Crowdfunding is quickly becoming the new shiny object in the world of social change. From Giving Days, to new giving platforms, to lots of articles and studies (here and here to start), it seems that crowdfunding is everywhere lately.
I’m all for innovations in the funding of social change, but I’m not convinced that crowdfunding is really creating anything fundamentally new.
Under “crowdfunding” I include efforts like Kickstarter where a creative effort (a film, art exhibit, library) can garner small investments from a large number of people. And I’m also including Giving Days, at the city and national level, where nonprofits try to raise as much money as possible in a 24-hour online “event”. What these efforts all have in common is they raise money, from a large group of people, over a short period of time.
I earned my fundraising chops working public television pledge drives, one of the earliest “crowdfunding” efforts. The technology was different (TV screens and telephones, instead of CRM systems and social media), but I’m not sure much else is.
So I would like to see us separate what is potentially exciting about crowdfunding from what is just hype. To help in that effort, I offer some questions:
How much is truly new money?
It’s unclear to me how much new money crowdfunding brings to social change organizations. For example, nonprofits participating in Giving Days encourage their annual donors to give on that specific day so that Giving Day dollars are higher. But that’s not new money. True innovation in social change funding comes from efforts to grow the 2% pie - giving as a share of America’s Gross Domestic Product has stayed at 2% for the last 40+ years. I’m not convinced that crowdfunding uncovers money that would not have otherwise ended up somewhere in the nonprofit sector.
How many new donors are being retained?
The point of crowdfunding is that it’s a one time deal. There is a message of urgency that encourages donors to give NOW. So the numbers on a specific Giving Day or with a crowdfunding campaign may be good, but is the funding sustainable? Are nonprofits or social change organizations actually growing their donor base? Are they able to go back to these investors later and encourage them to give again? And if the funding isn’t sustainable, is it really worth the effort it took to get it?
Is crowdfunding reinforcing the “Overhead Myth”?
The destructive idea that donors shouldn’t support nonprofit “overhead“, or administrative costs, is slowly dying, but crowdfunding might just be bringing it back to life. Nonprofit crowdfunding darling charity:water has been taken to task for reinforcing the idea that 100% of the dollars they raise go “directly to the field”. And crowdfunding projects are often specific and “sexy,” which means that the money is not being raised for boring things like the staffing, technology, and infrastructure that most organizations desperately need. Are we perpetuating the overhead myth by encouraging donors to give to specific projects, instead of to overall issues, organizations or teams?
What’s the return on investment?
A lot of time and effort can go into crowdfunding campaigns. If the benefits are shortlived, donors aren’t retained, and the majority of the funding is not new dollars, while the costs (staff and board time, technology investments) are high, then what is the true return on investment? I’m not arguing that it can’t be positive, but I would like to see more critical analysis about it, both at the aggregate and the individual organization levels.
I hate to be a Debbie Downer, but I’d like us to dig a bit deeper to understand what the real effects of crowdfunding are so far and what it’s true promise is. If there is already research out there that can answer some of these questions, please let me know in the comments below.
Photo Credit: SeedingFactory.com
My focus this month at Social Velocity is nonprofit leadership. As I mentioned earlier, May’s webinar is Reinventing the Nonprofit Leader. And I’m delighted to release today, as promised, the companion book, Reinventing the Nonprofit Leader.
Here is an excerpt from the new book:
The new millennium has been a difficult one. A crippled global economy, threatening climate change, crumbling education and healthcare systems, and a widening income gap comprise a few of the social problems we face.
And as our social challenges mount, the burden increasingly falls to the nonprofit sector to deal with the fall out.
So it is time for a new kind of nonprofit leader, one who has the confidence, ability, foresight, energy, and strength of will to lead the nonprofit sector, and our communities, forward. Indeed it is up to the leaders of our great nonprofit sector, to face, rather than shrink from, these many challenges.
It is time we move from a nonprofit leader who is worn out, worn down, out of money and faced with insurmountable odds, to a reinvented nonprofit leader who confidently gathers and leads the army of people and resources necessary to create real social change.
So in the hopes of inspiring nonprofit leaders to claim their rightful place as true heralds of social change, I have written this book. It is based on my many years of coaching nonprofit leaders to success. This book lays out the elements that those nonprofit leaders have learned in order to embrace their role as reinvented nonprofit leaders.
The reinvented nonprofit leader:
- Unlocks the Charity Shackles and demands to be treated as an equal and critical part of the economy, the community, the solution.
- Refuses to Play Nice and gets real with funders, board members, partners, and staff who are standing in the way of progress.
- Embraces Strategy that moves beyond just “doing good work” and gets real results.
- Uses Money as a Tool because big plans will not come to fruition without a sustainable financial engine behind them.
- Demands Real Help and the tools necessary to achieve the mission because the best leaders recognize weakness and solicit help to address it.
- Breaks Down the Walls of the organization and lets the world in as fully engaged partners, advocates, and supporters.
- Remembers the Dream that got them here in the first place because often it is the big idea that propels great leaders forward.
It is a tall order, but true leadership is.
We no longer have the luxury of mediocre leaders. These times demand confident, capable, engaging leaders who are a beacon to a society whose mounting problems are overwhelming at best.
While it may seem like an impossible transition to become a new kind of nonprofit leader – one who is more entrepreneurial, innovative, confident and strategic – let us remember that nonprofit leaders have always been entrepreneurs. They have recognized some sort of disequilibrium in our society and have created, out of nothing, an organization, a solution and an assembly of staff and volunteers to fix it. In essence, I am simply encouraging you, the nonprofit leader, to claim your rightful place.
The reinvented nonprofit leader is confident, engaged, and savvy. She will, I have no doubt, lead this great nonprofit sector, and all of us who benefit from it, to new heights.
So how do you become a reinvented nonprofit leader? Let’s take these one by one…
If you want to read more, download the Reinventing the Nonprofit Leader book now.
And if you register for the webinar before May 21st the companion book is free. You can register for the Reinventing the Nonprofit Leader webinar here.
I am really in to Slideshare lately. I uploaded my first Slideshare presentation, Calculating the Cost of Fundraising, last month and people seemed to really like it. So I plan to create regular Slideshare presentations and share them on the Social Velocity Slideshare site.
Today’s Slideshare is 7 Ways to Kiss Fundraising Goodbye. Traditional nonprofit fundraising is broken. It lock nonprofits in an endless cycle of chasing low return activities. A much better approach is to create a sustainable financial model that aligns well with your mission and core competencies. Nonprofits must move from Fundraising to Financing.
If you want to move your nonprofit from a Fundraising to a Financing approach, download the Build a Nonprofit Financing Plan Step-by-Step Guide.
Nonprofit leaders have been given a seemingly endless list of tasks: develop and execute effective programs, manage a diverse and underpaid staff, chart a bold strategic direction, create a sustainable financial model, wrangle a group of board members with often competing interests, and recruit and appease a disparate funder base.
All with little support along the way.
I think its time for us to reinvent the nonprofit leader. In order to better lead her staff, board, and donors to greater social change, the reinvented nonprofit leader must:
- Unlock the charity shackles that keep nonprofits beholden to dysfunctional expectations
- Refuse to play nice with staff members, board members, or funders who stand in the way of the mission
- Embrace strategy that gets results
- Wield the money sword
- Break down the walls of her nonprofit to let in more supporters, advocates, and partners
- Demand real help and the tools necessary to do the work well
- Remember the dream for change that inspires the work
So in the hope of inspiring nonprofit leaders to claim their rightful place as true heralds of social change, I am offering a new Social Velocity webinar, Reinventing The Nonprofit Leader.
Informed by years of experience coaching nonprofit leaders, the Reinventing The Nonprofit Leader webinar will help nonprofit leaders like you to:
- Adapt to a rapidly changing world
- Find the confidence, energy and will to lead more effectively
- Better engage your staff, board, and donors in the work
- Stop apologizing for what you really need
- Use money as a tool
- Embrace new technologies and approaches to build momentum
- Become inspired for the work ahead
Reinventing Nonprofit Leader
A Social Velocity Webinar
Wednesday, May 21, 2014 at 1:00pm Eastern (or On Demand)
Don’t worry if you can’t make the time of the live webinar. All of our webinars are recorded and available On Demand, so simply sign up now, and you’ll be sent a link to watch the recording of the webinar after it airs. You can see the entire Social Velocity On Demand Webinar Library here.
I hope to see you there!
Photo Credit: Library of Congress
One way to diversify and grow a nonprofit’s financial model is to attract more major donors. And I’m not just talking about major individual donors. Major donors are individuals, foundations or corporations whose gifts to a nonprofit are solicited and stewarded in a one-to-one, as opposed to a many-to-one, relationship.
But you won’t find them by chance. You find them by creating a thoughtful, systematic plan.
The Social Velocity Attract Major Donors Step-by-Step Guide helps you create a plan to secure more major donors. Typically major donor campaigns are undertaken by larger, older nonprofit organizations. But I believe that any nonprofit can turn their board and staff into an army securing larger gifts for their organization.
Here is an excerpt from the Social Velocity Attract Major Donors Step-by-Step Guide…
Attract Major Donors
What constitutes a major gift varies by nonprofit organization and depends on the size of the organization and the depth of their donor base. A major gift could be as little as $100 for a small, grassroots organization and as large as $1,000,000 or more for a large, established organization.
The first step in your major donor campaign is to determine how much you think you can raise from major donors in the first year of your campaign. In order to get at that goal you need to:
- Define a major gift level for your organization
- Analyze your current major gift activity
- Determine what investments in fundraising infrastructure you are going to make this year
Let’s take these one by one.
Defining a Major Gift for Your Organization
A major gift is a giving level at which you currently have a few donors, but the vast majority of your donors are below. So for example, if you currently have a handful of donors at or above $500, but most of your donors are below $500, $500 would be a major gift for your organization. Keep in mind that the major gift level for your organization can change over time as you bring in more donors and they start giving at higher levels.
Analyzing Current Major Donor Activity
Once you know what a major gift is for your nonpro!t, you will want to review how much you are currently raising at and above that level and from whom. Pull a report from your donor database that lists all gifts over the past 2-3 years at or above your major donor level. This will give you an idea of how much you currently bring in from major donors.
Determining Your Fundraising Infrastructure Investments
Your major donor goal depends in part on the resources you will devote to the major donor campaign.
- Do you have any plans to invest in your fundraising infrastructure? Do you plan to hire a Development person to focus on major gifts, or add other position(s) in order to free up current fundraising staff to focus on major gifts?
- Do you plan to upgrade your donor database to be more functional and efficient?
- Will you create marketing materials for major donor prospects? The fact that you are putting together this major donor plan will ensure some gains in major donor activity because strategy itself is a great resource investment. If you plan to invest in the backend of your major donor fundraising effort, you can expect to see some gains in major donors.
Once you have these three elements, you can determine a reasonable goal for your first year of a major donor campaign. It should be an increase from what you discovered in #2 above, and that increase is dependent upon how many changes (#3 above) you are willing to make to how you are currently securing major donors.
Once you’ve determined your major donor goal for the coming year, you will want to create a gift range chart that breaks that goal into goal into gift amounts, # of donors, and # of prospects so that you have a sense of what it will take to get to your goal…
To read more, download the Attract Major Donors Step-by-Step Guide.
And you can view all of the Social Velocity Step-by-Step Guides here.
Photo Credit: Chris Potter
Heather Mansfield’s newest book, Mobile for Good, is a nice complement to her 2011 book, Social Media for Social Good. This time around, she adds mobile to the “new media” mix and gives a detailed approach for nonprofit leaders ready to embrace changing technology.
In Mobile for Good, Mansfield sounds a warning call to nonprofit leaders. The tide of new media is swift and those nonprofit leaders who don’t embrace it will be left behind:
“Your nonprofit would be wise to assume and act upon the fact that more than 50 percent of your website traffic will occur on screens varying in sizes from one to six inches by 2016.”
And, contrary to popular belief, this shift is not just among the youngest generations of potential donors. Every generation – from Silent, Baby Boomers, Gen X, Millennials, to Gen Z – is increasingly discovering and giving to nonprofits online.
But Mansfield is not suggesting that nonprofits chuck all fundraising vehicles in favor of a singular new media approach. Rather, she urges nonprofits to embrace a multi-channel fundraising strategy, “using print, web, and email communications, and mobile and social media in order to appeal to donors of all ages and socioeconomic backgrounds.”
And in fact, reports on the death of email are unwarranted. In fact, it’s enjoying a rebirth:
“Email is not dying. It’s growing. Furthermore, every email address that your nonprofit accrues translates into $13 in online donations over a one-year period. If you think this trend is isolated to Gen X and older, it’s worth noting that 65% of Millennials subscribe to nonprofit e-newsletters.”
The key, however, is making sure that everything (your website, your e-newsletters) is responsively designed, meaning that it automatically converts to fit whatever is being used to view it (laptop, phone, tablet).
Mansfield urges nonprofit leaders to invest in new media. The nonprofit sector’s desire for free or very cheap technology solutions isn’t realistic anymore:
“It’s imperative that you find the funds and the tech know-how to position your nonprofit for future survival…One of the downsides of the rise in social media is that it has inadvertently resulted in nonprofits becoming overly accustomed to and dependent upon “free” online tools. This mindset is becoming destructive to the sector istelf…The era of free is over.”
Mansfield devotes a chapter to each of the main social media networks and gives tips and best practices for each. The problem with writing a book about such a quickly evolving space, however, is that it becomes out of date before it even hits the shelf (for example Facebook’s recent organic search changes, and LinkedIn’s discontinued Products and Services tabs). So you must view Mansfield’s tips in a larger context, and for real-time updates you can check out her Nonprofit Tech for Good blog.
Overall I think the book holds a good deal of value for nonprofit leaders, however, I do have two criticisms.
First, for the nonprofit leader already overwhelmed by new media Mansfield doesn’t effectively prioritize where to focus. By including all major social media networks and all new fundraising tools (including untested ones like Crowdfunding) she leaves the impression that there is an endless and equally valuable list of innovations to embrace. Without a framework for prioritizing where to focus it is easy for the already overwhelmed nonprofit leader to give up. She could have discussed the merits of focusing on some of the bigger bang for your buck social media networks (like Facebook) while letting others (Pinterest) go if time doesn’t allow. Or thinking through a nonprofit’s target audience and their habits and preferences in order to prioritize staff time.
Second, I must take Mansfield to task for perpetuating the nonprofit overhead myth – the idea that nonprofits should separate their “program” and “overhead” costs. As I’ve mentioned before, this myth is incredibly destructive to nonprofits by forcing them to hide or ignore the true costs of their work. In Mansfield’s “Online Fundraising” chapter, she lists 10 best practices, of which #6 is to “Include Program Versus Operating Expense Graphics,” suggesting that nonprofits create “a pie chart graphic that shows your low fundraising and operating costs.” She goes on to mention the Overhead Myth Campaign in passing, with no irony about how she is perpetuating the myth itself. Ugh.
At the end of the day, Mansfield provides a nice overview of the rapidly changing new media landscape and some great steps for what nonprofits can do to keep up.
Photo Credit: nptechforgood.com
Today for something a little different, I’ve taken to YouTube for my blog post. My hope is that as the Social Velocity YouTube channel becomes a library of videos on various nonprofit topics and challenges, you can use the videos to spark discussion among your board, staff and donors.
So today’s topic is about getting your board unstuck and moving forward for you. The transcript of the video is also below.
If you want to learn more about getting your board engaged, download the 10 Traits of a Groundbreaking Board book, or the Getting Your Board to Raise Money On-Demand Webinar.
I know how hard nonprofit leaders struggle to get their board of directors active, engaged, involved, motivated, moving forward with their nonprofit organization. So today I want to give you three questions that can get your board engaged and invested in the work of your organization.
Before I start, though, I want to say that you get a board motivated and engaged by splitting it into its parts. You cannot get a board engaged and invested by talking to the board as a whole. So I encourage every nonprofit leader to set aside a time every year to meet one-on-one with each individual board member. And in those one-on-one conversations I encourage you to ask 3 questions of those board members that can really get them engaged and motivated.
The first question to ask them is, “What about our nonprofit’s mission and work really motivates you?” This helps you tap into each individual board member’s passion, what brought them to the board in the first place, why they are volunteering their time, and really helps them think again, remember, and be thoughtful about why they are engaged with the nonprofit and what they want to see the nonprofit to accomplish.
The second question to ask each individual board member, one-on-one, is, “What specific assets do you bring to the table as a board member?” This gets the board member and you to start a conversation about what unique skills, experience, or networks that individual board member brings to the table. So then you can start to think about, well how can we tap into this person’s unique assets?
The third question you want to ask each individual board member is, “What do you want to accomplish as a board member this year?” This puts the burden on that individual board member to be thoughtful about what they want their contribution to be as a board member. So they might start thinking about wanting to be involved in an upcoming strategic planning process, they may have some ideas about how to better market the organization, they might be thoughtful about some key decision makers that they could open doors to. There’s a whole host of things that it might start to get them thinking about how they can be specifically involved in the organization.
So, again, I think the key to engaging a board of directors is to start working with them one-on-one and asking them some really thoughtful questions that result in a really meaningful conversation that can really engage your board. Good luck!
I’ve been thinking about using Slideshare, the social media network for presentations and infographics, a lot lately. It’s an amazing site with tremendous content. I wanted to start sharing some of my presentations there.
So today, here is my first SlideShare offering, “Calculating the Cost of Fundraising.” These slides are excerpted from my Calculating the Cost of Fundraising on-demand webinar.
The concept is simple. If you want your nonprofit to achieve financial sustainability you need to analyze the return on investment of your money raising activities. With that analysis you can make smarter decisions about where you should focus your limited resources for greater financial success.
These slides and the more detailed webinar give you some quick and easy tools to use to determine the return on investment of all of your fundraising activities. The webinar then helps you compare the results of your calculations and gives you tips for deciding what to do with that information. And most importantly how to convince others on your board and staff when you have to move away from some money-losing activities (always a tricky political maneuver).
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It's time for a new kind of nonprofit leader, learn how to become one in this Social Velocity webinar.
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