Certified Nonprofit Professional Practice Exam

What principle explains the observation that a significant portion of donations often comes from a small number of donors?

1. Pareto's Principle

2. Maslow’s Hierarchy of Needs

3. SWOT Analysis

4. Diffusion of Innovations

The correct answer is: Pareto's Principle

The principle that addresses the observation that a significant portion of donations typically comes from a small number of donors is Pareto's Principle. This principle, often referred to as the 80/20 rule, suggests that in many situations, roughly 80% of effects come from 20% of the causes. In the context of fundraising, this means that a small percentage of major donors often contributes the majority of financial support for an organization. By applying Pareto's Principle, nonprofit organizations can effectively strategize their fundraising efforts and focus on nurturing relationships with high-capacity donors, understanding the significance of this group's contributions to their overall funding. This knowledge can lead to more targeted engagement efforts, optimizing resources towards securing and retaining these key donors, ultimately benefiting the organization's sustainability and impact. The other options represent different concepts unrelated to the fundraising dynamics described. Maslow's Hierarchy of Needs addresses human motivation and psychological needs, while SWOT Analysis pertains to strategic planning by identifying strengths, weaknesses, opportunities, and threats. Diffusion of Innovations focuses on how new ideas and technologies spread through populations and does not relate to donor behavior in the context of charity.