Growing Philanthropy Part 3: Identifying New Audiences, Channels, and Forms of Giving with Strong Potential for Growth

Encourage the adoption of monthly giving. Monthly giving has so many benefits for charities and donors that I am always amazed at how few nonprofits promote this option. Per Sergeant and Shang, the lifetime value of supporters giving in this way is estimated to be 600 to 800 percent higher than "non-sustainer" donors. They note that younger donors prefer monthly giving because it is considered more convenient and environmentally friendly, requiring less renewal and reminder mailings. Donor retention is far higher for sustaining donors as well. It's a no brainer.

Improve the sector's engagement with young people. Promote giving at an early age and help develop a "giving habit". Utilize new digital media such as digital applications, virtual environments, gaming platforms, and social networking. Find ways to make it easy, affordable, and enticing to include them in the philanthropic process.

Encourage and promote best practices in social media. Traditional giving channels still significantly outperform online giving, and social media accounts for only just over 10 percent of that small portion. Nonetheless, social media has a huge potential to greatly increase a supporter's engagement, and engagement is the key to healthy giving. Social media also has the potential to build donor commitment, trust and loyalty. But it must be done well. This is a great opportunity for an astute nonprofit since so much social media based fundraising is done so poorly.

Encourage asset-based giving. 93 percent of American wealth is made up of stocks and non-cash assets such as real estate, business interests, and personal property. Charities are "missing the boat" if they are solely focused on chasing the 7 percent cash available. Provide easy means for donors to contribute asset-based resources.

Improve the quality of bequest fundraising. Although 80 percent of Americans will support the nonprofit sector during their lifetimes, only 8 percent will provide for charities in their estates. Sergeant and Shang believe part of the challenge is that charitable bequest solicitation has been relegated solely to the planned giving departments at nonprofits. They suggest that soliciting bequests should receive wider and broader communication and informational materials be accessible and employed by all staff.

Leveraging companies to promote philanthropy. Since many individuals spend most of their waking hours at work, provide opportunities in the workplace to educate employees about charity missions and outcomes. It must be more than simply a card table and brochures set up in a lobby. One nonprofit had launched a campaign to address obesity and set up a fajita bar at a local business to teach workers how to prepare healthy fare. They effectively hammered home their brand, their goals, and addressed latent objections such as proper dieting is no fun.

Although Sergeant and Shang's report included other recommendations, they concluded with this insightful statement, "Instead of viewing donors as a source of revenue and maximizing the value of that relationship, they (nonprofits) need to focus more on the individual and the articulation of that person's philanthropy. Only when we stop asking for money and instead ask for individuals to reflect on their own philanthropic identity will the needle truly be moved on giving."

Let's move the needle.

I Resolve to...

A year ago January, the Advancement Best Practices LinkedIn Group asked their members to list their fundraising resolutions or goals for 2012. Here is what they answered:

42% Build a philanthropic culture
20% Link metrics to ROI
17% Engage trustees/ CEO
16% Identify new potential donors
5% Not one of the above

I think it is interesting that the top goal was to build a philanthropic culture. You would think that was a given for anyone working for a nonprofit. The fact that it was yet to be built, (not even simply improved), says something about the state of our business. If a nonprofit or charity doesn't have philanthropy at the core of what they do, how are they surviving? How are they connecting with and motivating their donors? By coercion? Yikes!

According to Guidestar, up to 60,000 nonprofits fail each year and in 2010 8% claimed they were in imminent danger of going under. Why?

I think the lack of a philanthropic culture is part of the problem. But more importantly, there is a fundamental misunderstanding as to how and why donors give. Here is what nonprofit leadership must understand:

• The heart is more important than the head. Executive Directors and Boards are often embarrassed to present the emotional side of their story. They want to "convince" the donor that they are a good "investment". Leave the investment up to the bank. Your charity or nonprofit most likely grew our of a compelling need. Don't forget that. 
• You must ask to receive. The classic "If we build it they will come" is hooey. If you don't ask, someone else will -- and they will get the donation.
• Everyone in your organization must be comfortable with the fundraising process. I have heard some fundraisers say, "Everyone in our organization is a fundraiser". I don't buy that. Fundraising is a skill forged from experience and an art born of personality. Not everyone is good at it nor do they have to be. If this wasn't so, why would we hire fundraisers? But the entire staff should understand how it works, if only to support the efforts of the fundraising team. The one thing that can kill an organization is an employee who is constantly denigrating the fundraising process.
• Take advantage of every avenue to raise funds. There are 1.5 million nonprofits in the US. That's a lot of competition. Make it easy for the donor to give to you through the channels they prefer. You must have an annual fund program, solicit major gifts, make use of social media and e-philanthropy, create profitable events, accept planned gifts, and keep abreast of whatever is working for other organizations.
• Test, test, test. Be fiscally prudent but don't be afraid to take risks. Risk can often be reduced by testing. I am constantly astounded to find experienced nonprofits that fail to test fundraising approaches. 

There are certainly other elements of successful fundraising. As the survey identifies, link your metrics to return on investment. (This is especially true of events. I am sure many organizations would be shocked if they included direct and all indirect costs in their event profitability assessment.) Engaging trustees and all leadership in the mission as well as the fundraising process is helpful. And yes, finding new donors is important. But, I would have ranked "steward current donors exceptionally well" ahead of prospecting and that isn't even listed! Your most valuable donors are the ones who have already provided you with a gift.

What are your resolutions for 2013? I will list mine in my next post.

Post Direct Mail Fundraising

Direct mail is still the king of fundraising. Despite the incessant drumbeat of speculation that direct mail  is on the wane, dying, or already dead, it is still responsible for 75% of all fundraising revenue for a typical nonprofit (source: Blackbaud 2011 donorCentrics Benchmarking Report). 

By the way, bad direct mail should be dead. With a stake in its heart!

Personally, I believe that the most successful fundraising strategies include a multifaceted approach. Coordinated campaigns that include complimentary direct mail, online, social media, telefundraising and personal solicitations are proving to be extremely effective.

But what would post-direct mail fundraising look like? Are alternatives to direct mail dependent campaigns really working for certain charities?

Is post-direct mail fundraising already here and does it looks like Charity:Water?

Tom Belford of the Agitator blog recently asked regarding Charity:Water's September campaign Is this any way to launch your annual appeal? He answered with a definitive "You bet it is!" And Beth Kanter recently posted about Charity:Water's brilliant use of Instagram. 

The following video hints at why Charity:Water is so successful, why it connects so strongly with donors on an emotional level, and how it utilizes electronic media so well.

September Campaign 2012 Trailer: Rwanda from charity: water on Vimeo.

The video tells a great story and illustrates how Charity:Water is a key part of the story. But it has the astuteness of understanding that Charity:Water, the nonprofit, is not the story. It is all about the people of Rwanda. It is their story. The story is told clearly and simply. It promises that if you - the donor - partner with Charity:Water you can help ensure the story ends well.

Paull Young, Charity:Water's Director of Digital Engagement, recently summed up their approach this way:

• ask supporters to give up their birthdays, offering a great experience in return
• focus on sharing great content, not asking for money
• make the campaigner the hero, not the organization
• strive to have a ten year relationship with constituents
• rely 100% on social media and online platforms with no direct mail

This approach seems to be working extremely well for them. Charity:Water raised over $8.6 million in 2009 and over $16 million in 2010. All without utilizing direct mail.

Let's take a look at how they do it online. Click on this link for their September Campaign 2012. 

Charity:Water leverages the web beautifully. An arresting first frame of an embedded video takes up nearly half of the page. Towards the top of the page is a progress bar showing how much has been raised so far and what the ultimate goal is. Under this first video titled "The Trailer" you see there will be four other videos that can be viewed on August 28, September 4th, 7th and 11th. These are tempting teases encouraging the visitor to return to the site. Naming the lead video The Trailer makes it seems like a movie premier and I think you will agree the clip has the impact and production values of a Hollywood blockbuster.

As you scroll down you see that you can donate now or start your own campaign. You also see that they promise to "prove" they have completed their goals with photos of each completed well site. They will even supply GPS coordinates for each project just in case you want to check them out yourself.

Lastly, as you continue to scroll down on the landing page you see project cost information, links to individuals who have started campaigns, profiles of the people they are helping, more outcome data, and information on what different levels of contributions will accomplish. Scattered throughout the page are multiple links providing ways to give, start a campaign, or receive additional information and project updates.

The entire site is beautifully designed. The data is simple and compelling. The visuals are eye-catching.

You'd be hard pressed to find anyone that does this better than Charity:Water.

Is Charity:Water unique? Could this same "no direct mail" approach work for all charities? I am not sure it could. Many nonprofits have a more complex and nuanced story to tell that may require more traditional communication media. Additionally, many prospects may be less comfortable with online giving. Perhaps more telling, many charities may not have the superb "new media" talent to pull something like this off.

What do you think? Is this the future of fundraising? Or, is this simply a superbly executed exception?

Volunteers Give 10 Times More Money

Volunteers. How do you feel about them?


Do you concur with Erma Bombeck who said, "Volunteers are the only human beings on the face of the earth who reflect this nation's compassion, unselfish caring, patience, and just plain love for one another"?


Or do they better fit your definition of "can't live with 'em, can't live without 'em"? 


Maybe volunteers provide far more value than the good intentions and unpaid servitude we normally ascribe to them.

According to a survey conducted by Fidelity Charitable Gift Fund, those who have volunteered in the last 12 months donate ten times more money to charities than non-volunteers. Many survey respondents also claimed that volunteering is likely to increase their donations and cause them to donate to the organizations where they volunteer.


Surprising? Maybe not. I think we all presume that a more "engaged" donor is a more valuable and committed donor. But what are we doing to foster and encourage this beneficial relationship? Are we unwittingly turning some potential volunteers off? The survey revealed these reasons for not volunteering:

• No time to volunteer - 46%
• Pressure to give more time than you want to - 32%
• You are just not interested - 32%
• You can't find the right non profit to match your cause or needs - 30%
• You prefer to just give money - 19%
• You had a bad experience volunteering in the past - 15%

Have we crafted volunteer programs that respect our volunteer's time constraints? 

Have we provided a variety of opportunities that would appeal to different interests?

Have we taken managing volunteers seriously enough to ensure the experience is rewarding and satisfying for them?

Is it worth all this effort? (Would you agree that the ten times more giving figure settles that question?)

Charities have some work to do. 6 in 10 survey respondents believe that nonprofits have become too much of a big business. Roughly half agree that charities have disorganized management. 

Nonprofits have to do better. Volunteering is clearly too valuable to approach arbitrarily. 

As Ms. Bombeck so eloquently stated, volunteers are amazing people. 66% of survey respondents agreed that "true philanthropy" includes the giving of time and money. Yet 84% think volunteering should not include some sort of reward or incentive. Nearly 70% of those surveyed support the causes they care about simply because they think it is just the right thing to do!

Let's honor these altruistic individuals enough to create well planned and effective volunteer programs. It will be a more rewarding experience for everyone.

The Two Faces of Fundraising Events: Part 2 - A Hydra Head?

In The Two Faces of Fundraising Events: Part 1, I noted that fundraising events are very popular with many nonprofits. The big charities often make a boatload of money on their "walks" and other "thons". Most staff and volunteers "get" events. They know the purpose is to raise money for the cause. Attendees understand this too and don't object to paying their share. They also feel they receive something tangible in return - a fun time, a chance to rub shoulders with community leaders and maybe even "the famous". Staff and leadership like events because they are often well covered by the media and goodness, they don't have to make a complicated "pitch and ask".

But is it the most effective fundraising vehicle?

Let's look at the potential investment numbers. Here's where the hydra-headed aspect of events raises its ugly...well, you know.

Let's suppose a nonprofit puts on an annual black-tie gala with music, upper tier catering, and an auction. Planning starts a year in advance. At least one staff member spends half of his/her time working on the event. Board members are involved in touching their friends and contacts. The President and Director of Development have roles. The event goes off well and grosses $100,000. Super, huh? Maybe. (Thanks to Nell Edgington, President of Social Velocity for the following cost presumptions. They ran a superb series of blog articles on the cost of fundraising which can be found here .)

Let's suppose some direct expenses:

Venue, music, food, decorations, invitations: $50,000

Often, this is how many nonprofits view their net profit from the event - $100,000 in gross revenue minus $50,000 direct expenses = $50,000 net profit.

But we need to consider the total costs of running this gala and how that compares to other fundraising opportunities. It is imperative to look at the indirect expenses such as:

Cost of staff members to prepare for and manage the event (hours worked by staff members times salary + benefits). 

Staff Event Coordinator's time: $15,000

President's time: $4,000

Development Director's time: $5,000

And let's also figure Board Member time utilizing the standard value of volunteer hours ($20.25): $3,000

Total indirect costs are $27,000

Add direct costs of $50,000

Total indirect and direct costs = $77,000

Our new net revenue is $100,000 - $77,000 = $23,000

The nonprofit made $23,000. Still seems like a reasonable number doesn't it? Especially, since so many new people attended the gala, and the mayor was there -- and it was mentioned on the 6 o'clock news.

But let's look at the cost to raise each of those 23,000 dollars. 

Cost to raise $1.00 = Direct + Indirect costs/ Net Revenue

$77,000/$23,000 = $3.35 cost to raise $1.00

(Also, how many of those new people are really connected to your cause? Is the mayor a prospect? Will anyone remember the 6 o'clock news?)

Now let's suppose you have a salaried staff person working on major gifts prospects. This person's salary is $65,000 per year plus benefits. Indirect costs might include leadership or Board members attending donor visits for a total of $100,000. Their activities result in $500,000 worth of donations in a year. The net revenue figures work out like this:

$500,000 - $100,000 = $400,000

... and the cost per dollar raised ($100,000/$400,000) would be $0.25.

Not only that, but hopefully you have been soliciting and stewarding warm prospects, not a random group of event attendees who may or may not be smitten by your mission.

Doing the math is illuminating.

Does that mean events are a waste of time? No. But it does depend on how you view the investment. How much staff time do you want devoted to this sort of return? Can it be spent more effectively elsewhere? Maybe you can afford to have staff devoted to events and major gift prospecting. Or, maybe you look at the value of events being more resident in their friendraising, cultivation, and stewardship value?

Do the math -- and see what makes sense for you.

Generosity Day: A Valentine Reboot

Last year, a couple of days before Valentine's Day, Sasha Dichter, Chief Innovation Officer for Acumen Fund launched an effort to completely change the nature the 14th of February. He and his friend Katya Andresen, of Network for Good, came up with the idea of turning Valentine's Day into Generosity Day. As Dichter stated, "We wanted to reconnect (the day) to the core ideas of love and human connection."

Sasha says it started as an idea with him when he decided to spend the month of December saying "yes" to everyone who asked him for money -- a homeless person, a street musician, a nonprofit. Soon he posted on his blog that "I want all my readers to hear first. This Monday (Valentine's Day in 2011), is going to be rebooted as Generosity Day: one day of sharing love with everyone, of being generous to everyone, to see how it feels and to practice saying "Yes." Let's make the day about love, action and human connection -- because we can do better than smarmy greeting cards, overpriced roses, and stressed-out couples trying to create romantic meals on the fly."

The results were heartening. "We reached a few million people last year through blogs, Facebook, Twitter. Our hunch was spot on: People are hungering for something more in their lives -- more connection and more meaning", said Dichter.

What are you doing for Generosity Day? Have you thanked your donors, staff, friends?  Have you thought about the transformative nature of gratitude? Are you so focused on need -- your need,  that you have overlooked the power of reciprocity? 

I have included two videos below. One describes the concept behind Generosity Day, the other was created by the Jubilee Project and poses the question "What is love?" to a variety of people met on the street. (The Jubilee Project was born out of the Haiti earthquake in 2010 and creates videos for good causes.)

Give it  a try. Let's reclaim Valentine's Day. 

Old Charity. New Technology.

According to the Associated Press, the Salvation Army set a record for donations generated by their ubiquitous "Red Kettle" fundraising efforts this past holiday season. Bell ringers attracted $147.6-million dollars eclipsing the $142-million dollar record set in 2010. More than $41-million dollars were collected outside Wal-Mart and Sam's Club stores alone!

The Salvation Army has been collecting donations with their red kettles since 1891, but don't think they are stuck in the past. Recently, they have launched two "virtual kettle" programs. Now, individuals, teams, or corporations can host their own Online Red Kettles. Using Salvation Army web-tools, supporters can build a personal Online Red Kettle page, upload an address book, and send email invitations that encourage friends and family to support the cause.

Additionally, the charity introduced an option to make credit card donations on-the-spot using mobile payment technology through a Salvation Army representative's smartphone. The Salvation Army is the biggest nonprofit to adopt mobile payment technology offered by Square Inc. 

There are a couple of interesting lessons that can be learned from these initiatives:

• A 147 year old organization can learn "new tricks", particularly if they focus on the needs of the donor.  Major George Hood, the charity's spokesman stated, “A lot of people just don’t carry cash any more. We’re basically trying to make sure we’re keeping up with our donors and embrace the new technologies they’re embracing.”  Three cheers to the Major and his associates!

• A lot of small donations sure add up! Don't underestimate the impact of volume. Considering that the average kettle gift is less than $2.00, amassing $147.6 -million is an achievement that might understandably be considered totally unrealistic if a charity hadn't just gone out and done it. 

I look forward to seeing what the Salvation Army does next.

Where and Why People Donate Their Time and Money

YourCause, an online resource designed to provide powerful online tools to facilitate fundraising and volunteering, recently posted a great infographic focused on where and why people donated their time and money in 2010/2011. Note that the top motivators for giving included a personal or emotional connection to the charity or being asked by someone they know well. Religious and educational causes accounted for top categories to receive volunteer assistance.  Not surprising given the current recession, economic development was the top issue donors wanted addressed by charities. Also, note that the ways in which donors choose to give appears to be becoming more diverse with donors stating that they have made much greater use of giving channels beyond sending a check in the mail.  

Let’s see what 2012 brings!

(Thanks to Katya Andresen for mentioning this on her blog.)

Online Giving and Older Donors

A new study by fund-raising consulting firm Dunham + Company out of Plano Texas seems to suggest that donors that are 60 or older are beginning to defy the long-held presumption that they aren’t comfortable giving online.  They found that of the 524 donors who participated in the survey and had made at least one gift of $25 in the past year, 51% of those in the 60 plus age group made their contributions online. Additionally, once these donors gave online they tended to give more frequently than younger donors.
(Link to Dunham + Company Study Article)

Wow!  Or, to quote the study “We believe this study blows some holes in the conventional thinking about older donors and online giving.”

Or does it? Is it problematic that the survey was conducted online? Does this skew the results? I believe to a great degree it must.

Should we temper our enthusiasm for results that are generated by a study that requires that the participant have a level of comfort with the online process to even take the survey?

You betcha!

Nevertheless, there is some validity in the study statement, “This just reinforces the need to apply best practices around integrated, multi-channel communication strategies and give donors options on how they want to fulfill their gift.”

This should apply to all demographics. Make sure the online giving process is clear and simple. And perhaps most importantly, reassure the donor of any age that the transaction is secure.

Giving online, even though it receives a tremendous amount of attention, still pales next to more traditional offline giving. The more we improve the online process, the more donors of all ages will have the confidence to give electronically.

What do you think?