OUR FUNDRAISING MODEL IS BROKEN, DIGITAL CAN FIX IT

October 25, 2015 by in category Digital Planning tagged as , with 5 and 3

Digital is delivering for almost every industry – music, retail, media – and across government. Yet according to some fundraisers, not for charity fundraising. Why not? Probably because, unlike other sectors, charities have been resisting the change that the rise in our digital lifestyles has brought about.

Successful commerce has always had a culture of customer focus: with the rise of the Internet businesses have transformed to avoid losing their customers to competitors and taking a massive hit to the bottom line.

Charities, however, have always (rightly) been focused on improving the lives of beneficiaries with an assumption that the public will duly follow them by donating, volunteering or campaigning. Because, by doing that, the members of public would be supporting “a good cause”. If a wider public don’t engage, the wisdom goes, they only need to be educated about how important an issue is and their support would follow. In reality, it’s questionable how many new supporters have been recruited through this process of education – most of the time we’ve been preaching to the converted.

Many charities are reliant on the tried and tested traditional fundraising model and tactics that we know people hate. Over the years we have happily ignored this as it has brought in the cash for the important work we all do. In the summer of 2015, with the Olive Cooke fundraising scandal, our (fundraising) chickens have come home to roost. People are increasingly not prepared to tolerate our intrusion.

Understandably, across the non-profit world we are concerned. But, we should also feel inspired and challenged to create a new fundraising model, one that will engage people in ways they want to be engaged in the digital world that (potential) supporters live in today.

 

Choose not to change at your peril

 

The music and media industries learnt this lesson the hard way. For years they tried to fight the disruption caused by changes in their customers’ behaviour triggered by the arrival of the Internet as a major content distribution channel. They tried to stop applications like Napster, free distribution of content, mixing and matching and borrowing of music. All this was seen as an attack on the industry as it challenged their established business model.

Napster gravestone

It’s only in the past few years that the industry accepted that it needed to change and work within the ‘rules’ of the digital ecosystem where their customers and fans have been for years. Napster, with its free music, may have gone from the mainstream but we have new models for music buying, listening and sharing like iTunes, Spotify and now Apple radio.

In the case of the music industry, Napster was a disruptor. And there’s been one for each industry – easyjet and Ryanair for the airlines; tripadvisor for the travel advertising; Airbnb for hotels; Uber for taxis; Facebook and Google for advertising and content; and Buzzfeed, Vice, Upworthy for news and media industries.

Who are the disruptors for charities? 38 degrees, Avaaz and Change.org shook up charity campaigning. The trendy brand marketing of charity:water and the Kiva platform with its direct link between donors and beneficiaries both had the potential to disrupt charity fundraising but didn’t. User generated viral initiatives like #icebucketchallenge made us stand up and pay attention. But these are one-offs, as is to be expected with virals, and do not give the basis for the development of a sustainable model.

 

Learning from the ‘disruptors’

 

There are a few common characteristics the ‘disruptors’ and new cause-related transactional models have:

  • Brands like RED, Tom’s shoes and eBay give people an opportunity to be charitable while they do what they would do anyway, i.e. buy things.
  • Crowdfunding platforms like Kickstarter bring many people together in support of a cause, product and/or innovation. These people will probably never get together again as the same group. However, as individuals they might fund another project with another group of people with whom they share another passion.
    Some of the ‘disruptor’ companies are distributing things they do not own: Uber is the biggest cab company which owns no cabs, Airbnb is one of the biggest hoteliers but owns no hotels; Facebook is the biggest content distributor but generates no content of its own; Ebay is one of the biggest shopping platforms but owns no retail space/warehouses or products.
  • The ‘disruptor’ companies are cutting out the middleman and providing a self-service platform which helps customers who look for services to find service providers and vice versa. This is about cutting costs but it’s also about the convenience of tailoring one’s own offer or purchase.

Let’s not get distracted by the discussion around the impact (good and bad) of some of these models. We need to focus on some basic principles they all share that make them appealing to mass audiences:

  1. They provide flexibility and convenience for the end user – we can buy, sell, work, read, support friends and innovative projects on our own terms in our own time (at home, at work, on the bus!);
  2. They provide a good user experience thanks to testing and experimentation – platforms are mobile, easy to use and easy to understand as they are written and explained clearly;
  3. They provide vetting of community members and the services members provide and they enforce the community rules which builds trust in the platform;
  4. Around these platforms there is a community of people linked together by the same need and/or passion, who police and evaluate products and services which in turn creates trust in the overarching brand.

 

Non-profits have a community of supporters who are passionate about our causes yet many charities are still scared of trusting them. We often patronise (potential) supporters and feel that we need to educate them. Many charities shudder at the RED model as it supports consumerism in people which “should be challenged” as one of the root causes of poverty. As much as this might be true, how wise it is for charities to plough on in their own righteousness without a chance in hell to engage anyone outside of their own bubble?

We provide patchy user and brand experience – there aren’t that many charity websites or online donation forms out there which are easy to use. As much as we talk about supporter experience and journeys we develop websites which fulfil internal priorities and the wishes of those colleagues who shout the loudest. Most of us don’t really start with our supporters when we plan.

And we definitely don’t offer flexibility in how people can engage when our main focus is to get everyone onto Direct Debit. Whatever the way someone engages with a charity in a year, they will be repeatedly asked for a regular gift regardless of how many times and ways an individual has said “No” or have preferred to give a one-off donation.

 

A new fundraising model in the digital ecosystem

 

I am not suggesting that we need to create a charity Uber or Airbandb. Implementation of that model would mean cutting charities out of the picture because they are an ‘unnecessary’ middleman between donors and beneficiaries. We know that people like to give to charities they trust because they “know the money is going to the right place”. Which is why Kiva turned out not to be a ‘disruptor’ for fundraising.

Nor am I suggesting that we need to scrap right now the regular gift as a fundraising product and related fundraising methods. Because it is a choice some of our supporters are making and it brings in the funds needed for the work charities do (and will do so for some time).

What I’d like to see is a fundraising model and a range of fundraising products that truly live in the digital ecosystem where the majority of our supporters are and will increasingly be in. Learning from ‘disruptors’ how to engage the public we need to create a new fundraising model fit for today’s digital mindset. Such a model will help us create a new generation of donors before the current charity fundraising model collapses. Because, make no mistake, collapse it will.

 

 

Thank you for reading!
I’ve been mulling this over since this summer and some of my colleagues have heard my monologues on this topic many times already. I would welcome your comments and views below or on Twitter (I’m @bubana), especially around other aspects of what makes these “disruptors” work and what that means for charities.

5 Comments

  • Tim Kitchin
    on October 29, 2015 Reply

    Great piece, Brani. I see this as part of a gradual and painful shift to sustainable fundraising.

    To borrow Kotler’s marketing phraseology – fundraising is the science and art of finding, keeping and growing profitable donors…

    To really follow through on his logic it’s simply not enough to simply create programmes and then ‘find someone to pay for them’. That’s sales thinking, not marketing.

    To really embrace marketing thinking, donors’ and beneficiaries’ interests actually have to be aligned and connected (just like Uber’s drivers and passengers, or Airbnb’s homeowners and holidaymakers). In this sense Charities are ‘merely’ social impact platforms.

    Charities that are doing individual fundraising well today are using strong brands to find their supporters efficiently – facilitating largely self-selecting and self-managing communities of supporters.

    They are then keeping them by delivering a clear and transparent sense of their beneficial impact.

    And they are growing them by offering fresh, fun and immediate ways to make a (visible) contribution to the cause – whether it be breast cancer, child protection or environmental conservation.

    But even today’s abundance of great practice stops a long way short of sustainable fundraising. Sustainability doesn’t just require fundraisers to get better at communicating social impact, it also expects operational teams to start designing programme delivery in ways that donors can intrinsically empathise with. That connect to their sense of purpose. And that they will want to keep contributing to.

    Sustainable fundraising demands donor accountability from the outset. It requires programme leaders to ask ‘who pays’? and ‘how?’ much earlier in the planning cycle, whether the payer is an institutional donor, a government or an individual giver.

    Ultimately Charities can only deliver the social change that their donors want and will pay for. Fundraising sustainability and donor accountability go hand in hand.

  • Richard Turner
    on October 21, 2016 Reply

    I think it goes even further Brani if you recognise everyone is now a channel. Digital of course is a great catalyst for this. Fundraising tries to focus on a using a response driven model when the approach that is now needed is how to inspire people to spread your story to their networks. Seen in this light digital becomes the obvious How. And it gets better because your charities story is far stronger coming from your supporters than it is from the charity (for example see “Songaminute man”).

    If marketing moves from being a tactic to building a movement, charities can still play a very valued role – that middle man makes me feel part of something alongside others who believe in what I believe and connecting them. And by helping it grow by engaging my own network (if so inspired) I will feel involved. So rather than ‘we have a problem – give us the money to solve it’ – it needs to be ‘we have a problem want to be involved?’. And the money will still come.

    And, as you say the current response driven model is breaking up (for the same reason – everyone is now a channel and so can easily share a bad experience). Interesting times ahead!

    • Author
      Branislava Milosevic
      on October 21, 2016 Reply

      Hi @Richard

      I think that Digital is not a channel. There is the whole culture and world that has developed in and around Digital (I explain more in this post) which makes Digital more of a destination. Looking at Digital as a channel has in the past lead to ‘same old sh*t, new channel’. So we have increasing numbers of (large – x large) charities investing in Digital for lead gen. but then they drop people in the traditional supporter development programmes (telemarketing, reg. gift asks, etc) which will soon start to fail (well telemarketing will, that’s clear)

      I like your challenge around engaging people around the message ‘we (as a society) have a problem, let’s solve it together’.

      What I’m arguing for is creating new fundraising products based on the principles of the disruptors which can be added to the fundraising mix. One of the principles disruptors bring into the market is flexibility – this is something that the current fundraising/charity models do not allow for.

  • Richard Turner
    on October 21, 2016 Reply

    Actually I’m not saying digital is a channel – I’m saying everybody is now a channel. That’s different. It’s just that digital empowers me even more to share my view (as an individual) and help leverage my social capital. So the channel if you like are the very people we try and target. Hence it needs to be a shift from ‘how to target me for more money’ to ‘how to inspire me to spread your story’. And yes agree you can’t apply the old ways. It’s a paradigm shift.

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