The Donor Pyramid: Valuable Tool or Outdated Concept?

In the ever-evolving landscape of philanthropy, the traditional donor pyramid model has come under scrutiny in recent years. Critics argue that it has significant flaws and may not be the best tool for modern fundraising. They contend that it emphasizes monetary gifts, neglects non-monetary contributions, and fails to represent the complex and diverse nature of donor behavior.

We recently put this question to the AHP membership: is the donor pyramid obsolete? Respondents to our post in the AHP Huddle membership community agreed that, despite its flaws, the pyramid is still a useful tool. Here are both sides of the argument so you can draw your own conclusion.

Point: The Donor Pyramid Is Outdated and Flawed

Overemphasis on Monetary Gifts

Critics argue that the traditional donor pyramid places too much emphasis on financial contributions. It may lead to a transactional approach to fundraising and can potentially alienate a significant portion of the donor base.

Neglecting Non-Monetary Contributions

Critics suggest that the donor pyramid fails to acknowledge the full spectrum of donor engagement beyond financial gifts. Donors contribute in various ways, such as volunteering and advocacy, which are not adequately represented in the pyramid.

Nonlinear Donor Behavior

Critics assert that the pyramid assumes a linear path to donor engagement, which does not align with real-life donor behavior. Donors often follow nonlinear paths, engaging with organizations in multiple ways simultaneously.

Risk of Alienating Small Gift Donors

By prioritizing major donors, charities may alienate smaller gift donors, leading to a decline in giving from the broader public.

Counterpoint: The Donor Pyramid Remains a Valuable Fundraising Tool

The Pyramid's Descriptive Role

Proponents of the donor pyramid argue that it serves as a descriptive model for providing essential metrics.

"We tell our clients that the gift pyramid (or gift table, or gift chart) is descriptive,” says Susan Brekelmans, MBA, senior consultant at Benefactor Group. “It's a model for arriving at a fundraising goal and helps provide the metrics needed to plan the work and measure progress."

The pyramid, when used alongside other tools like gift charts and dashboards, also helps fundraisers understand the distribution of gifts and behaviors.

"Understanding both gift distribution and behavior is important, says Bill Littlejohn, senior vice president and chief executive officer at Sharp HealthCare Foundation. “And presenting it in a pyramid or chart can certainly help with that dynamic."

Fundraising Requires Focus

Supporters of the pyramid highlight its ability to help organizations make the most of limited resources.

Tim Dougherty, chief advancement officer at Silver Hill Hospital, emphasizes the importance of focusing on major donors. "In mature, sophisticated fundraising programs, 95% of the money comes from 5% of the donors.  If your job is raising money, this is where you should be focused.  I am not saying to ignore small donors, but I am saying to focus time, attention and energy on those donors who can help you organization the most.”

And Continued Attention to the Base

The donor pyramid draws attention to major donors, but its shape also reminds us of the importance of maintaining a strong base. As annual fundraisers say, “the wider the base, the higher you can build the pyramid.”

"What the pyramid really is meant to show is that an organization needs to have enough donor prospects and annual fund donors to enable them to cultivate a sufficient number of major and planned giving donors to meet fundraising goals," says Tim Logan, ACFRE, FAHP, FCEP, principal at The TimLogan Group. “In current fundraising with the ever-increasing campaign focus, the danger is that an organization will attempt to identify major donors without developing a broad base of supporters. Attempting to find major donors instead of developing them accelerates the probability that the well will run dry.”

An Adaptable Framework

The donor pyramid remains relevant when fundraisers understand its role as one of many tools in their toolbox, rather than as a rigid hierarchy.

Jacob C. Heuser, vice president, system philanthropy at UnityPoint Health emphasizes the need to adapt its methodology. "There is a science to how our world works, and we must work to understand that science,” he says. “The donor pyramid is a part of this science, and we must understand how and when to adapt it to our circumstances."

Conclusion: A Balanced Approach Is Key

Fundraising professionals must recognize that there is no one-size-fits-all approach to donor engagement. The modern philanthropic landscape is multifaceted, with donors contributing in diverse ways. Embracing a donor-centric mindset that values all donors and understanding the role of the donor pyramid as a descriptive tool can help organizations navigate the complexities of fundraising effectively.

Ultimately, the effectiveness of the donor pyramid depends on how it is implemented and integrated into a broader fundraising strategy. When used thoughtfully and in conjunction with other tools, it can continue to play a valuable role in helping organizations achieve their fundraising goals while fostering a more inclusive and diversified donor base.