Wednesday, January 13, 2016

Rolling Back the 80/20 Rule

Talk is in the air that the 80/20 rule should truly become or replace the 90/10 rule. I'm not so sure.

I had always read the Pareto Principle as something that was lamentable – you have all these people working, and you get most of your productivity out of a small set of people. If that is how you want to read it, then in a way the greater concentration is even more lamentable.

In terms of fundraising, it might actually be an advantage. One way is to be looking at the potential donors as being a pyramid, with a broad base and a small amount of people who are at the top and can potentially give you a lot of money. In terms of trying to be targeted, it might be better if you can just target those ten percent of people that you know will give you the 90% of your donated funds.

But here’s the catch: those people have to be both identifiable and consistent. One worry is that your organization’s 10% might shift from year to year. Another related issue is that people die without planning ahead for their death and including your agency in the will.

What makes the bottom majority important is that this is where your future twenty or ten percent is coming from. People move up in the world and get better jobs and access to more resources (and connections to people who also have resources).

To just rely on the minority that is giving the majority now is short-sighted. You need to be constantly developing your development pipeline.