Many nonprofits think the top of the donor pyramid is where the money is; that it’s the best place to get the greatest return for their fundraising investment. It’s not.
It’s true that with enough prospects, major gift officers will bring in more revenue in the short term and with a better ROI than if you invested lower on the pyramid. And that’s why, to some, it’s a no-brainer to hire a couple of major gift officers who will net several million dollars in 24 months, rather than investing hundreds of thousands of dollars in direct mail or online stewardship.
But that’s very short-term thinking.
And I can give you at least 273 reasons why.
273 Reasons to Analyze Your Annual Fund
Pursuant recently analyzed a client’s annual fund and found that 273 of their annual fund donors contributed $4.2 million to the organization over 15 years. That works out to nearly half a million dollars a year from 273 annual fund donors who started out giving a mere $250 per year—less than $25 a month.
These are donors who, according to a strict ROI calculus, wouldn’t merit the additional investment needed to grow your organization’s relationship with them.
Keep in mind that your annual fund and your online presence are what fill the donor pipeline. Remember, those 273 annual fund donors gave $4.2 million over 15 years. Unless you invest money and effort into building relationships with donors at the bottom of the pyramid, there may be no major donors to talk to in the future. The fact is that every level of the pyramid, regardless of current giving, is vitally important.
Is your annual fund an incubator for future major donors? Do your direct mail and major gifts departments collaborate to maximize donor progress up the pyramid?