Are You Using The Pyramid of Giving?

By Laurence A. Pagnoni, MPA

On occasion, it’s important to return to the fundamentals of fundraising. The Pyramid of Giving is a key fundamental because it illustrates a theoretical overview of development and reminds us of the inextricable relationship between deepening donor engagement and raising more revenue. (See picture below.)

But times have changed. Some fundraising experts say the Pyramid is no longer relevant, while others claim it can be adapted. I fall in the latter camp. What about you?

There’s no doubt that the Pyramid is linear. It documents the steps through which a donor moves as their commitment to increases.

In a sophisticated development department, the fundraiser’s goal is to qualify current donors at each stage and, wherever appropriate, encourage the donor’s upward movement in the Pyramid through increased giving.

Increased giving doesn’t only mean raising the amount of the gift but also includes making gifts monthly, multi-year pledges, and legacy gifts, to name a few moves.

Highlights

Looking over the Pyramid below, you see four types of fundraising:

  1. Annual Giving is the primary fundraising method used to gain support, upgrade giving levels, provide operating support for day-to-day operations, and support on-going programs.
  2. Capital Giving is an intensive, organized development effort to secure philanthropic gifts for specific capital needs or projects, executed within a specific time period, usually over one or more years.
  3. Planned Giving is the integration of sound personal, financial, and estate planning with the individual donor’s plans for lifetime or testamentary giving.
  4. Transformational Giving is a type of giving that is historical to your nonprofit. Here are a few examples: a building is named for a major donor, an endowment is created or expanded, an annual gift is pledged for multiple years. Sadly, most nonprofits do not even offer their donors transformational giving options. 

What’s the Point?

A donor is not someone who gives once but who gives repeatedly and at increased levels.

The point of using the Pyramid is to guide your thinking about how to engage the donor toward increased investment. It’s a fact that as we age, we tend to have more resources to share. That means that following your donor on their life trajectory is wise.

When a trained fundraiser uses the Pyramid, we transfer skills to your board, administration, and development staff. In the Pyramid, you see the path to implement an integrated development solution leading to more revenue.  Having sufficient revenue ensures the fulfillment of your institution’s mission. Remember, development is a process, not an event!

Old Fashion?

Some fundraisers find the Pyramid old fashion and show a preference for a model similar to an unsprung spring, a series of cyclical loops where we circle back to the donor for feedback.

There is merit to that new thinking, and I like those models, but they do not negate the Pyramid. The two approaches should coexist.

My colleague Andrea Kihstedt supports this integrated view

You see, if you use the Pyramid to guide your thinking, you will likely have more major gifts, planned gifts, and legacy gifts designated in the donor’s estate plan. This is in contrast to the fact that only 9% of donors make a legacy plan. (I would like to see that percentage rise to at least 50%!) The percentage is so low because we are not using the Pyramid!

You will want to know where you’re headed with your donors, assuming they are along for the ride with your nonprofit. The Pyramid helps you see that.

Andrea says it this way:  “In fundraising, while all donors are important, not all donors are equal….social media has neither toppled nor crumbled the donor pyramid! The donor pyramid is alive and well in capital campaign fundraising where it got its start.  And if used properly, it continues to have important applications in all fundraising campaigns. When organizations use the donor pyramid to focus their attention on raising large gifts, that’s just what happens — they raise large gifts.”

To view our full PDF on the Pyramid of Giving, click here.

We welcome your comments about this post on the LAPA blog.

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