If you’re looking for where to apply your resources during a campaign, you might want to display the nature of your donors from least to most generous, as a way of knowing where to start and with whom. When you plan out your drive this way, you can begin with the highest-value donations and work your way down to the smaller but more numerous ones.
When you lay this all out on a chart, you find a pyramid, a visual representation of different tiers of donations that show you where your money will come from and how many people you need to reach out to for each tier. Depending on whom you ask, this is called the donor, “giving”, or “fundraising” pyramid, and it’s a very handy tool when wielded right.
However, there are plenty of limitations to it, and alternatives are available, as well as other tools that should be used alongside it for maximum effect. We’re going to go into these shortly, but before we do, let’s look at exactly what this pyramid is all about.
What is a Donor/Giving Pyramid?
A donor pyramid, in the simplest terms, is a visual representation of your donors, segmented by the level they’ve been given based on their donations. This puts roughly 20% of your top-dollar donors above the 80% of those who make up the rest in small donations and make up the rest of the pyramid.
It’s a way of visualizing your donors, starting with the more general ones at the bottom and working your way up to the most generous and recurring ‘legacy’ donors at the top of the pyramid. It’s designed to isolate and work with those who give the most as a way of figuring out how to cultivate more of them and maximize their potential.
For donation drives, an organization might cast a wide net, attracting donors of all kinds, and gradually fine-tune its approach as it aims to target the decreasing number of more contributory donors, who will ultimately make up the smallest tier of the pyramid. This helps to identify the significance of each donor in relation to how much they contribute to the organization.
But it’s not only giving that can rank donors into a pyramid. The same principle can be used to separate your donor base into tiers based on donor lifetime value, recurring donations, or simple engagement, among other metrics. The rankings may then differ depending on the metrics you’re using, and that will depend on your specific goals.
Donor pyramids can therefore be used in various contexts, for example, in stewardship, where neglecting mid-level donors by taking a binary, ‘high vs. low donor’ approach can be detrimental to figuring out their engagement status and specific requirements. The donor pyramid can help categorize by numerous useful factors such as:
- Giving Frequency
- Donor Lifetime
- Potential to donate
- Membership status
- Engagement status
And therefore allows for important distinctions between them based on these factors. This can help an organization understand how and why their donors are doing what they’re doing and help to identify what each tier wants with their relationship with the organization. From here, stewardship can be tailored more specifically to the needs of each donor.
The process of designing the pyramid in this way requires organizations to select and define each tier, and this alone is useful. If you’re planning to use donation level as the differentiator in the pyramid, you need to fully understand and agree on what the thresholds are for each tier, and this might change depending on the specific campaign.
Then, placing each donor into their category gives an immediate visual overview of where they sit in relation to one another and their contribution to your organization.
Fundraising Pyramids: Why they Work
This visualization in itself is useful for several reasons relating to an organization’s understanding of its donor base, but what makes the donor pyramid so powerful is how it facilitates actions based on this understanding.
Essentially, there are two major intentions of the donor pyramid, the first one leading to the second:
- Draw up a clear and simple visual of the relevant donor metrics in relation to the organization
- Use this as a tool to figure out how to move low-level donors up the pyramid toward higher involvement
Again, this can be used in a general or specific context, but the ultimate goal is more or less the same: find out who needs to be maintained at the top of the pyramid and who needs to be stimulated to ascend through the levels.
The donor pyramid is great for use on various specific campaigns and goals. Each campaign has its own goals, and each goal can have its own fundraising pyramid. This makes the system versatile and applicable in numerous contexts and can be used in planning stages to figure out how much you need to raise for each tier.
For those on the front line, a giving pyramid like this might not be entirely necessary, but it’s important also to think of board members. Showing a chart like this to management is a simple way to emphasize the significance of the legacy donors and justify the distribution of resources accordingly.
These benefits have helped many nonprofits, and charities assess their relationships with their donors, though there are some drawbacks, some of which are leading organizations away from the more traditional pyramid and onto potentially more detailed or more applicable variants and alternatives. We’ll go into some of these shortly, but first, let’s look at what goes into designing a donor or fundraising pyramid for your project. (end part 1)
Types of Donor Pyramids and How to Create your Own
Designing a fundraising pyramid isn’t difficult, but it does become more powerful if you have your own data to make use of in its conception. This principle also applies to some of the alternative shapes of the pyramid you might want to work with, as well as some of the different approaches that we’ll cover in the next section. For pyramids, your chart can take on either a classic pyramid shape or a flat top.
Classic Pyramids
This is the tried-and-tested method and still the most common pyramid. This will give you the framework to move from the top down and focus on a single donor to provide you with 20% of the campaign funds. From there, you’ll move on to other donors and focus your attention on smaller donations as each one is secured.
Flat-top pyramids
This is a variation on the above, but instead of a single donor, you’ll be working towards acquiring that same 20% from a handful of large donations. The rest of the pyramid remains the same, and you progress to these sections as the top level is completed.
Sometimes a gift-matching system is a good way of dealing with this flat-topped high tier, and it can work out very well if done right, but the nature of securing multiple top-level donations can make it more difficult.
The process of designing a pyramid, whether as a planning tool or a simple display, can be broken down into three stages. Taking donation amount as the metric for the tiers, here’s how they break down:
1. Calculate your donation levels
There are online calculators to help with this, or it can be done manually. It’s probably better to make use of a calculator and tweak it as needed. Regardless, you should be able to set your overall fundraising goal and then figure out the donation levels based on the number of required donations at every level to make up the final amount.
There are a few different suggestions as to how many prospects you need to get a donation. Some say three; others say five. Use your own data to find the figure that’s right for your organization, or if you’re just getting started, you can go with 5 to be safe. Whatever you choose, apply it to each tier of the pyramid to figure out how many prospects you need to fill the donation requirements.
2. Tidy up your numbers
If your calculator gives you tiers that are too small, you’ll need to group some together. As long as the final amount stays the same, you can fiddle with the tiers and the required donors until you get brackets that match what you’re looking for.
You’ll also need to make sure the bottom of your pyramid is populated with a large number of very small donations. If the base of your pyramid isn’t small enough to account for these, you’ll be missing out on valuable information. Ultimately you want at least 50% of the funds to come from the top 20 donors and 20% of the total goal to come from a single donor, if possible.
3. Draw it out
You should have everything you need to put together into a pyramid chart. Ensure you’ve got enough prospects in each segment to cover the ratio of prospects to donors that you established in step 1.
And that’s about all there is to it. This approach doesn’t work for everyone, though, and there are some limitations. Now, we’ll take a look at some of these limitations and a few alternatives to work with.
Donor Pyramid Drawbacks and Alternatives
One of the most immediate limitations of the classic pyramid is that it offers very limited segmentation capabilities. While you can partition based on engagement levels or type of giving, you can typically only cover one metric at a time whilst still maintaining the pyramid theme. Some other metrics for segmentation use nominal data, meaning they can’t be ranked, for example, the location of donors.
This makes the pyramid good for specific campaigns and specific information around them, and usually only on a smaller scale, where each bracket will respond to the same approach. With more complex donor tiers, the classic pyramid risks a low-resolution output that doesn’t scale well without becoming overly complicated.
This simple chart also doesn’t show much in the way of transitional information, instead offering a snapshot in time, telling little or nothing about the relevant transitional nature of donors as they potentially ascend through the pyramid.
Finally, the structure of the program for fundraising includes donor acquisition, nurturing, retention, and other things that are not visible in the giving pyramid. For example, new donors and donors who are in their third year of donations will occupy the same level of the pyramid, despite being rated with very different chances of repeating their donations, and therefore require very different management approaches.
With all this in mind, there are some alternative solutions to consider. Here is a couple of them:
The Hourglass
If you take a second pyramid and invert it on top of the first, you come to the hourglass model. This creates a plan of action that relies on a much slower accumulation of smaller gifts, making the time frame longer overall, but you’ll still have significant lead donor segments to get started on. The mid-level donors will be slim, which allows you to focus more on the top and bottom tiers, but will give the illusion of the campaign slowing down as you work through this section.
The Obelisk
An obelisk starts with a point, just like the pyramid, then remains relatively uniform all the way down. This method means you won’t have such a wide base of donors supporting the campaign, and this means that the significance of your legacy donors is higher than other methods. This creates some urgency at first, but it does leave some wiggle room for adjusting the campaign as time goes on based on the success of your early drives.
The Future
These two alternatives to the pyramid offer somewhat different approaches, but they do still suffer from some of the same limitations of the classic giving pyramid. The issue is that there is no single shape that your donor base can take and no single approach that will work for everyone.
Further, the idea that a small-time donor is likely to climb the ladder through recurring donations to loyal supporters and into the legacy range is unrealistic. At best, most donors will go up only a level or two, making the pyramid system relatively redundant in many contexts.
A donor funnel can help cultivate leads of all kinds and pays more attention to the process than the overview of a static point in time. Still, this might have different applications than the fundraising pyramid and doesn’t have to be used as an alternative. However, it does lend itself to more engagement-focused work, and this can be a powerful tool, especially when it comes to the bottom rungs of the funnel.
Ultimately the two should work in tandem, with one representing a simplified overview of the current state of donors and the other helping to guide content to work donors through the pyramid. And this illuminates how the donor pyramid is often misused.
Donors don’t want a faceless organization soliciting them for a sterile transaction; they are looking for engaging material that tells them a story they can relate to and an accessible means of interfacing with that story.
What this comes down to is the need to shift the application of this pyramid away from management and allow it to lean into its strengths as a depicter of the current state and a demonstration of why resources need to be applied where they do.
If you are confused about the “how” of this, look to your donor funnel, which is where managing and segmenting should be kept.
Conclusion
Your donor pyramid could be a powerful tool for a variety of reasons, not the least for showing your management why and where you’ll be spending the resources. However, if knowing how to use the pyramid is important, knowing what it isn’t is equally so.
It’s not a strong method of segmentation. Nor is it a tool for strategizing engagement or visualizing different demographics. The donor pyramid is more of a visual aid and a framework for assessing who from your donor base needs to be addressed first.
With this in mind, there are still some useful modifications to the classic pyramid, such as the obelisk and the flat top. Still, if you’re looking for guidance on your engaging content, these should be used in conjunction with the donor funnel. And for help with both, consider Rally Corp.
We help you capture and keep the attention of your supporters, engaging and mobilizing those you need to reach. Be sure to check out our templates and frameworks to engage them with content and stories that are thoughtful and relevant to where they are on their particular donor journey.
