Correspondence: John Sauvé-Rodd, Datapreneurs 32 Ennismore Avenue London W4 1SF, UK Tel: +44 020 8 742 1131; E-mail: johnrodd@datapreneurs.net

¹is a British fundraiser and strategy consultant focused on the not-for-profit business arena. He runs Datapreneurs, a UK-based consultancy that aims to transform 'dumb' or passive data into intelligent, actionable information, using a combination of logical thought and creative thinking. He has researched the area of donor profitability by drawing on his 25 years in the not-for-profit sector, plus his good fortune to have seen charity operations and analysed large amounts of data in Canada, the USA, Europe and Australia.

Received 3 February 2008.

Abstract

General profitability rule found: using further donor profit case studies, there is a repeating and broadly similar 'profit curve' across widely different charities and countries. It appears that there is a 'natural law' of profit distribution at work. This means that donor profit ability can be predicted and forecast with some accuracy.Taking action: four approaches are suggested for the deployment of donor-level profit in practice: (1) large-scale cost reduction on loss-making donors; (2) cost reallocation to high-profit donors; (3) conversion, recycling and internal trade for loss-making donors and (4) much better accounting skills for costs in fundraising departments. Resistance to change: however logical and 'scientific' the arguments for donor-level profit-based approaches, charities cling to old ways, despite their decreasing effectiveness, and are risk averse. Proxy strategies: very few charities undertake profit-based approaches as suggested, but there is evidence of a proxy system: middle donors (also called intermediate or high-value donors). These, however, are not part of a true or thorough profit-based strategy and they serve to divert attention and muddy the water. No overhead trap: critics of the donor profitability approach have warned that an 'overhead trap' exists for anyone slicing out large chunks of cost from the low end of a donor programme. Tests in this research prove that the overhead trap does not exist and is an illusion. Future vision: at the heart of a profit-based strategy, we recommend starting with these words 'All donors are important to us, but we realise that some donors are far more important, financially, than the general throng...'.