In 1906, Italian economist Vilfredo Pareto devised a mathematical formula to articulate the unequal distribution of wealth in his country. Noting that twenty percent of the people owned eighty percent of the wealth, the ‘Pareto Principle’ spread to become broadly recognized as ‘the eighty twenty rule.’
Over time, the Principle has evolved into a diversely applicable business model: “80% of your sales come from 20% of your clients.”
Despite the many societal changes that tilt percentages towards 99%, Pareto’s Principle resonates today as an important reminder for nonprofits: bridging the 80/20 ratio is essential for maximizing financial results and impacting strategic leadership direction.
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