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The Power of Digital Fundraising

January 18, 2014

(Charise Flynn is the chief operating officer at Dwolla, a payment network that allows any business, organization, or person to send, request, and accept money. Dwolla reduces transaction costs and offers free tools, making it a popular option among a new generation of nonprofits.)

Digital_fundraisingA few clicks on a screen brings up a familiar face — your sister, two thousand miles away, ready with her weekly update. With a few taps on your smartphone, a taxi pulls up and speeds you to your favorite restaurant to meet your spouse. Another few taps, and you deposit a little extra in your babysitter's account after she agrees to stay late with the kids.

Smartphones, instant access to information and entertainment, and a host of digital technologies are changing the way consumers think, feel, and act. This poses unique challenges and opportunities for many industries, including the nonprofit sector.

According to a recent survey by the Nonprofit Finance Fund, 42 percent of nonprofits say they lack the right mix of financial resources to thrive and be effective over the next three years. It's a finding which strongly suggests that nonprofits need to rethink the way they raise funds.

Let's face it: the Internet is everywhere and with all the connectedness comes new, affordable opportunities for nonprofits to expand their reach, reduce the friction associated with fundraising, and collect more donations from more people.

Spontaneous Donations and Social Media

Everything about direct mail and sending a donation to a nonprofit via paper check screams friction — and the steadily falling number of checks cut, from 37.8 billion in 2002 to 18.3 billion in 2012, illustrates the point.

But if paper checks are an analog technology whose time has just about gone, the Internet is enabling nonprofits to reach new donors and provide them with a quicker, safer, and more pleasant donation experience. For instance, a Donor Perspectives white paper from Blackbaud recently noted that 80 percent of survey respondents make "one-off" donations online, underscoring one of the most important aspects of digital technology — its ability to reach people "in the moment."

Did you see President Obama's video on Vine thanking the Batkid for "saving" Gotham City? A growing number of businesses and influencers are using Instagram and Vine to market their products and services, and nonprofits can learn from those efforts – showcasing inspiring photos and videos that illustrate your organization's impact can be a powerful way to move followers to action. In addition to the traditional social media tools, nonprofits should also look into new platforms such as Thunderclap, which uses crowdsourcing to amplify a nonprofit's message and make sure it reaches the right audience.

Digital Payments

Whether through your Web site, a social networking site such as Facebook or Twitter, or platforms like redditDonate.com, there are countless ways for your organization to reach new audiences and raise funds. Because many of these platforms do more than aggregate online donations, nonprofits should weigh the pros and cons of each before diving in.

Network for Good's Donate Now service provides nonprofits with a variety of fundraising tools, as well as a platform for accepting donations. However, you'll be paying $59.95 to $149.95 a month for an account, on top of a minimum 3 percent fee on all transactions.

Another popular option is PayPal, which has a discounted 2.2 percent (+ $0.30 transaction fee) option for nonprofits.

A lower-cost digital option is Dwolla, which charges a flat $0.25 on donations over $10 and is free for all donations of $10 or less. Dwolla's Form Builder and a host of other free tools allow nonprofits to develop simple landing pages that allow them to collect donations quickly, safely, and at low cost.

Text Messaging

The No. 1 cell phone activity today is text messaging. While costly, SMS donation platforms have a proven track record in terms of capturing the "impulse" giver. The disastrous 2010 earthquake in Haiti – in response to which individual donors contributed $43 million for relief efforts simply by texting their donations to the Red Cross — demonstrates the power of SMS donation platforms.

The platform behind the Red Cross' successful Haiti campaign was mGive, which has worked with other large nonprofits, including the United Way, PETA, and Amnesty International, on cause-specific campaigns. The Mobile Giving Foundation, which helped raise funds for the American Humane Association and Salvation Army after Superstorm Sandy, is another popular text-message donation service.

When considering an SMS campaign, however, it's important to take into consideration the cost, which can be as much as 5 percent to 10 percent of each donation, as well as thousands of dollars on top of that to secure a five-digit text number.

Crowdfunding

Leveraging the network effects of the social web, online platforms such as Indiegogo and Kickstarter have helped entrepreneurs and artists raise over $710 million for their projects or inventions. Another site, HopeMob, which attracted more than half a million users over its first six months, highlights various nonprofit causes and organizations and provides its potential donors with a simple way to find, care, and give.

Online crowdfunded challenges such as Chase Community Giving and the Pepsi Refresh Project also have been popular, especially among small and medium-sized nonprofits, and demonstrate, if nothing else, that the time to invest in your social media efforts is now.

Digital technology will continue to evolve and provide forward-thinking nonprofits with opportunities to rethink how they raise money and cut costs. That doesn't mean nonprofits should embrace every new technology and fundraising trend as soon as it emerges. But it does suggest they should take the time to look into as many as they can and do their best to evaluate how those technologies might help them reach their fundraising goals in the long run.

Is your organization using social media or other digital technologies to raise money? Have a tip, a favorite tool or platform, or a success story you'd like to share? Use the comments section below....

-- Charise Flynn

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