PHILANTHROPY 2.0 – The Modernization of Giving

Abstract

The non-profit sector is one of the fastest growing sectors in North America. In Canada alone there are 161,000 registered charities and non-profit organizations, more than half of which are charities taking in upwards of $8 billion annually. (Hall et al., 2004) As this sector continues to grow, even more groups are vying for limited resources. As a result, these organizations must become increasingly more creative and savvy in communicating, and carrying out, their mission. The sector shows no signs of slowing down, even in the midst of the recent economic recession. To this end, the fundraising community has entered a new landscape, one where the quality, content and delivery of communications generated are more critical than ever. Philanthropy has entered into a new economy, brought about by what Harold Innis refers to as a “…cultural disturbance resulting from sudden extensions of communication.” (Innis, 1951) This new economy is highly competitive and thrives on currencies made up of human, social and financial capital.

The arena of fundraising represents the equivalent of a classroom setting, where the fundraiser’s primary focus is to educate and motivate people not only to donate but also to deepen their relationship with that specific cause. One of the greatest challenges fundraisers and non-profit leaders face on an ongoing basis is the ability to keep donors, board members, staff and volunteers engaged. This paper seeks to address the changing spaces of information technology as it pertains to fundraising within the non-profit sector. It examines traditional and non-traditional fundraising, offline and online modes of fundraising, and the impact social networking and Web 2.0 are having on charitable organizations and their ability to cultivate, solicit, and retain a donor base that spans multiple generations.

The sector has been under great scrutiny for some time, and for this reason it is critical that social profit organizations exercise adherence to a high level of governance. With respect to donors, this means impeccable stewardship of their funds. Stewardship is defined as “the management of another’s property and the responsibility to take care of something”. (Oxford) Demonstration of stewardship includes, but is not limited to, forms of communication such as annual reports, direct mail-outs, Emails, websites and face to face interactions. The opportunities social networking presents are complex. The increased number of channels available to communicate with, and steward, donors has significantly increased donors’ expectations of the organizations they support. Donors are increasingly savvy with respect to the use of information technology. If the minimum communication expectation was once an annual report, a phone call and two pieces of direct mail, now the number of touch points throughout the fiscal cycle incorporate all of the above, plus numerous online strategies derived through multi-media channels.

Philanthropy is defined as “…the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes.” (Oxford) An organization engaged in philanthropy is commonly referred to as a charity. The terms philanthropy and fundraising are often used interchangeably. The sector in which charities typically reside is known as the non-profit sector. The term ‘non-profit’ carries a somewhat negative connotation. It implies that such organizations operate on minimal resources and are more focused on survival than on advancing their cause. While this is true for many organizations, there is an emerging trend towards operating within a for-profit business model, where the profits generated are directly allocated to the particular cause, bypassing the traditional bottom line in a for-profit environment. For this reason, I will instead refer to traditional non-profit organizations as ‘social profit’ throughout the body of this text.

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Traditional Fundraising

For decades, fundraising has been carried out through traditional tried and true methods, typically expensive to produce and deliver. Appeals for donations are most often made through direct mail and phone calls, and through print and radio (public service announcements). This traditional model is based on what I refer to as a ‘top down—talk at’ style of interaction. It does not promote a relationship with the donor and is static in nature. It is a one-way communication, known in fundraising terms as ‘the ask’, which is dependent on the donor’s immediate mood and situation. Web 2.0 has given birth to Fundraising 2.0. It is more dynamic, sophisticated and is potentially more effective in securing charitable donations. There are greater opportunities for creating spaces for two-way, fluid conversations, which serve to build trust and pave the way for donors to become engaged stakeholders. Fundraising 2.0 promotes a structured, deliberate, in-depth conversational arena, setting the stage for opportunities to listen to—and learn from—the target audience.

By no means has this recent use of social media, also known as e-philanthropy, replaced traditional fundraising methods. Information technology must be regarded as servant, not master—and it is an essential servant. If we view information technology as the central nervous system of an organization, Fundraising 2.0 becomes the core around which all other fundraising systems and processes must be organized. (Jamieson, 2000, p.3) The process of fundraising is complex and contains both a front and back end to what may be referred to as a donor transaction. The front end is about connecting with prospective donors through compelling appeals that outline reasons to invest in a particular cause. Social media allows organizations to take advantage of the ability to exponentially access spheres of donors not available through traditional methods. Fundraising’s back end reinforces the impact of social good being carried out as a result of the donor’s investment. This is where social media messages via Email, Tweets, SMS, Facebook posting, and Blog posts have proven to be highly effective channels for both donor acquisition and stewardship.

Online Fundraising

Online tools are cost effective, technically easy to deploy, and relatively simple for donors to use. They also possess the potential for communications to go viral. In comparison, traditional methods are expensive and are much more complex and time consuming to implement. Unlike social media, traditional methods offer less opportunity to spread the message. Ted Hart, a philanthropy consultant, believes that “…the true power of ePhilanthropy-based methods lies in their ability to do more than simply function as a novel way to raise money. It lies in the communication and relationship-building promise of Web 2.0.” He further states, “The internet is an ideal platform from which to reach, inform, and engage potential donors, many of whom may be beyond the reach of normal fundraising channels.” (Hart, Greenfield, Haji, 2007, p.xv) Hart’s beliefs seem to be echoed by Soules, who writes that “In order to understand any medium, we must attend not only to its physical characteristics, but also to the way in which it is employed and institutionalized.” Soules also notes that Harold Innis sees “…a dialectical relationship between society and technology.” (Soules, 1996, p.2)

Postman’s theory of gains and losses are inherent when comparing offline and online fundraising tools. Postman outlines that there are winners and losers; gains and losses associated with the “…development and spread of computer technology.” (Postman, 1992, p.10) Postman’s stance of weighing the gains and losses associated with technology is relevant when examining the impact online fundraising tools have on charities’ success not only in receiving donations, but also in furthering their cause and increasing their reach into society. Charities choosing not to incorporate social media into their communications strategies run the risk of leaving money on the table: a significant gain for the competition.

Dobson and Willinsky address the democratic qualities of digital literacy, as it affords greater access to knowledge and the ability to speak out, making one’s views widely available. (Dobson, Willinsky, 2007, Ch.16, p.1) The 2008 US Presidential race drew attention to the power of social media as a fundraising channel. During the month of February, John McCain raised $11 million through various live fundraisers. In that same month, Barack Obama did not attend any fundraisers, opting instead to leverage social networks. He raised $55 million in that same twenty-nine day period. (YouTube) It was further reported that 34% of donations to the Obama campaign were under $200, which speaks to the ability social networks have to go viral at breakneck speed, allowing people with limited dollars to shift the landscape of society. The Barenaked Ladies’ popular song, “If I Had a Million Dollars,” no longer applies when it comes to supporting a cause.

The use of social media appeals to donors’ membership in particular fundraising communities. Online modes of front-end donor transactions promote responses that are not restricted to making a donation on the spot, although that is still preferred. Online investment capital may also include donors’ centers of influence through the sharing of online social networks, Email contacts, and oral discourse through conversations. In essence, donors become members of an extended sales force on behalf of the charity’s cause. On-going donor involvement and significantly increased numbers of touch-points throughout the online fundraising cycle increase the impact of the donor transaction’s back end. Bolter posits that “McLuhan’s apothegm that the medium is the message,” is relevant with regard to the use of social media for fundraising. (Bolter, 2001, p.51) “The online space plays a vital role in any public engagement campaign. This space has the ability to take your message to the “viral” level. Good viral messages are not easy to create. Provoking someone to pass along your message to their social or professional network is what makes a campaign virally strong online. This “pass along” provocation is not specific to an issue, but rather to the properties of the culture of the Internet.” (LaCroix, 2007) Fundraising 2.0 messages arrive embedded with feel good updates on investor returns, in what, in fundraising terminology, is referred to as the ‘sticky factor’.

There are always challenges inherent in staking new ground. I speak from experience as Executive Director of a Foundation whose cause of mental health is prevalent yet steeped in stigma. Unlike other human conditions, such as cancer, AIDS, and homelessness, mental illness is an invisible disease that, for decades, has been the orphan child in the realm of public embrace. It is currently where civil rights were in the sixties, HIV/AIDS was in the seventies, and cancer was in the eighties. For positive change to occur, education and awareness must be proliferated; social networks serve as powerful tools for giving mental illness both a face and a voice. They create safe spaces for people to speak out and reach out. It is both critical and essential to build a mental health community that promotes public discourse and advocacy through citizen engagement. Fundraising strategist, Pattie LaCroix states that “social change pivots on engagement and engagement rotates on inclusiveness and collaboration.” (LaCroix, 2007) While not a panacea, charities that are successful in connecting with people in online spaces have the potential to tap into a new army of supporters from the ground up. Using social media to build community creates a space for deeper engagement and frames philanthropy as social investment, where sharing ideas, and spreading knowledge and awareness are assets that are as highly valued as actual donations.

Reaching generations of donors that span the digital and economic divide is a formidable challenge. Social media has opened up opportunities to reach a wide spectrum of donors from diverse socioeconomic backgrounds. Traditionally, donors were primarily affluent, having been taught about the importance of philanthropy by their families. They seek to become valued partners, not just cheque writers; they want to know their gift has made a tangible difference. Quite simply, donors want to see their return on investment. Relationship building and communicating with potential donors is a process. This cycle begins by identifying who donors are, continues through educating them on the cause, compels them to make a donation, and finally stewards them using updates illustrating the impact their donation has made. Social media has the power to effectively carry out these steps in the fundraising cycle and, with respect to mental health, has the power to break down stigma and to remove existing barriers to acceptance and understanding.

CONCLUSION

In the changing space of philanthropy, it is clear that emerging information technologies significantly impact how the social profit sector is carrying out their business. There is a movement away from accumulating lists of ‘faceless’ donors; a movement which is more quantitative in nature, seeking to build a groundswell of engaged stakeholders embracing their philanthropic commitment to the proliferation of social good. An organization’s degree of success is driven by its ability to ‘walk the talk’ with transparency and accountability, and by its ability to keep donors informed at all times. It must continue to seek new opportunities for improved communications by incorporating emerging information technologies into a multi-channel strategy. “Social networking and web technologies will be leveraged in ways we have yet to imagine. Tools that we cannot yet conceptualize will become the norm for nonprofit fundraising”. (Roberts, 2007)

Dr. James Austin from Harvard Business School opines that “Charities that have dismissed ePhilanthropy as a fad, or run from it in confusion, will sooner or later, need to become reconciled to it. If they don’t, they risk losing touch with donors and imperiling the vitality of their work.” (Hart, et al., 2007, p.xi) Change is the one, assured inevitability of technology (Postman, 1992) and it is critical to the success of social profit organizations to strategically cast their communications nets broadly and incorporate the most efficacious platforms available. As information technologies advance, charities that do not adapt by embracing change, will find themselves a mouse click away from being overlooked by potential donors.

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Did You Know 4.0 “Shift Happens” https://www.youtube.com/watch?v=6ILQrUrEWe8

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