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Analyzing Fundraising Strategies through the 80/20 Principle

Knowing what produces our greatest results can make a real difference. When I speak to nonprofit and education professionals involved with fundraising the discussion inevitably turns to the ROI of funding strategies currently in place and ways to improve. I think many nonprofits have explored various types of funding sources and to some extent have a diversified fund development plan in place. Where many fundraisers go wrong is in identifying which of these strategies has become too time consuming and less productive to their organization. To help dissect this problem I utilized the principles of an economist born over 150 years ago- enter Mr. Vilfredo Pareto. In the business world most are familiar with the term the “80/20 Principle” or Pareto’s Law. Quick history lesson; Pareto was a controversial economist (who isn’t these days) that lived from 1848 to 1923 and he wrote a book where he included a law about income distribution. The mathematical formula he used to demonstrate a grossly uneven but predictable distribution of wealth in society where- 80% of the wealth and income was produced and possessed by 20% of the population. Pareto’s Law can be summarized as follows: 80% of the outputs results from 20% of the inputs. Now let’s make this relevant to the fundraising world: •80% of the funding comes from 20% percent of our donors •80% of our total volunteer hours comes from 20% of our volunteers •80% of our corporate sponsorships come from 20% of our industry/business relationships •80% of our results comes from 20% of our time and effort The list can be