NONPROFIT FUNDRASINGREMOVING ROADBLOCKS AND MEETING GOALS WITH MOBILE TECHNOLOGYTAYO ADEMUYIWA, M.D., AND MATT CHANDLER

ROADBLOCKS TO FUND DEVELOPMENT...................................2

THE VICIOUS CYCLE OF FUNDING.............................................4

CONVERTING PROMISES AND PLEDGES...................................5

LOOKING FOR ONLINE SOLUTIONS...........................................7

USING SOCIAL MEDIA TO SPUR DONATIONS............................9

THE EMERGING ROLE OF MOBILE TECHNOLOGY..................11

MEETING NONPROFIT GOALS WITH MOBILE APPS................13

KEY FINDINGS............................................................................15

REFERENCES..............................................................................19

TABLE OF CONTENTS

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Nonprofits face a multitude of challenges, including an ever-expanding abundance of organizations vying for the same donor dollar. Because of this competition, perhaps no issue is as fundamental to the survival and success of nonprofits as those that bring instability to fund development.

That instability is often reflected in a high turnover rate among directors of fund development. Recently released findings of a study sponsored by the Evelyn and Walter Haas, Jr. Fund and CompassPoint reveal that today’s nonprofits often find themselves in a battle to maintain continuity in development efforts. But while the symptom of development problems is often reflected in difficulties filling and maintaining the director position, this staffing issue is merely a symptom. A closer look reveals that a lack of basic fundraising systems is at the root of the problem and having a stifling effect on donations to nonprofits.

The study’s report, “UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising,” goes on to reveal the

THE VICIOUS CYCLE OF FUNDING

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No issue is as fundamental to the survival and success of nonprofits as those that bring instability to fund development.

cyclical effect that inefficient in ineffective fund development can have on nonprofits.

Lack of funding has direct impact on the performance of the nonprofit organization. Failure to perform negatively impacts giving, which then in turn leads to further declines in performance due to lack of resources. From there, the cycle starts all over again, eventually leading to an organization’s serious decline and eventual demise. (2)

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But freeing themselves from such a vicious cycle is no simple task. According to David H. Bangs in his book, Nonprofits Made Easy, it isn’t a lack of identifying potential donors and funding opportunities that hamper fund development efforts. Instead, most small nonprofit organizations make the misstep of spreading themselves too thin by aggressively pursuing every last potential avenue in attempting to attract the greatest number of givers. (4)

The result is that all fundraising efforts become diluted and attaining fund development goals falls by the wayside. Over time, this approach can erode the organization to the point it begins losing sight of its mission. Services suffer and the vicious cycle of weakened performance and reduced funding is further fueled.

Nonprofit organizations are better off targeting potential donors, then selecting a donor approach that provides the services necessary to make donating a positive and easy experience. (4)

ROADBLOCKS TO FUND DEVELOPMENT

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As part of efforts to solicit donations, most nonprofits enable potential donors to pledge a donation of a specified amount, allowing the donor to delay making the donation. Successfully soliciting donors to make a pledge may give nonprofit organizations a false sense of security that a giver will follow through on what is promised and in the end, the organization will get all the donations that were promised. Although it can vary by jurisdiction, pledges to a nonproit are generally considered to be a legally enforceable contract. (6)

But as Thomas Troyer, a tax lawyer, points out, nonprofits seldom enforce the law where unfulilled pledges are concerned. Troyer advises and represents private foundations and other tax-exempt organizations at the Washington firm of Caplin & Dryasdale. The reason such laws are not enforced is obvious. The chances of actually collecting the sum that was pledged is quite low and could cost additional dollars most nonprofits can’t spare. Even more of a deterrent, however, is that any such lawsuit is likely to turn off potential future contributors. Pursuing one pledge that was never realized could also cost a number of

CONVERTING PROMISES AND PLEDGES

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future contributions from other donors who were turned off by the litigation, in effect multiplying the negative impact of the lost pledge. (6)

There are a number of approaches nonprofits typically rely on to fundraise, including solicitation by phone, mail and now email, as well as in-person requests, crowd funding, event-related funding, contests and social media campaigns, to name but a few.

Some of these avenues include a donation mechanism that enables donors to immediately contribute, while others put the burden of following through squarely on the shoulders of the prospective giver by forcing donors to take additional steps once a promise or pledge is made. The ease of those steps necessary to follow through can determine the difference between funds received and good intentions left unfulfilled.

In many cases, completing payment of the donation can involve multiple steps, such as writing out a check, finding an envelope, buying postage and mailing the donation. With each step, nonprofit organizations run the risk of losing out on the donation. Compare this process with soliciting donors at a fundraising event where givers are able to immediately provide contributions.

Once ease of giving has been addressed, the second critical factor in turning promises into contributions is in the amount of time that is allowed to pass between a potential giver’s initial decision to contribute and his or her opportunity to actually do so. It is the combination of these critical factors that has given rise to online giving portals and mobile donations.

With each step, nonprofit organizations run the risk of losing out on the donation.

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Use of the internet to enhance fund developing efforts is nothing new. The continued availability and use of the internet has left a growing number of nonprofit organizations seeking online solutions to their funding needs. For many, those efforts have taken the shape of online donor forms on their website, but such solutions are not without their own challenges, specifically the need to accept payment. (7)

Nonprofits will find credit card processing has become a commodity, allowing them to shop around for the best deal before opening a merchant account so they can take credit card payments online. But identifying the best deal isn’t only about

LOOKING FOR ONLINE SOLUTIONS

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finding the lowest-cost processing fees. Choosing an online or mobile payment processing option should involve considerations of security, reliability and overall ease of use. (7)

Nonprofits are also turning to third party online payment processors, such as PayPal, which has more than 200,000 nonprofit accounts and handles nearly $1.8 billion in transactions a year. A growing number of small nonprofits have chosen to use PayPal donation buttons as turnkey solutions to accepting donations online. Others have opted to make use of an entire suite of PayPal business and donation services to handle a broad range of transactions. (7)

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White nonprofits are using social media networks in growing numbers, there has been little evidence that Facebook and Twitter are being used in large numbers to solicit donations, at least in a direct manner.

But one recent exception may stand to illustrate how social media sites can contribute directly to fundraising eorts in a big way. The ALS Ice Bucket Challenge went viral in large part due to its visual appeal. It challenged participants to either post a video on social media of having a bucket of ice water dumped over their heads or make a $100 donation to ALS, or both, within 24 hours of being challenged.

Social media sites provided the platform that turned the Ice Bucket Challenge into a global fundraising movement that raised in excess of $100 million in donations over a 30-day period.

The Case Foundation, in collaboration with Social Media for Nonprofits, surveyed nearly 500 nonprofit professionals with the responsbility for social media and communications. An overwhelming 88 percent of nonprofits responded that emails

USING SOCIAL MEDIA TO SPUR DONATIONS

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and the organization’s website were their most important communications tools, despite 97 percent indicating their organization was on Facebook.

Researchers concluded most organizations think of communications importance in relationship to donations, which explained why a majority did not consider social media networks as important as websites. About 74 percent of respondents identified social networks as being used primarily for event announcements or organization-related inormation. Getting an individual to retweet or repost a comment is only considered significant if that action can be traced to a specific donation being made. (8)

Social media turned the Ice Bucket Challenge into a global fundraising movement that raised in excess of $100 million in donations over a 30-day period.

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Mobile technology use continues to grow, with just under 60 percent of all American adults owning a smartphone and about 42 percent using a tablet device. According to the Pew Internet Project (2014), about 61 percent of adults living in households with annual incomes of $50,000 to $74,900 have smartphones.

Even more eye opening is the finding that as much as 81 percent of adults living in households with annual incomes of $75,000 or more have smartphones. Those increasing numbers are not going unnoticed by nonprofits, eager to reach a pool of potential donors via opportunities for text donations or similar approaches.

Earlier research from the Pew Research Center’s Internet & American Life Project revealed that one in five U.S. adults, or about 20 percent, have made a charitable contribution online, and that one in 10, or about 9 percent, have made a charitable contribution using the text messaging feature on their smartphone.

So what does this trend in technology mean for nonprofit organizations? With many simply trying to stay aloat, the thought

THE EMERGING ROLE OF MOBILE TECHNOLOGY

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of incorporating further technology into their development efforts for a proprietary charity app or donation app may seem far beyond reach. Scarce resources are often allocated elsewhere first, causing further harm to the nonprofit’s image with potential givers who may perceive the organization as being incapable of providing useful services or making use of technology to advance a cause. Unfortunately, this perceived reputation is often on the mark. (5)

Despite awareness of technology’s role as an effective tool in fundraising, it can be difficult for the executive director of a nonprofit to consider a mobile campaign, for example, when he or she is faced with the reality of hiring non-paid interns or high school students just to keep a web presence. (5)

Unfortunately, nonprofits that don’t have the capacity or resources to establish a strong digital presence could soon find themselves unable to compete with other organizations. Online marketing can be used to raise money and build awareness, as well as draw the attention of new funding sources. (3)

Development of a mobile app often equates to a significant investment, an all-too-common hurdle for nonprofits.

There are options that can ease the development cost of mobile apps and other digital tools so these technologies are no longer cost prohibitive for nonprofits hoping to increase donations and build awareness. For example, those organizations hoping to use a mobile app for the purpose of building awareness of their mission may find assistance from a program sponsored by the Institute of Electrical and Electronics Engineers that matches nonprofit requests with an engineer volunteer from among 400 program participants. (9)

There are also a small number of grants available to assist nonprofits in using innovative technologies. However, with funding at risk and competition stiff, nonprofits may find it advantageous to explore other avenues, such as soliciting in-kind donations for technical services.

Yet another option for nonprofits is to make use of third party mobile apps specifically targeting charitable giving. There are a number of mobile apps designed to provide donors with a giving app enabling donations to their favorite charity.

Development of a mobile app often equates to a significant investment, an all-too-common hurdle for nonprofits.

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With a number of options available to address cost concerns, mobile technology is emerging as an increasingly significant tool for nonprofits to make an impact, not only in pushing content but in fundraising itself. However, despite its potential, many nonprofits have dragged their feet rather than allocate time and monetary resources to get a mobile charity app off the ground.

Fundraising will likely surface as the primary reason nonprofits incorporate the use of mobile apps. There are a few challenges to the steady growth of mobile app use by nonprofits. For example, unlike Android, Apple prohibits the use of its operating system for directly accepting charitable donations,

MEETING NONPROFIT GOALS WITH MOBILE APPS

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but does allow any fundraising apps to direct users to a nonprofit’s mobile site. While this would seem to provide some limitations that might discourage developers, a number of these new fundraising apps have become available on the market that cater to mobile users.

When designed specifically for nonprofit donations, these apps can provide additional beneits, such as donation tools and summaries of tax deductible donations. These enhancements, coupled with the ease of making a donation with a few taps, are likely to spur continued growth of the mobile giving sector.

Mobile technology is emerging as an increasingly significant tool for nonprofit fundraising.

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KEY FINDINGS

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KEY FINDING 1: THE ALS ICE BUCKET CHALLENGE WAS A SUCCESS BECAUSE OF SOCIAL MEDIA.

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KEY FINDING 2: SOCIAL MEDIA AND MOBILE PRESENCE CAN LEAD TO INCREASED DONATIONS.

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KEY FINDING 3: THE PREVALENCE OF SMARTPHONES MEANS MOBILE IS CRITICAL FOR MEETING FUNDRAISING GOALS.

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REFERENCES

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1. “Underdeveloped: A National Study of Challenges Facing Nonprofit Fundraising.” CompassPoint. CompassPoint Nonprofit Services, n.d. Web. 18 Sept. 2014 <http://www.compasspoint.org/underdeveloped>.

2. Bell, Jeanne and Marla Cornelius, UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising (San Francisco, CA: CompassPoint Nonprofit Services and the Evelyn and Walter Haas, Jr. Fund, 2013).

3. Pope, Elizabeth. “Fundraising Via Mobile Apps Can Still Be a Challenge - The NonProfit Times.” The NonProfit Times. The NonProit Times Publishing Group, Inc., m.d. Web. 20 Sept. 2014. <http://www.thenonprofittimes.com/news-articles/fundraising-via-mobile-apps-can-still-be-a-challange/>.

4. Bangs, David H. Nonprofits Made Easy. Irvine, CA: Entrepreneur, 2006. Print.

5. Stringfellow, Angela. “Challenges Facing Today’s Nonprofits.” OPEN Forum. American Express Company, 2 Mar. 2012. Web. 19 Sept. 2014. <https://www.americanexpress.com/us/small-business/openforum/articles/challenges-facing-todays-nonprofits/>.

6. Lipton, Lauren. “Strapped for Cash, and Worried About a Pledge You Can’t Afford.” The New York Times. The New York Times, 10 Nov. 2008. Web. 20 Sept. 2014. <http://www.nytimes.com/ 2008/11/11/giving/11DEFER.html?pagewanted=all&_r=0>.

7. Hrywna, Mark. “Online Payment Systems - The NonProfit Times.” The NonProfit Times. The NonProfit Times Publishing Group, Inc., 1 Oct. 2011. Web. 20 Sept. 2014. <http://www.thenonprofittimes.com/news-articles/online-payment-systems/>.

8. Sharma, Ritu. “NPQ.” How Nonprofits Use Social Media to Engage with Their Communities. Nonprofit Quarterly, n.d. Web. 21 Sept. 2014. <https://nonprofitquarterly.org/management/23837-how/nonprofits-use-social-media-to-engage-with-their-communities.html>.

9. Sethuraman, Anusha. “Nonprofits Leverage Mobile to Make an Impact.” New Relic Blog. New Relic, Inc., 15 Apr. 2014. Web. 18 Sept. 2014. <http://blog.newrelic.com/2014/04/15/nonprofits-and-mobile-apps/>.

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