Jaclyn Rundle, Ph.D. Central College Economics, Accounting & Management Dept. Pella, Iowa [email protected]
1. Traditional fundraising methods seem to be losing steam.
In the past, telemarketing approaches (e.g., phone-a-thons) were an important source of small contributions Now nonprofits make more fundraising calls but bring in fewer dollars Why? ◦ Donors drop landlines ◦ Cell phone numbers are hard to access ◦ People screen calls
For instance, as walk/run fundraisers like the Komen Walks proliferate, they bring new problems: ◦ Each new event increases competition for participants and donations ◦ High potential for donor overload and brand confusion ◦ Result: Lower revenues for each nonprofit Worth noting: Komen Walks in Maine, Arizona and elsewhere have been canceled due to significant attendance declines
2. The fundraising environment is shifting dramatically. 2018 Giving USA Report Statistics: ◦ Overall charitable giving has increased to record levels over the last four years; ◦ But, compared to the past, a smaller percentage of U.S. households now donates. ◦ Now, 20% of households give 80% of all donations.
Generational demographics: Gen X is small compared to Boomers and Millennials, resulting in fewer Gen X households in prime giving age. Religious participation, which often motivates giving, is on the decline in the U.S. What does “support for causes” mean today? People now can contribute directly to causes by doing rather than donating. Example: Instead of donating to environmental nonprofits, environmentalists may support the earth by installing solar panels or biking to work.
Another example of the shifting environment for fundraising…. Many charities expect past giving patterns to remain stable under the new tax law. But the American Enterprise Institute, a conservative think tank, predicts in its June 2018 study that 2018 donations will drop by $16 billion or 4%, as many fewer people in the U.S. itemize tax deductions. The greatest impact will be seen among middle- and upper-middle-income tax filers. Are these your donors?
Nonprofits Are Experimenting With New Fundraising Approaches As Traditional Fundraising Methods “Age Out” And As the Environment Changes
1. Using data and research to boost fundraising effectiveness 2. Social giving and networking 3. Technology-based fundraising Examples: 1. Using experiments and data analysis to improve fundraising, even for small nonprofits 2. The “social donor” phenomenon, including ◦ Classic crowdfunding; ◦ New variations, such as decentralized fundraising and interactive fundraising using games & teams 3. Capitalizing on new technologies to attract donors & provide them with a means to give
Studies show that only about half of all nonprofit organizations review scientific studies to find ways to improve fundraising
But nonprofits that review scientific studies or conduct their own research report greater fundraising productivity than other nonprofits
Bonus: More social scientists are researching charitable giving and fundraising Example: University of Chicago’s Science of Philanthropy Initiative (SPI): “Evidence- based research on charitable giving” Created in 2012 Offers annual conferences Aggregates results of academic research – but provides “Practical Takeaways” Research identifies effective and ineffective approaches to fundraising
Social Information: What a donor knows about other people’s giving amounts Upward Social Information: A donor learns that others have given more than the donor Downward Social Information: A donor learns that others have given less than the donor
Donors tend to increase their giving when provided with Upward Social Information But tend to decrease their giving when provided with Downward Social Information
Where does Social Information come from? It can come from a neutral or public source (e.g., a newspaper article) Or it can come directly from a nonprofit, as it strategically seeks a larger donation
The Two-Step Ask works to raise the level of an individual donation
Step 1: Ask donor: How much would you donate for Christmas gifts for one Angel Tree child? Step 2: After listening to the Step 1 response, ask the donor: How much would you donate to buy Christmas gifts for ten Angel Tree children?
The donation amount received after Step 2 is significantly larger than when only the Step 1 question is asked Why? Because people tend to be mathematically consistent in their thinking Donor’s mental calculation: My donation for ten kids should be much bigger than what I’d give for one child
Science of Philanthropy Initiative web address is spihub.org SPI research articles always include “Practical Takeaways” Experimental focus: SPI encourages all nonprofits to conduct their own experiments; FAQs are on the SPI website Why conduct experiments? Surveys & focus groups tap into people’s intentions while experiments analyze what people really do.
Increasingly, nonprofits conduct their own experiments and analyze their own internal data. Why? To learn about ◦ Their donors; ◦ Their donors’ patterns of giving; ◦ How often to contact donors; ◦ Specific ways to increase donations; and ◦ Which fundraising events and methods are or are not worth the time and effort
The Alley Theatre is a Houston-based 501c3 Alley has annual revenues of $22 million (so, not a small nonprofit) Vision and Mission: To be a leader in the American Theatre movement through productions of its resident theatre company The fundraising staff is small – three people The question: How to bring in more money without hiring more fundraising staff?
Paid a consultant to develop two predictive models, which continually analyze and “score” the theatre’s internal data First predictive model identifies donors likely to become major donors ($10,000+) Second predictive model identifies ticket buyers who are likely to become donors Result: With no extra staff, donations increased more than 3% - and provided insight into donor/ticket buyer behavior
SAWF is a 501c3 founded in 1992 Based in Durham, NC Annual revenues of less than $750,000 (so, a small nonprofit) Mission: Collective action by farmworkers, college students and community to create improved conditions and justice for farmworkers SAWF created an “experiments team” made of some staffers, donors and board members The team’s job is to devise fundraising questions; conduct mini-experiments; and analyze data to find answers. Examples: ◦ Question: Will donor appreciation parties produce new funds even if no formal “ask” is made at the party? Answer: Yes. ◦ Question: Will new money come in as a result of SAWF paying to be included in a public charitable giving guide? Answer: No.
1. Emotion, not logic, motivates giving, and people yearn to make a difference – so use vivid story-telling to explain the mission and to convey the impact of the donation 2. Giving is social – so foster communities of giving, using social media and face-to-face groups 3. Premiums may deter giving – but people still love to win stuff, so consider using raffles and contests in fundraising
Any nonprofit can review the social science research of SPI (or others) and adopt recommended techniques and practices Any nonprofit can analyze its own data and do its own experiments, like SAWF, Boston Ballet and Alley Theatre Reminder: Data is already available in your nonprofit’s records & databases Simple, clear questions work best (like SAWF) Ask one question at a time (i.e., keep a singular focus) Question example: How often should we communicate with different types of donors? Question example: Which fundraising events are worth the time, money and effort required to hold them? Question example: What rate of return does our nonprofit receive from the total time and effort we spend on applying for grants? Analyze nonprofit records to identify basic demographics: gender, age, race/ethnicity, income, marital status, geographic location Why do this? Some examples: ◦ Age: Is your donor base is aging out? If yes, devise strategies to recruit new, younger donors ◦ Marital status: Studies show that nonprofits often target couples for donations, losing out on the sizeable giving capacity of singles of all ages ◦ Diversity: As the U.S. population changes its composition, so should your donor base
Today, donors increasingly want to give as part of a community They seek connectedness to a cause and/or a group of like-minded people This phenomenon is expressed in many new fundraising methods: ◦ Crowdfunding ◦ Interactive fundraising using teams and games ◦ Donor-directed and personal-event-based fundraising Crowdfunding is online social fundraising through networks, using a campaign
There are multiple fundraisers: The nonprofit itself, individuals & teams
Key element: Find potential new supporters when current individual supporters reach out to their individual social networks online
1. A project with a specific use for funds raised 2. A precise fundraising goal in dollars 3. A deadline for raising the funds (e.g., 30 days) 4. A platform (special website, e.g., Kickstarter) 5. A well-developed campaign to motivate supporters & donors 6. Supporters and donors (some already known to the nonprofit; others not yet known) 7. Continual engagement with stakeholders via social media, email, etc. – don’t ever let the campaign languish! 8. Pro tip: Before the campaign launches, have a match ready, to generate enthusiasm
Average amount raised in nonprofit campaigns: $9,200.00 (down from $16,000) Average contribution: $66.00 (down from $88.00) On average, 28% of donors are repeat donors – so 72% are new donors When individual fundraisers set up their own fundraising pages in a campaign, donations tend to double Ways to increase giving and participation: Post videos and send frequent updates
Some well-known platforms:
Kickstarter Razoo Fundrazr Crowdrise YouCaring CauseVox Nonprofits report that total crowdfunding campaign costs run 20-40% of revenue
Costs of Crowdfunding include: Platform fees Processing fees The cost of the nonprofit staff’s time and effort to run the campaign
1. Kickstarter (Note: Creative projects only): ◦ Platform fee: 5% of money raised ◦ Processing fee (Stripe):3% + 20 cents per transaction 2. CauseVox (Rates for Nonprofits): ◦ Platform fee: 4.5% of money raised ◦ Processing fee (Stripe or PayPal): 2.2% + 30 cents per transaction 3. YouCaring (Now part of GoFundMe; formerly generosity.com, owned by indiegogo.com) ◦ Platform fee: None ◦ Processing fee (Paypal or WePay):2.9% + 30 cents per transaction
In summer 2015, a donor gave $100,000 to GSWW but restricted the gift: No money could be spent on transgender girls
GSWW returned the donation (which represented a quarter of its annual budget) and created an Indiegogo crowdfunding campaign to replace the lost $100,000
#ForEVERYGirl Campaign
Goal: $100,000 Length of campaign: 30 days Funds raised: $338,282 Number of donors: 7095
Campaign went viral and raised awareness worldwide “PANDA NATION IS A COMMUNITY OF SUPPORTERS WHO ARE FUNDRAISING TO HELP WWF PROTECT WILDLIFE AND WILD PLACES AROUND THE WORLD. “ WWF encourages Panda Nation crowdfunding around personally meaningful moments: Celebrate a birthday Memorialize a loved one Weddings: WWF contributions instead of gifts Mark the occasion of a baptism or bar/bat mitzvah
Kiva, a global micro-finance nonprofit, connects individual micro-lenders with micro-entrepreneurs (average loan: $400) Potential lenders join Kiva as members before lending In 2012, a Kiva membership analysis showed that 33% of members had never made a loan Problem: How to motivate members to loan money, and to keep lending? Kiva asked individual members to join teams on the Kiva website This increased lending - but only temporarily So Kiva encouraged competition: ◦ It publicly ranked teams based on number of loans made by each team ◦ Kiva also messaged teams about their rankings Result: Kiva saw a rise in both overall lending and rate of continuing engagement by member-lenders
Research shows that donors like to feel connected to a community of givers who collectively support a cause Corporations, tapping into this desire for community, now offer campaigns and programs to enable customers to collectively support a cause or nonprofit as they shop Examples: PetSmart’s Buy a Bag, Give a Meal Campaign; Amazon Smile Program
Cause-related marketing campaigns often are time-restricted and also may set a maximum corporate donation Example: PetSmart’s campaign ◦ From 3/1 - 12/31/17, for every bag of dog/cat food sold at PetSmart, the company donated one meal – defined as 5 oz. dog food or 1.5 oz. cat food ◦ Donated meals were given to animal shelters, animal welfare charities and food banks ◦ Kudos to PetSmart for not setting a maximum number of pet meals to be donated!
Ongoing program: Amazon Smile donates .5% of each qualified purchase to charity Customer must buy on smile.amazon.com This is a corporate donation, with no cost to the purchaser Most donations go to charities “spotlighted” on the website But a customer can direct a donation to any 501c3 charity, which then must complete an Amazon registration to receive the money People shop constantly on Amazon – but often forget to purchase on Amazon Smile Amazon’s donation percentage is a tiny .5% on qualified purchases, or ½ of 1%, or (.01/2), or (.005 x each dollar of the purchase) A qualified purchase of $100 yields a donation of 50 cents – not much! A recent report: Total yearly charitable contributions given through Amazon Smile amounted to .00012% of Amazon’s total sales All donations are good! But be careful that donors don’t unthinkingly substitute a small Amazon Smile donation for a larger direct gift to your organization Encourage Amazon Smile giving among those who can be counted on to donate beyond their Amazon Smile gifts ◦ Which of your donors already are strong and loyal supporters? ◦ Staff, board members, people served by your nonprofit
Telling stories to donors is an effective and time-honored way to explain what the nonprofit needs But showing donors is even more effective. Nonprofits are commissioning Virtual Reality (VR) films, shown on headsets to show potential donors the heart of the reason for a fundraising drive Seeing the story in 3-D fosters empathy; “People cry as they take off their headsets” Charity: water (NY) Mission: To provide safe drinking water in developing countries Charity: water used VR film and headsets at its annual gala to show the impact a water well had in the life of a little girl in an African village. Gala attendees put the headsets on and viewed vivid real-life scenes from the village. Result: Donations at the gala doubled compared to previous events. 92nd Street Y (NY) Mission: To be a world-class cultural and community center for residents of New York Fundraising problem: The 143-year-old nonprofit’s building interior needed major and expensive remodeling and upgrading. 92nd Street Y used VR to show donors a before-and-after view of the building Result: A marked increase in donor interest
Pencils of Promise (NY): ◦ Mission: To build schools and train teachers in Laos, Ghana and Guatemala ◦ Used VR films and headsets to show real students learning in a classroom built with donated funds Amnesty International (London) ◦ Street fundraisers (common in UK) stopped London passers-by and asked them to view a brief film showing the impact of barrel bombs in Syria ◦ Result: “A strong and often emotional response” plus a 16% increase in the number of people signing up to have donations automatically deducted What is Augmented Reality (AR)? Dictionary definition: “A technology that superimposes a computer-generated image on a user’s view of the real world, thus providing a composite view.” Example: Pokemon Go users went to specific physical locations and saw game images in AR Using a device like a phone or camera and an AR app, an organization can add – and share – images, audio, video, charts, etc. A few nonprofits already are starting to use AR to communicate with stakeholders CoppaFeel! is a London-based nonprofit whose mission is to educate women about breast health CoppaFeel! used AR to create buzz around a billboard campaign designed to raise awareness of the importance of regular breast exams “The world’s first augmented 3-D reality boob billboards” With the AR app, viewers could see the image in 3-D, name each boob, share with friends, etc., Highly interactive, personalized - and fun, which was the point! Be creative in your fundraising approaches!
Here are a few random examples from the world of fundraising, designed to spark your imagination… Colorado Public Television decided to canvas neighborhoods to find new donors Teams of volunteers visited neighborhoods chosen using zip code-based demographic information Benefit: Personal engagement with potential donors Result: Average increase of 50,000 new donors per year – and majority of new donors signed up for automatic monthly giving
Children’s Miracle Network empowered volunteers to do peer-to-peer fundraising using competitive video game marathons
Volunteers in different locations set up the marathons - and sometimes streamed them online - to raise money from friends and family
Added benefit: Good - and free – publicity from local radio and television stations Outreach Indiana, a nonprofit supporting homeless kids, invited volunteers to help make burrito lunches for the kids. Later that day, each volunteer received a short video thank you, showing the kids happily eating the burritos. Volunteers could see the impact of their volunteer time – and a number of them became first-time donors!
Pencils of Promise, the nonprofit building schools and training teachers in Laos, Ghana and Guatemala, set up a system to accept cryptocurrency donations –
And shortly thereafter received a $1 million Bitcoin donation.
Questions? Comments?
May All Your Fundraising Efforts Be Successful!
Contact me: [email protected]