The Donor Pyramid Debate

The donor pyramid has found itself in the middle of some heated debate these days. Check this out:

R.I.P. Donor Pyramid? http://t.co/lxRikqrFID #fundraising

— Claire Axelrad (@CharityClairity) June 6, 2014

Is The Donor Pyramid Really Dead? An Open Letter to Claire Axelrad from Andrea Kihlstedt http://t.co/YbQ5qDa8Qn via @GuideStarUSA

— Andrea Kihlstedt (@AndreaKihlstedt) June 25, 2014

Yes, The Donor Pyramid is Really Dead http://t.co/h3hAh9BeX8

— Claire Axelrad (@CharityClairity) July 1, 2014

Poor donor pyramid. Existential crisis isn’t easy.

I usually don’t wade into these meta-discussions. There’s money to be raised and debating the state of the donor pyramid doesn’t exactly help me do that.

But, this one caught my attention. The donor pyramid is a long-standing framework in our profession. And I’m a frameworks kinda guy.

In this case, my short answer to the “Dead or not?” question is both Yes and No. That a copout? Maybe. But hey, I’m new to the blogosphere – I need friends. And luckily in this case I agree with both Claire and Andrea.

Let me put it this way, the donor pyramid is dead for some purposes, and very much alive for others. It depends and what you want to use it for.

It’s Dead

From what I can tell, the main criticism from Claire and others is that the pyramid isn’t a realistic model for donor behavior. We can’t expect people to enter at the bottom, upgrade their way to a major gift level, and then leave a bequest.

Largely, I agree with this. Donors get engaged for a variety of reasons and enter the organization at different levels. They’re human beings after all.

Further, Claire says it isn’t wise to “force” donors into a pre-assigned place on the pyramid. It’s too wooden and artificial, particularly in our always-connected, digital age.

So, instead of a pyramid, she advocates for a vortex model – a swirling circle of energy and activity, largely fueled by social media. “Everyone is equal in a circle; just at times some folks have more energy than others. People move in and out, giving and getting, as the time and spirit move them.”

Claire goes on to say that the vortex idea is less hierarchical and more human. It’s not a ranking system with the rich folks on top and the commoners on bottom. There are no value judgments in a vortex, apparently.

I definitely appreciate the sentiment here. We all want to treat our donors well. People are more than the size of their bank accounts. We all want energized fans, ambassadors, and volunteers. And digital communications have changed the way people connect with organizations.

Although I’m not sure I understand Claire’s “vortex,” it probably is a better description of how people are actually interacting with the nonprofits they care about.

So yes, I agree. As a template for how people should engage with an organization, the donor pyramid is dead. No question.

However.  The criticism might be entirely unnecessary. Why? Because I’m not sure anyone uses the pyramid in the way its critics describe.

It’s Aliiiiiiiiive!

In her post, Andrea mentions that critics have “attributed to the Donor Pyramid powers it never really had.”

I think this is accurate. As far as I can tell, the pyramid was never meant to be a blueprint for donor activity over time.

Sure, there’s a lot of research out there telling us that donor retention rates are dismal across the board. But don’t blame the donor pyramid. And of course many organizations would love to have more major donors, but no one’s expecting the pyramid to solve that problem.

It’s a planning and assessment tool. And only one of many.

When defined in this way, I think the donor pyramid is still very much alive. And I think Claire and others would agree with me.

I work for an organization in the middle of a multi-billion dollar comprehensive campaign, and yes, we have a pyramid. It provides a breakdown of where we are by gift size and a rough sketch where we think we need to be at each level. It’s a nice chart. And we have a bunch of others that present the data in different ways.

Earlier in my career, as Director of Annual Giving for a different organization, I absolutely used a pyramid. Why? It helped me plan and it helped me understand what was going on during the course of the year. Did I expect anything more from it? No.

If you want a donor pyramid to capture vagaries like “engagement” or “energy,” you’re setting yourself up for disappointment. It was never meant for that. But it does provide a useful snapshot of some pretty valuable gift revenue information.

So, to reiterate: The donor pyramid is dead as a model for donor engagement, yet alive as a planning and assessment tool.

This is Where it Gets a Little Long
(Skip to the bottom if you should be raising money right now instead of reading blogs.)

Now let me take a moment to defend frameworks more broadly. We in the nonprofit sector have some serious insecurity to get over here.

We can get so worked up about anything that doesn’t seem “donor-centered,” or isn’t human enough, or makes too close of a connection between a person and a dollar amount. Frameworks, by definition, aren’t warm and fuzzy.

But we need them for internal planning, tracking, reporting, and assessment purposes. We need useful tools that simplify complexity and help us understand what’s happening with our donors. It’s not like any of us review our pyramids and then go out and say, “Gee Bob, you’ve been kinda mid-pyramid for a number of years now. How about you move up a level?”

And – another pet peeve of mine – we need to end our fear of aggregates. Internally and as an industry, we need to be able to think and speak in broad terms about large groups of people. We need to be able to make generalizations about their behavior (both actual and desired), knowing that not every single donor will act according to plan. We simply can’t customize every donor’s experience. And we can’t get hung up on the outliers.

Let’s not lose the forest for the trees.

Is it unreasonable to expect that some donors at the bottom of the pyramid should move up over time? If we’re doing our jobs some of that should be happening, right?

Similarly, do we want to see any mid-level donors step up to the major gift level? Do we hope that some major donors make legacy gifts?

Absolutely! If those things aren’t happening, we’re missing opportunities. Frameworks help us keep an eye on these dynamics as they play out.

The same could be said for other tried-and-true frameworks in our profession like the fundraising cycle. Are we ready to chuck it as well? And just because some donors don’t start at “identification?” Or, because some skip “cultivation” altogether?

Whew. Apologies for the rant. Guess I really am a frameworks nerd.

OK, let’s get practical.

Three Things You Can Do Today with Your Donor Pyramid

1. Appreciate the top

In her exchange with Claire, Andrea mentioned that the pyramid is an important graphic reminder that 80% of the dollars contributed to our organizations come from the 20% of donors at the top of the pyramid. Claire followed by questioning whether we really need the pyramid to remember that.

My answer? Maybe.

We forget the 80/20 principle at our peril and the pyramid certainly doesn’t let us forget it. Yet, with many of the gurus writing regularly about how we need to be on Pinterest, Google+, and whatever else is new and trendy, it can be easy to forget who really butters our bread. Are you investing sufficiently in major gifts?

2. Break down a goal

Need to raise some money? Couple million for a new program, a few hundred thousand for scholarships? Setting up a pyramid will give you a feel for how many gifts at each level you’ll need in order to reach your goal. And then you can see if you have the prospects to get it done. Estimate 5-to-1 to be on the safe side, 3-to-1 if you’re feeling lucky.

Your end result will likely look different from your initial pyramid, but the exercise will help you focus on the critical 20% at the top and get off to a good start.

3. Look for upgrade opportunities

I’ve used the pyramid to look for “fishing holes.” For example, is there a deficit at a particular level? Would boosting gifts there be meaningful enough to warrant an investment of time and money? If so, consider rolling out a new giving society or other special recognition opportunity at that level.

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Thanks, as always, for stopping by. This is a conversation worth having. Let’s keep it going.