Pareto Principle – Theory v Reality
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You will get a majority of your revenue from a minority of donors
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If you have a ‘flat Pareto score’ – like 20% of donors giving you 50% or less of revenue – then you are probably not doing enough work in the areas of bequests, mid and major donors
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If you have a ‘steep Pareto score’ – like than 5% of donors giving you 80% of revenue – then you may be too reliant on a few donors for your whole operation. Time to invest in some monthly givers?
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Increasing investment in your ‘top’ donors is likely to reap rewards. What type of investment?
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Better stewardship
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Visits, events and meeting donors ‘in the field’
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Bigger, better direct mail to fewer donors
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Integrating direct mail with digital, phone, visits and events
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[…] Triner (2016) of Pareto Fundraising, noted that applying Pareto Principle “in fundraising, it means concentrating more resources on the 20% of people who would, theoretically, give you 80% of your future revenue. Pareto2 (Pareto squared) is a little bit more complex. It is when we look at those top 20% of donors and note that 20% of them will give a majority of income too. Again, theoretically, this small number (20% of 20%, which is 4%) would give you 80% of 80% of your revenue – 64%.” […]