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Frictionless Fundraising
How the Internet can Bring Fundraising back into Balance
By Michael C. Gilbert, Jan. 2003
At the peak of the Internet capital boom, I was interviewed by the Chronicle of Philanthropy about "online fundraising". I was very much a wet blanket. I said that consultants were at the very least letting nonprofits believe that the internet was some kind of "money spigot" and if they didn't get with it they would lose out on the flood of donations. I disagreed.
There were too many companies (with indistinguishable dotcom era names) all of whose anxious and ignorant sales people were using their bloated marketing budgets to tell nonprofits that credit card transactions were the key to online wealth. So long as online fundraising was defined by the ability to take credit card transactions through a web interface, I was a skeptic.
The ability to take credit cards online is like having a checking account. It's essential. But it's not fundraising. Just ask yourself this question: When was the last time you opened a bank account for a nonprofit and had a thousand people line up to make deposits?
To discover the real promise of online fundraising, we have to first start with the right vision of the craft of fundraising itself. As with all attempts to empower nonprofit practices with new technology, it's almost always a mistake to start with the technology itself. It is wiser to start with a pure understanding of the nonprofit practice that the technology is meant to serve. In this case, that means asking: What is fundraising?
What is Fundraising?
Some of my readers will be familiar with a methodology I have pioneered in the nonprofit sector, which I call Information Ecosystem Mapping or sometimes just Communication Mapping. This four part diagram uses this method to represent the practice of fundraising as a series of stages of communication with a stakeholder:
The arrows in this diagram represent the movement of donors
from one stage of fundraising communication to another.
Prospecting is the practice of initiating a relationship with a prospective donor and includes marketing, promotion and qualifying leads. Cultivating is the practice of developing each new relationship, deepening the relationship so that an appeal is more likely to meet with success. The Asking is the practice of solicitation, the formal request for a pledge or donation. Finally, Stewardship is the practice of tending to the relationship with the donor over time.
A respectful vision of online fundraising comes from asking the question: What can new communication technology do to empower this process?
Before we even ask that question, we need to ask if there is anything wrong with the practice of modern fundraising. After all, direct mail, telemarketing, on air pledge drives, event based fundraising, canvassing, major gift solicitation, and plain old passing the hat raised nearly $200 billion dollars last year from individuals in the United States. It's working, right?
Wrong.
Modern Fundraising is Out of Balance
Modern fundraising operates within a cost environment in which it is expensive to communicate with donors. Every phone call, letter, or personal visit is expensive. This cost structure is a constant source of friction for every form of communication that does not immediately benefit the bottom line.
There are hundreds of books and thousands of workshops that fundraising professionals can use to learn how to tweak that last 0.01% response rate out of a direct mail piece or, at the very least, to build their confidence with major donors. But none of these resources can overcome the simple facts of the cost of communication, and most of them take those costs for granted and end up reinforcing a form of fundraising that is anything but balanced.
Modern fundraising is obsessed with the Ask. Prospecting exists only to supply more people to hit up for money. Cultivation is a detour and stewardship an afterthought. Modern fundraising looks something like this:
Development professionals in every sector are worried: Will renewal rates decline? Will the cost of paper and postage ruin the margin of return on direct mail? How many more hours of on air pledge breaks do we need? Will our generation of loyal donors die off, leaving us with a demographic of distracted people? How in the world will we make up for declining foundation and government funding? And what about the loss of tax incentives for bequests?
Yet we keep asking for money every time we send someone a piece of mail because we cannot afford to do otherwise. We add one more ask into our yearly cycle and craft more and more "urgency" into each ask.
Deep down we all know this is out of balance. A donor relationship needs to be a whole relationship in order to be sustainable. All we have to do is put ourselves in the position of the donor and ask ourselves how we feel. Wouldn't we rather be thanked properly? Wouldn't we rather we were asked only at the point where it was obvious we wanted to give?
The only donors who have a whole and balanced relationship with the organizations they support are major donors. That is because the value of these donors far exceeds the cost of communication. There may be friction, but there is plenty of fuel to overcome it.
Major donors are treated as human beings. The rest of us are treated as sources of money. The irony is painful, and the reality is sad.
Online Fundraising: A False Start
The ability to accept credit card transactions online is a useful service. It is useful to online fundraising in the same way that a bulk mail account with the Postal Service is useful to direct mail. But it is very dangerous to regard it as an essential part of the craft of online fundraising.
This is a classic example of what happens when you let technology drive your planning process: The result is a workflow and practice that emphasizes the capabilities and limitations of the technology, rather than the wisdom and the goals of the people who are doing the work. In this case, the entire practice if fundraising itself is pushed to the side.
The most important impact is that it shifts the center of expertise from fundraising professionals to technologists. And of course, the impact of that in turn is that money is not raised.
Online Fundraising: A Second False Start
Although the legacy of the dotcom fundraising era is still with us, people are realizing that "if we build it, they will come" is simply wrong when it comes to online fundraising. Credit card transactions are not fundraising. But if that is true, then what do we do.
I'm afraid that what we are doing is emulating the worst practices created by the current imbalance in the world of modern fundraising and marrying them to credit card transactions. The result is a combination of all that is wrong with modern fundraising and all that was wrong with the dotcom formula.
This model, like all modern fundraising, has the benefit that it will actually raise some money. On the other hand, because of the potential scale of internet solicitation, and the corresponding commercial problem of spam, it has the potential of throwing things much further out of balance.
It's very clear that this is the direction many organizations are going. Rather than developing rich systems of communication with their stakeholders, they are applying the same standards of quick return to their online work as they have to their direct mail campaigns. Many are taking this even further and sending email to people who don't see themselves as having opted in. Both these practices erode the commons that is the goodwill of the public and will prevent online fundraising from achieving its true potential.
Online Fundraising: A Frictionless Future
The potential exists to treat every donor like a major donor: To prospect with respect, permission, and integrity. To cultivate and segment and personalize. To ask for the right amount at the right time, so that giving is natural, and lifelong. To steward the relationships with care, so that loyalty and commitments increase, along with the resources that come from such relationships.
This potential exists because two costs have decreased by many orders of magnitude: the cost of communication and the cost of personalization. The integration of email, the web, and databases means that instead of costing 60 cents to reach the next person by post, it costs a sixth of a cent by email. And it means that some personalization costs almost nothing and is maintained by the donor, instead of potentially taking an entire phone call or lunch by a paid staff person to achieve. By reducing the friction in the system, we can restore balance to the four components of classical fundraising.
No longer will prospecting be so desperately focused on the immediate donors. An investment will be made in respecting and developing the level of permission with each prospect. Owners of lists will facilitate introductions through Chaperoning rather than through spam-like list rental. Stakeholders who have heretofore been reached only by mail will be helped to change to an online relationship, if that's what they desire.
Nonprofits will begin to genuinely cultivate their relationships and so have these relationships feel more natural to all involved. Newsletters and web sites will be redesigned with richer cultivation in mind and so better integrate the program of the organization with development and fundraising. There can be more and more personalization, resulting in greater and greater trust.
The ask will become easier because, like plucking a ripe fruit, a well cultivated donor hardly has to be touched in order to give. Furthermore, the ask will become about much more than money. Sometimes it will be about volunteering or about activism or about education. The greater levels of rich enrollment will also lead, as all the research indicates, to greater giving.
We will thank and keep people informed like never before and in so doing we will truly steward these relationships. We won't mix thanks or updates with further asks. And, just as we are stewards of our donors, we will learn how our donors themselves want to be stewards of their donations.
But this frictionless future is only possible if we are willing to go back to basics. We have to plan our technology initiatives with our communication needs foremost in our minds, discard the misconceptions that we have learned from using more expensive media, and adopt a long term vision of deep respect for the relationships that are, after all, our most precious asset.
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