When asked to describe annual giving, many are tempted to talk about its activities: appealing for gifts, processing payments, sending acknowledgements and stewarding the donors. Others describe annual giving through its common metrics. They’ll tell you how much money it generates or how many donors it helps to secure. And then there are those who talk about annual giving mechanisms—the solicitation channels or the constituency-based programs employed by annual giving departments to cultivate and solicit donors.

While all of these things are very important parts of a program’s anatomy, they don’t really get to the heart of annual giving and its role within the larger context of an advancement program. To explain this, a “pyramid” diagram is sometimes used and includes different levels to indicate various types of giving that a donor can engage in during their lifetime. As you can see above, annual giving can be a key initial step in the process of converting occasional donors into special donors, then major donors, and ultimately principle donors over time. For advancement programs, this is a model for effective prospect management and cultivation over a lifetime.

The problem with using a “pyramid” model, however, is that it places annual giving near the bottom of the process, suggesting that it may not be as important. After all, it’s the small set of big donors that “matter” according to the 80/20 rule. But this visual misses the mark. A more appropriate model would be to invert the pyramid so that annual giving is near the top of a “funnel.” Instead of viewing annual giving as a means of moving donors “up” into higher forms of giving, it can help ensure that all of the other aspects of a prospect management strategy fall into place. Remove or hamper the top of the funnel, and fewer gifts will get through to the narrow spout.

Want to learn more? CLICK HERE for AGN’s Webinar on Transitioning Annual Donors to Major Donors.