Evaluate What you Spend and Why You Spend It

Researchers and industry leaders continue to point toward a perplexing problem in fundraising: A top group of donors is driving the vast majority of dollars given. We see this at a macro-level in the United States, as well as at individual organizations we serve. Twenty years ago, 20% of donors were delivering 80% of dollars. Today, about 5% of donors deliver 97% of overall giving, as the following graphic shows.

Some researchers suggest an even wider ratio, depending on the institution (2% of donors delivering 98% of overall gifts). As leaders, we must pay attention to this trend and attempt to buck it by investing in the full pipeline. We must also, however, make sure that we are investing in the top 5% of our donors.

When Magnet works with customers, one of our first questions is: What percent of your budget do you allocate toward Engagement, Annual Giving, Leadership Annual Giving, Major Giving, and Principal Giving? We find that very few institutions have intentional investments in the top 5%.

The cost of Magnet is a fraction of what most institutions spend on tools that engage the masses. Innovation continues to come to our industry, and we need it. The role of Magnet is not to solve all problems or be a solution for everything; however, we find it to be a necessary component of better engaging your most important constituents.