In 1906 an Italian economist named Vilfred Pareto discovered that 80% of the land in Italy was owned by 20% of the people. He further expanded the concept by observing that 20% of the pea pods in his garden contained 80% of the peas.
The concept quickly caught on and businesses everywhere soon came to realize that 80% of their sales revenues came from 20% of their clients. This later became known as “the 80/20 rule.”
The Pareto Principle works for nonprofits too! 20% of your donors generally account for 80% of your donations (and sometimes it’s more like 10% account for 90% of your donations)
Is your organization spending the bulk of its time and money focused on finding new major donors, retaining them, and inspiring planned gifts? What are you doing to move mid-level donors up?
Here’s a quick and easy worksheet to help you see if your nonprofit marketing budget is appropriated properly with the 80/20 rule:
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