If your donations have hit a wall, maybe it’s time to shake things up and try a different approach. Ever heard of the donor pyramid? It’s a great strategy to organize your donors by how much money they have and what they’re into. This article will show you what a donor pyramid is, why it matters for your nonprofit, and how to make one to boost your fundraising efforts.
Are you finding it hard to boost your nonprofit’s donations? Do you feel like you’re throwing fundraising ideas at the wall, and nothing is sticking? A donor pyramid can help you categorize your donors into segments based on their financial abilities and interests. This information can help you build better relationships with donors and raise more funds for years to come.
The donor pyramid is a simple way to visualize donor groups. It’s called a donor pyramid because it looks like a triangle. Your smallest donors are at the bottom of the triangle. Your major donors are at the top. The rest of your donors will be divided between the two. After finishing your pyramid, you’ll see how much you can raise from each donor group.
Having a donor pyramid is crucial for your nonprofit. Here’s why:
Nonprofits need to be strategic when it comes to fundraising. A donor pyramid helps you know where to invest your efforts and money. Let’s say you want to raise $200,000. Is it better to focus on one donor or reach out to 100? If you have a major donor who can give this much, and you’ve already got a connection, you might want to focus here. But if your organization has many small donors, you might need more events and campaigns to get that much money.
Donor pyramids strengthen your relationships with donors. You know what your nonprofit wants to achieve financially. You probably know the potential donations of major donors, but a donor pyramid can help you find the right match. If you’ve done your due diligence, you already understand the donor’s engagement cycle well.
You know what matters to each major donor and can see which programs and events they’d probably be down for. With this info, you can focus your resources on targeting other donor groups and getting more donations from everyone.
Before you finalize your nonprofit’s annual financial goals, take a look at your donor pyramid to get an idea of how much you can realistically raise. A well-structured and well-researched donor pyramid will categorize your donors based on their donation amount. To set sensible financial goals for your nonprofit, look at how much you’ve raised in the past and how much each donor can potentially give in the future.
One big advantage of a donor pyramid is that it focuses on having a diverse group of donors. It’s important for your organization to reach out to different types of donors and use different activities to raise funds. It’s not a good idea to depend on just one grant or donor to stay afloat. By spreading your nonprofit’s fundraising efforts across several donors, you are building a more sustainable financial model for your nonprofit.
You can easily monitor and track changes in each donor segment with a donor pyramid. Use this visual tool to find trends and growth areas and see where donor engagement strategies might be lacking. Once you categorize your donors by their ability to donate, you’ll figure out who to approach for specific programs and why they’re more likely to donate.
Nonprofits with diverse programs and audiences need multiple donor pyramids. A donor pyramid can help you develop financial goals for each program and determine which donors are more likely to give.
Start by pulling a report of all fundraising sources – individuals, companies, and grants. Start by looking at your organization’s fundraising from the last three years. You can categorize donors based on their donation amounts, dates, and reasons. Make sure you sort your donors based on how much they donated, with the biggest donations at the top.
Once you have your reports, you’ll have a clearer picture of your donor’s typical giving behaviors. Do you have any major donors or grants? How much do they give each year and what programs do they support? When you’re going through your donor list, try to find natural breaks to figure out the different donor levels. Assign specific amounts to each level (for example: $10 – $99, $100 – $999, $1,000 +)
Now that you have the levels and your list of donors, you can start creating your donor pyramid. When you group your donors, make sure to include the number of donors for each donation amount to see how much your organization can raise.
The addition of each donor within a segment will help you determine your organization’s financial goal. Use the reports from the last three years to see which donor types are stable and how far you can push your goals. If you’ve noticed a spike or decline in a particular segment, give it priority.
Pro Tip: It is vital to monitor new donors and donor retention for your nonprofit. A donor pyramid can help you better understand how losing new donors is affecting your bottom line.
Make sure you have an engaged team in place before asking for donations. Burnout in nonprofits is a big problem; consider your staff’s current responsibilities when deciding who will be part of this fundraising team. It’s super important to have a team of fundraisers who can help you achieve your nonprofit’s goals. Your board, staff, and volunteers can all join your team, but they need to know your goals and what they must do to achieve them.
Get your team members involved in creating strategies for different donor groups. If you’ve got some major donors, it’s a good idea to have a few team members who can help nurture those relationships and lead those appeals. Other team members can assist with writing grants and organizing fundraising events.
Make sure your strategies and communication plans reach every donor level and include personalized appeals and approaches. You want to move donors up the pyramid at each donor level. While developing engagement strategies with your team, try to find ways to motivate each segment to donate more.
Don’t forget to keep track of how your communication with donors is going and make adjustments as necessary. Get more donation reports and make a new donor pyramid to monitor how well you’re doing. Make it a habit to meet with your team and be honest about the results.
Donor pyramids can help you keep track of donors and plan for the future. Use a donor pyramid to set goals, keep new donors, build relationships, and engage all donors with your organization. Don’t forget, you absolutely need a good donor management tool or CRM.
With Donorbox, you can segment donors based on their gift amounts, program interests, and personal connections. You can also use our Donor Moments to leave personalized notes that all your team members can see. Check out our website for features, fundraising tips, and resources to help you cultivate relationships and increase donations for your nonprofit.
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Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor