The Mathematics of Fundraising Part I: Creating a Gift Pyramid

Fundraising is about passion for mission, a bold vision for the future, and the deep, heartfelt desire to make the world a better place, right? We fundraise to ensure that our nonprofits do more than survive – we want them to thrive.

For better or worse, depending on how you feel about math, fundraising success involves a variety of calculations before, during and following each fundraising effort. This three-part series will focus specifically on how numbers and calculations serve as a foundation to an effective fundraising result.

Launching a fundraising campaign of any kind without a financial goal is a little like asking an archery team to shoot arrows into an empty field. You can do it – your efforts will land somewhere – but having a specific target in mind keeps everyone focused and aiming high. You do not, however, want to pull a fundraising goal out of the air. Find the fundraising goal sweet spot, where attainable meets exciting, and you’ll move your organization from surviving to thriving.

In Part I of the series, we’ll look at the basic mathematics of how many gifts it takes to reach a $1 million goal, using fundraising best practices as our guide. Part II will explore the number of prospects it may take to reach, cultivate, and solicit the gifts you need. And in Part III, we will examine calculations that will help you estimate and manage some of the cultivation, solicitation, and public facing aspects of your efforts.

Thriving means setting a goal that looks beyond what you raised last year, striving instead to give your nonprofit the financial means to move forward. It is a delicate balance of vision and reality. You want to set a course that is both ambitious and achievable. Set the bar too high, and you risk exhaustion and feelings of defeat. Set it too low, and you will squander opportunities to close additional gifts, missing the satisfaction that comes with your community fulfilling its fundraising potential. You want your donors and volunteers to be challenged, but you also want the win!

Step 1: Determine what your organization needs.

Whether you are planning an annual giving campaign to support your operating budget, a capital campaign to build or enhance facilities, or even a gala event, your fundraising priorities should flow out of the strategic plan approved by your CEO and Board. Likewise, your strategic priorities should be rooted in financial reality. As a fundraiser, it is crucial to understand, and to be able to explain to donors how philanthropic dollars fit into the overall financial and strategic picture.

Step 2: Determine what it will take to raise that amount.

Let’s say, for the sake of this blog, that you need to raise $1 million to fund a new program. It is possible that someone in your inner circle will suggest what seems like a simple solution – raise 1,000 gifts of $1,000 each, and voila! You have a cool $1 million. The trouble with that approach is that giving doesn’t happen that way. Some people in your circle will not be willing or able to make a $1,000 gift. You don’t want to leave them out, do you? Others will be amenable to giving more than $1,000. Let’s not leave money on the table!

Furthermore, it is unlikely that every prospect will actually make a gift, which means you’ll need more than 1,000 prospects and the time and resources to solicit them – a set of calculations we will consider in Part II of this series. Traditional fundraising best practices hold that giving happens in a pyramid shape, with a few large gifts at the top and smaller and more numerous at each subsequent level leading to the base. (Recently, Giving USA promoted the idea of a giving “trapezoid;” I’ll explain in a minute.)

Step 3: Build your Pyramid.

Conventional fundraising wisdom holds that 80% of a fundraising campaign will be contributed by 20% of donors. The Giving USA “trapezoid” reflects the trend of large gifts comprising an even greater share of total revenue. For this illustration, however, we’ll stay with the 80/20 guideline which, for a $1 million goal, would call for approximately 47 gifts ranging from $200,000 to $1,000. Nine or so of those gifts – representing 20% of your 47 gifts – ranging from $200,000 to $50,000, would add up to $800,000, or 80% of your goal.

Did you happen to notice how it is possible to map out a pyramid view of raising $1 million for fewer than 50 gifts, as opposed to the 1,000 gifts required by the simple division model? Now, your fundraising can encompass donors at multiple points on the gift level spectrum – and your nonprofit can cross over into a more professional and strategic form of fund development.

Giving pyramid calculations like these aren’t meant to be etched in stone, but to serve as a guide for what, at its most basic level, will be required to amass $1 million in contributions. Viewing fundraising goals from this vantage point does, however, raise your game considerably from a conceptual perspective. The chart works whether you are raising $1 million, $5 million, or $25,000. It allows you to build a successful fundraising plan around your top-level donors.

If this goal-setting exercise has you feeling overwhelmed, you are not alone. Fortunately, with fractional team building, you don’t have to go it alone! We have administrative support professionals as well as high-level development and systems experts who are ready to help you plan, launch, and implement your most successful fundraising effort yet. They can help you analyze past fund development efforts, clean and streamline data and systems, and provide hands-on help as needed.

Click Here to find out how our team can support your team. And be sure to stay tuned for Part II, where I will explain how to use math to take a deeper dive into what it takes to raise $1 million.