The traditional donor pyramid needs to be updated to reflect the impacts of the digital world and evolving consumer behaviour, according to Tony Elischer, managing director of voluntary sector consultancy THINK Consulting Solutions.
He explains why in ‘The 2008 Expedition: Rediscovering and Climbing the Donor Pyramid’, published today to coincide with the Institute of Fundraising’s National Convention.
The traditional donor pyramid has been used as the fundamental model for fundraising since the 1960s. According to its principles, fundraisers help develop donors or supporters so that they ascend a pyramid from lower to higher levels, where each successive level represents fewer donors giving at higher levels, with major gifts and legacies at the top.
Elischer argues: "This formulation of the donor pyramid fails to reflect how the digital decade has changed the way many people want to connect with, interact with and possibly build a relationship with a charitable cause".
Elischer’s 2008 version of the pyramid inserts several new tiers, by splitting big gifts/major donors into three separate categories of high net worth individuals (HNWIs) and distinguishing between ‘committed’ givers and ‘regular givers’.
It also introduces two new concepts at the base of the pyramid, the ‘trydonor’ and the ‘incidental donor’.
Like the ‘trysumer’, the ‘trydonor’ will try out a product of a brand without deciding whether to commit to it or not. For example, they will respond to a campaign or sign a petition and wait to see how the charity responds to their first action before taking things further.
Elischer’s ‘incidental donor’ will indirectly support a cause by buying tickets to an event or merchandise.
In his paper Elischer argues that the original distiction between committed and regular givers should be restored. Someone who gives £2 a month by direct debit but otherwise interacts little with the charity is not the same as a committed donor who give monthly but through, for example, a sponsorship programme and who are much more involved with the charity.
"All too often", he says, "these two categories are merged together strategically and once this happens, it limits the ability to grow each category of donor in their own right."
In terms of major donors, Elischer’s new model splits the top five per cent of a charity’s donorbase into three interlinked levels – middle donors, high value donors, and major donors.
For international charities, Elischer posits that there is also a fourth HNWI category of ‘megadonors’, or rather "global philanthropists".
He defines ‘middle donors’ as people who give at the top of the range in their existing programme and supplement this with other gifts, who would be engaged via "highly-personalised direct marketing".
The high value donor is someone whom the charity is engaged in making more personal contact with to enable them "to get closer to the cause".
The top rank is the traditional major donor category, where "higher levels of stewardship can be offered to ensure loyalty and ultimate maximum level of donations".
Elischer believes that these HNWI categories can not be stated as a definite rule for each charity, but they do offer charities more control over the cultivation and stewardship process, and can facilitate movement not just up the pyramid but also back down if necessary.
He concludes his thought paper by arguing that an updated view of the donor pyramid is essential because "after all, globally, individuals still represent the largest and most valuable source of voluntary income for our sector."