is the donor pyramid dead?

NEW DIRECTIONS FOR PHILANTHROPIC FUNDRAISING, NO. 33, FALL 2001 © WILEY PERIODICALS, INC.

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This chapter, an original piece of thinking based onmany years of work with hundreds of differentorganizations and causes, offers a fresh frameworkfor developing the right direct marketing strategyfor individuals. It updates previous concepts such asthe donor pyramid and provides unique insights formoving toward an emphasis on donor share, notmarket share.

5Is the donor pyramid dead?

Tony Elischer

DONORS don’t necessarily follow cycles. In fact they don’t neces-sarily follow triangles or any other particular model that providespredictability and reliability. As within many other professions anddisciplines, we have invented a whole range of models to help stim-ulate thinking, explain trends, and direct strategies. Some of theseare unique to the not-for-profit world, whereas others are bor-rowed from the commercial sector either in a pure or adapted for-mat. Without these models to shape and explain our thinking itwould be more difficult to learn about fundraising, share ourknowledge, and encourage people to break paradigms and moveforward. Like any theories, they are designed to underpin realityand ultimately enable experience and real knowledge to take overin stimulating, shaping, and directing our activities.

A new and worrying trend appears to be arising whereby peoplelearn the different models and hold on to them rigidly, or worse

74 DIRECT AND INTERACTIVE MARKETING

still, pass them on without any experience or reality to make themmeaningful and useful. Moving beyond theory is vital for profes-sional development and the true ability to manage and direct in thesector. As expansion of the sector continues at a frightening rate,some people appear to be surviving on theories without the bene-fits of reality checks or experience.

When I first became a fundraiser twenty years ago one of thefirst key pieces of learning that I was offered was the now famousdonor pyramid. This is a fabulously simple model taken from com-mercial marketing that clearly indicates the ultimate direction thatany fundraising strategy should take in drawing donors into theorganization and then gradually moving them on to the next stageof their support, loyalty, and understanding. The choice of thepyramid shape is a useful indicator showing that as donors progresson their journey or relationship with an organization their num-bers inevitably become fewer, ultimately illustrating the Paretoprinciple that 80 percent of your income will come from 20 per-cent of your donors, or to update the theory, more likely 95 per-cent of your income will come from 5 percent of your donors. Thisframework for learning is still used in the induction programs ofmost fundraisers today; however, it is interesting to note that somepractitioners now declare the donor pyramid dead or passé. Thepyramid illustrates the principle of thinking through logical stepsthat are available to the donor and the idea of looking at each stageand its potential to contribute to another stage.

Over the last decade in particular our thinking as a professionhas moved on rapidly, we have learned more, gained more experi-ence, and become much more professional in our approach andthinking. So it is time to refresh our advice and our models, but itis not the death of the donor pyramid, merely the evolution andrenewal of this amazing thinking. As the outside environment nowchanges at such a rapid pace and therefore so do the lives of ourdonors and prospective donors, I believe we need a more dynamicshape to embrace the thinking at the heart of fundraising strategy.Therefore, illustrated in Figure 5.1 is a model that I have beenusing effectively for the last two or three years, which I call the

75IS THE DONOR PYRAMID DEAD?

Figure 5.1. The donor wheel

donor cycle wheel. Why a wheel? Because it is always revolving anddifferent wheels are needed for different terrain. The other impor-tant distinction about this model is that it directly reflects the com-plexity of a donor, who is represented by the two small wheels tothe side of the main donor cycle wheel.

The basis of this model is that the central wheel contains manyof the stages offered by the original pyramid model, but the wheelattempts to illustrate how the donor can join or leave at any stageand then either stay in a particular segment, move on, or move out.Let us look at the key stages within the wheel and some of the cur-rent thinking behind these programs.

Incidental donorsThis is an often-neglected category within any strategy and yet canprove an extremely valuable source of potential donors. The largerthe organization, the more likely it is to have a good supply of inci-dental donors who could be approached for conversion to full

© AMC ELISCHER 1998


donors. This category is really about people who may attendevents, thus buying a ticket but not consciously making a donation;people who buy merchandise; people who use advice or informa-tion services of a charity. Indeed you could extend this heading toembrace anyone who has contact with the charity without giving adirect charitable donation.

The inclusion of this category within the model is a usefulreminder that these sources of prospects should be explored regu-larly, especially against a background of cold recruitment becom-ing increasingly prohibitively expensive. This is also an interestingarea from which to explore how the whole organization views mar-keting and its responsibility toward it. Successful charitable orga-nizations in the twenty-first century will have to ensure thatmarketing is everybody’s responsibility and not simply the respon-sibility of those people who carry the word in their job title.

ContactersI use the term contacters to reflect the previously used category ofenquirers and responders; in other words, people who hear aboutyour brand and seek you out in order to be able to support you andthe people that you reach out to through your direct marketing.Traditionally this was always the start of the donor journey and isthe critical area where most charities need to develop ongoing pro-grams in order continually to feed the need for new supporters orreplace supporters who have moved on. In developed markets thisinitial stage of any cycle is increasingly becoming one of the mostdemanding, requiring high levels of market analysis, exceptionalsegmentation and targeting, and a reasonable degree of risk.

I am pleased to see that the whole new media mix is now makinga major contribution to thinking in this stage of the donor cycle andthat charities are increasingly experimenting with the use of theInternet and digital media to recruit donors. The other “new” tech-nique in this part of the cycle is face-to-face solicitation in the street,


which is proving exceptionally successful in many developed mar-kets. So for the direct marketer the portfolio of tools and options isbecoming ever more complex, yet with more opportunities.

DonorsDonors are the heart of every charity’s fundraising program, yetthey occupy an area that can no longer be left to flourish on itsown. The cost of maintaining one-off or occasional cash donors isincreasing on an annual basis, especially when you consider theattrition rate on this area of the database. The future is going to beabout donor share, not market share, and therefore we need to workas hard as possible at converting single cash donors to committedgivers where we can not only rely on a regular income stream butwhere we also stand a higher chance of protecting the donor fromdefecting to another charity. Fundraising will always attract a rea-sonable number of cash donors and some of these will never con-vert to a regular gift, so it is important to have these opportunities.But in our thinking we must recognize that this is simply a holdingstage from which we will try to move the donor to a closer rela-tionship and involvement with our charity and its programs.

Committed donorsThis is the part of the donor life cycle that has been transformedin the last five years, with charities waking up to the fact that thisis a crucial program that merits exceptional investment and energyin order to ensure it represents the largest possible percentage ofthe total donor database of any charity. The biggest transformationin this area has been the emphasis on recruiting large numbers ofpeople directly into a committed giving program. This has largelybeen achieved by rethinking the initial financial ask, and in theUnited Kingdom we now have low monthly ask programs that start


at a request for £3 ($5) per month. To the donor these programsseem to offer extraordinary value and are relatively painless torespond to, yet the secret is clearly in the initial upgrade programand trying to move those people, who become comfortable withgiving on a regular basis, to a more sustainable level that really hasan impact on the programs of a charity.

The absolute king of committed giving has to be child sponsor-ship, yet these programs are increasingly falling from grace as, inmany cases, they do not reflect the best thinking, practice, or needof development charities. The other major disadvantage of suchprograms was their financial entry level, which often equated to $35or more, thus limiting the accessibility of such programs to thewider population. So the key to transformation in committed giv-ing has been the widening of the financial options and the move tomore imaginative programs to engage the donor and cultivate theirloyalty to the brand as opposed to a specific product.

Exceptional giftsThis category encompasses high-value and major donors, one ofwhich is very well understood whereas the other is a “sleepinggiant” yet to be awakened by many charities in the sector.

The familiar area is that of major gifts, but the area with thegreatest opportunity for the majority of charities is the high-valuegift area; by simply distilling out perhaps the top 5 percent of adeveloped donor base we can often find a rich vein of donors capa-ble of giving at a higher level. Instead of immediately assumingthese people would welcome personal solicitation we need to ascer-tain whether they would respond better to a more personalizedprogram without going as far as initiating face-to-face solicitation,which would commonly be used in a major gift program. We arevery familiar with the concept of identifying “rich” individuals onthe database, but we have to recognize that in many Western soci-eties the polarization between the “haves” and “have-nots” hasmeant that one of the major growth categories within society has


been that of the upper middle class—in other words, people whocan afford to make a gift of a $1,000 or more. In larger charitiesthis category of donor can be quite large, so the most effective wayof handling this segment is to develop a highly personalized directmarketing program that moves the donor to feeling that he isbeing treated as part of a donor segment of one. The other majorattraction of a developing a high-value donor program is that itbecomes a useful “holding area” for potential major donors. Suc-cessful major donor fundraisers can only cope with so manyprospects at any one time and therefore it is useful to know that inthe meantime future prospects are being treated as VIPs ready forfuture cultivation.

Although major gifts is an established program that is most cer-tainly back in vogue, we are now learning that to undertake suchprograms we no longer need bricks and mortar to motivate donorsand undertake a structured gift program. Most fundraisers nowmake a distinction between big gift campaigns and the need to cul-tivate face-to-face major donors around the existing programs of acharity. Most charities now have some form of major donor pro-gram in order to cultivate the 1 or 2 percent of their top donors.The more proactive charities use the learning from approachingthese donors to then reach out to try to attract similar donorsfrom the outside community, who to date may not necessarily havesupported them.

Legacy or bequestsThis category represents the ultimate destination to maximize thepotential of a private individual and her support for our charitablecause. Legacy marketing is now well established and understood,but at the end of the day the secret to this area of our work is topromote legacy giving throughout the donor life cycle. Almost likean operating system on a computer it should be continually run-ning in the background and the donor only need become aware ofit as and when it becomes appropriate to their needs or stage of life.


All of the stages that are portrayed in the donor wheel indicatethat every charity should have at least some definition of these pro-grams within their overall fundraising strategy. This is not to saythat the charity has to be active on every stage of the cycle, simplythat it should recognize that at the appropriate point it will need tointroduce these programs in order to allow the right stages fordonors to move through to maximize their support of the charity.

The two small wheels to the side of the main cycle represent thedonor. I have used two wheels in order to show the complexity ofthe donor and the fact that when these wheels are interlinked theyare continually changing in combination. Therefore as peopleprogress through life their circumstances change and so does theirlifestyle. In relation to charities this will affect the amount ofmoney, time, or resources a donor has available at any particularstage in his or her life. I believe that it is critical that we understandthat loyal donors will change in their ability and willingness to sup-port us in different ways. We need to understand that every indi-vidual is, in effect, a different person every five years or so.Charities need to understand the different trigger points in peo-ple’s lives and then develop appropriate fundraising programs toallow donors to continue or develop their support at various stagesin their lives.

If you feel that you have grasped the basic thinking behind thismodel and what it is telling you, imagine that the two donor wheelsare gears that need to move in and engage with the main donor lifecycle wheel. So if the charity has some definition on each of its pro-grams it can in turn ensure that it has an appropriate program tomeet the needs of each donor and to maximize their value at keylife-stages. Donors must also be allowed to disengage with a char-ity for a short period to suit their life stage and lifestyle. The char-ity should continue to offer different opportunities by rotating thedonor life cycle, continually trying to attract a donor back to sup-port its cause, but we should accept that donor support can rarelybe constant throughout the life of a donor. If you accept this as a


thesis you would in effect never lapse a donor unless he is deceasedor you genuinely lost touch with his location.

So donors more than ever are failing to follow any formal logicor cycles, so I hope I have offered a model or framework thatencourages fundraisers to think more flexibly about how theydefine different parts of their program and the relationshipsbetween the different offerings. The donor wheel is as much a chal-lenge to fundraising thinking as it is a framework for the future: inthree simple circles it outlines a totally new way of working andthinking.

TONY ELISCHER is managing director of THINK Consulting Solutions.He has over nineteen years of hands-on experience in the sector, includingsenior roles with the Management Centre, Imperial Cancer ResearchFund, the Zoological Society of London, and Help the Aged. He is aninternationally regarded expert on marketing and fundraising, havingextensive experience of helping charities worldwide with strategy,fundraising, and management. He is well known in the sector not only asa consultant but also as an accomplished thinker, trainer, and author. Heis a Fellow of the Institution of Charity Fundraising Managers, on theboard of the Resource Alliance, past chair of the International Fundrais-ing Congress, and serves on several other boards within the nonprofitsector. More details of his work and thinking can be found at[www.tonyelischer.com].

is the donor pyramid dead?

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