I asked a prospective nonprofit client that question. She replied "what's that?"
In its simplest traditional business sense a sales funnel is a parameter for identifying the customer or target market that is most likely to be interested in what you are selling.
The value of using it is that it produces more sales for less initial investment in marketing.
Here's an example of what happens when you waste time and money on a campaign that doesn't adequately define a market.
Bill, a very well-to-do businessman, was approached by a nonprofit as a part of their major donor development after he was mentioned in an article as being interested in helping to provide food for needy people in his town.
The nonprofit's mission was to send food to starving people in Africa.
He responded politely to the letter by indicating that he had no interest whatsoever in feeding people in Africa while children, the disabled and the elderly in the United States are going hungry every night.
That should have been the end of it. They tried, he refused, end of story.
Instead he began to get letters and even phone calls asking for his support. After a year or so of that, he hopped on his jet, went to their headquarters and deposited a stack of mail and phone messages on the receptionists desk, with a not-so-polite note to take him off their mailing and call lists or face the consequences.
The problem was that the nonprofit qualified him simply because he was, well, rich and had an interest in feeding the needy.
All that did was to cost them a lot of money and time and made an enemy out of him.
The sales funnel, i.e. their parameters for qualifying major donors for further development was both overly broad and poorly maintained.
It doesn't matter if you are selling cars or a mission proposal…it behooves you to target your efforts to people who are likely to buy what you are selling.
In general, if you are sending out general appeals, monitoring your response ratio for both quality AND quantity and distilling your mailing list or media campaigns down to the essentials will serve you far better than just buying a mailing list. It also helps if your staff takes the time to really read any personal responses they get.
Cross referencing the donations against your contact or mailing lists can save you a lot of money and time, not to mention improving your response ratio from the customary 1 to 3% up to 20% or more.