Make More for Your Cause with the Pareto Principle

Finding Your Best Donors with the Secret of “Pareto Squared”

If you are a fundraiser, you probably already know all about the Pareto Principle or 80/20 rule.

This rule tells you that 80% of revenue will come from 20% of your donors.

But you might not yet have heard about Pareto2 or Pareto Squared.

This rule only works across a large data set, and across a few years, but it is another useful thing to understand if you want to maximise future income.

What is it?

It digs deeper than 80% of revenue will come from 20% of donors.

It shows you that 80% of that 80% will come from 20% of the 20%.

Lost you?

It means that, in theory, 20% of my top 20% donors, which is 4% of all my donors will give me 80% of 80% of my revenue – which is 64% of all the revenue.

Wow.  64% of revenue will come from just 4% of donors.

Beautiful – and, if you are good at following up mid-value donors, major donors and bequests, surprisingly accurate.

The implications for how you should focus your time are amazing. And you can find out more in The Fundraisingology Lab.

Author

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    Sean Triner is a Co-Founder of Moceanic and Pareto Group. With over three decades of experience in fundraising and a Bachelor of Science (Honours) in mathematics, Sean has a wealth of fundraising expertise to share with Moceanic members and blog readers. He is also a coach and available for bookings on the Coaching+ program for fundraisers to help answer your questions and work hands-on directly with you.

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