meeting approaches, or discovery tactics need to be rooted in a disciplined focus on what’s best for donors and our organizations. This means no Blackberrys and iPhones in meetings and it means no “information for information’s sake” 20 page profiles.
  3. Planning: Fundraising is challenging because its not transactional. We cannot force (or even persuade) donors to give big gifts, so this means we must all be strategic planners. You must use every bit of intelligence, every database field, and every chance encounter with great prospects to build a team-wide plan to engage the best prospects. Then remembering the respect-discipline tactics, rigorously execute plans.

Team-based solutions for prospect development are best, but they are elusive. Many 1,000’s of conversations on the topic have convinced me, though, that the issue isn’t the database or the reporting scheme. It’s not the codes or other system details. The root challenge–and, consequently, the source of the solution–is more elementally embedded in how we respect each other, focus our energy, and plan for the future.