Philanthropy & Funding

The Future of Fundraising

Four trends that will reshape the nonprofit landscape.

As nonprofit leaders look to leading their organizations into 2015 and beyond, it is important to recognize that change is certain and that to survive, organizations will need to adapt how they respond to donors and society as a whole. Based on the constant need for nonprofits to acquire new donors, the changes in what motivates donors to give, and the new opportunities created through technology, here are four trends that I believe will change the nonprofit landscape over the next few years.

1. Nonprofits will use advances in technology to engage donors face to face and at every giving level.

Fundraising has always been about building relationships with people who are or will be ready, willing, and able to give. Most nonprofits recognize that face-to-face interaction is the most valuable way to build those relationships, but it’s traditionally reserved for major gift development because it’s expensive, less scalable, and time-intensive.

To justify the cost of doing more, nonprofits will increasingly use new technology to identify prospects for giving before donors make mid-level and major gifts, and then use that data to drive face-to-face visits and upgrade solicitations.

The University of Louisiana Lafayette is already leveraging technology to engage general fund donors who have the potential to upgrade to middle and major levels; so far, it has raised more than $650,000 in revenue that it otherwise may not have tapped.

Organizations must approach these interactions differently than traditional major gift development, but if they re-engineer face-to-face donor engagement based on growing and sophisticated databases of financial and nonfinancial data, it will become an affordable, rapid approach to effectively building relationships and funding initiatives through giving at every level.

2. Transitional organizations focused on solving problems and then disbanding will increasingly challenge “permanent” nonprofits.

Boomers and their parents donated to nonprofit organizations as if they were paying a bill; many of today’s donors approach giving a lot differently. They donate based on perceived needs, not because they have a history with an organization.

So what is the natural next step? As donors become increasingly motivated to see results, we will see more nonprofits formed for brief, 3-to-5-year stints.

Foundations are also moving in this direction. Atlantic Philanthropies, for example, has decided to give away all of its money by 2020. The Bill and Melinda Gates Foundation has meanwhile adopted a “giving while you’re living” philosophy, based on what it can accomplish today rather than preserving of assets for decades.

What would it look like if more nonprofits formed for the purpose of addressing an immediate challenge and then ceased operations? How might it change the way we form, fundraise, fix … and finish?

3. Big data will become ubiquitous, and easier to manage and understand.

Almost every nonprofit organization monitors recency, frequency, and monetary value (RFM) data. More and more organizations are leveraging external wealth-screening data, which evaluate a donor’s capacity to give outside of their giving records. However, collecting and analyzing non-financial, behavioral data is no longer prohibitively expensive. Nonprofits have the opportunity to leverage robust, publicly available donor data points to improve their relationships with donors.

Some large organizations have already started down this path. For example, Vasser College recently leveraged big data to drive a strategy that surpassed its donor goal by 200 percent.

Big data is available—now—to all organizations, not just the big ones. With it comes a relatively untapped treasure trove. Nonprofit executives will increasingly see well beyond their existing, internal database horizons into an infinitely expandable world of data assets that inform how they acquire, engage, cultivate, and upgrade donor relationships.

4. Nonprofits will become proactive, rather than reactive, to opportunistic fundraising campaigns.

The well-known ALS Ice Bucket Challenge raised more than $100 million in 30 days and in some ways—like giving and volunteerism in response to the 2012 Haiti earthquake—defined viral fundraising. Both of these examples teach us that donors are willing to respond to social needs even if the nonprofits that benefitted never anticipated or even solicited their support.

Enter the world of opportunistic fundraising. At the risk of sounding insensitive—even exploitative—it’s time for nonprofits to leverage the incredible media awareness of the small world we live in, and develop strategies for maximizing newsworthy events that connect with their cause and mission.

Effective nonprofits will increasingly prepare well for future crises, large or small, and approach them as catalytic moments when they can make real progress. World Vision does this extremely well; it has a plan for activating donors whenever a natural disaster occurs.

The nonprofit landscape is changing; the most effective leaders will recognize this and adapt their strategies to maintain relevancy and ultimately make an impact the world.

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COMMENTS

  • BY Peter Gasca

    ON January 4, 2015 08:05 AM

    Great post!  Thanks for sharing

  • BY Scott McIntyre

    ON January 5, 2015 11:49 AM

    surprised not to hear how Crowdfunding has changed the charitable landscape.

  • Jonny Greenhalgh's avatar

    BY Jonny Greenhalgh

    ON January 5, 2015 12:57 PM

    I have also seen the advancement in the non-profit world and people thinking of charitable organizations in a new light.
    Many social enterprises are including themselves in the ‘change” landscape. These social enterprises are often for-profit companies that are created to not only impact economic processes but to also enact social change. Social enterprises are re-defying business and how people think of social problems. These businesses are offering products and services to their customers who in turn are creating change through their purchases / memberships.
    This model of business has been around for some time but is becoming increasing more popular with younger generations.
    Charity culture has changed dramatically,

    - “Boomers and their parents donated to nonprofit organizations as if they were paying a bill; many of today’s donors approach giving a lot differently. They donate based on perceived needs, not because they have a history with an organization”

    Younger donors tend to want to be involved in the process of alleviating the issue rather than just supplying financial aid. They are becoming part of the solution rather than paying for the band-aid. It is becoming increasingly popular to support these social-impact businesses and stand behind their products.

    Companies such as Tom’s, Ten Tree, Warby Parker, and Krochetkids.org are paving a new road to empowering people and social issues. Another up and coming company I have seen is Open For Change ( http://www.OpenForChange.com ) They are a social enterprise with a new social network that supples its members with volunteer opportunities, the ability to vote on different causes they support, and a fun new way to communicate with like-minded people.
    I am excited to see new social-enterprises make their way into the “change” landscape and see the impact they will create through the empowerment of people and social issues.

  • BY Jason Nicosia

    ON January 5, 2015 02:45 PM

    Future of fundraising! That’s our tagline at http://www.commitchange.com! Loved your article.

  • Curt Swindoll's avatar

    BY Curt Swindoll

    ON January 6, 2015 10:22 AM

    @Scott: Great comment. Crowdfunding is definitely making capital available to causes that would have otherwise gone unfunded. My perspective in the article was more geared to what larger NGOs can (will?) do to pursue funding in the future. In line with your comment re:  crowdfunding, I am aware of several businesses that are attempting to use technology to bridge the gap of awareness and trust that sits between between prospective donors and nonprofits. Two have been working at it for 15 years. I haven’t seen them really take off yet, but that may just be a critical mass constraint. But using technology to link donors and causes is definitely a trend worth watching. Thanks.

    @Jonny: I agree. The blending of for profit business and social enterprise has been merging for years. Good observation. For profits engage in social work to give more meaning to their work, and nonprofits are recognizing the importance of business best practices to create a more efficient and effective environment. 

    You also focused on the importance of “activation” as part of the engagement process. Great point. As you mentioned, activation may be the way someone chooses to engage in their relationship with a nonprofit; it may never involve a financial gift. What does this mean to a nonprofit that needs more than volunteerism to fund the mission?  They need to see donor acquisition as more than a single step process. It increasingly involves a multi-step effort: acquire the name, activate the relationship, ask for the gift, and acknowledge the support in whatever form it comes..

  • BY Scott McIntyre

    ON January 6, 2015 10:39 AM

    Thanks @Curt for your reply. Always hate seeing a perfectly useful comment section go unused! I also appreciate your reply. And to the benefit of those that are following this, I could also add that larger NGOs could find Crowd dynamics fruitful as well—both funding and sourcing. I recognize that shifting NGO operations to focus on smaller projects instead of large gala fundraisers or whatever their M.O. is would be disruptive for some, but I think it is only going to continue to grow in this direction. I see that alongside the satisfaction to donors of more transparency as to where their dollars are going and what benefits they deliver (instead of the anonymous realm of a general fund), there is the benefit to the organizations of more intimate/meaningful relationships with donors…even bridging into where donors would be more inclined to pledge more than a few dollars—ie, their own time (and even more importantly, their networks), even if it’s as simple as forwarding an email or tweeting a post. And beyond that it’s more likely that donors would engage in efforts that are more focused, especially to recipients local to them. I know it’s anathema to some NGOs whose purpose is for deep solutions to specific problems, but to those that have a broader mission, I think smaller, more frequent, and localized efforts will be greeted with appreciation by the many donors who otherwise grow tired of the same old yearly pledge drive. Many of my thoughts come from how people view crowdfunded campaigns, vs traditional fundraising, and from my experience with University foundations. I hope it’s helpful. Cheers.

  • BY Scott McIntyre

    ON January 6, 2015 10:50 AM

    @Jonny, your comments seem to describe a new theme that’s beginning to flex some muscle, namely “the Triple Bottom Line”. We are beginning to see municipalities, states and finally Wall Street recognize that benefit to Community is of benefit to the corporation is of benefit to the culture is of benefit to the economy…readers might want to wikipedia the following terms PRIs, L3C classification, and B-Corps (Benefit Corporations). Happy reading and please share. It’s a good subject!

  • Jonny Greenhalgh's avatar

    BY Jonny Greenhalgh

    ON January 6, 2015 11:54 AM

    @Scott yes I was talking about the “Triple Bottom Line” I have also seen the shift that communities and companies alike are using it as a model for development. I also am quite immersed in B-Corps. I’m currently in the process of creating one with some friends as well as my own business.
    @Everyone let’s keep the conversation rolling, it is such a great subject and very important for others to see the shift of development and what it truly means.

  • BY Lea Chambers Volpe

    ON January 7, 2015 02:33 PM

    I like the direction of the last few comments re: how “partnerships” seem to be an emerging trend in social enterprise development. Social enterprises are most effective when they are generated from the bottom up, have support from government (rather than roadblocks) and engage locally based NGOs as well as perhaps multi-national or national for profit organizations to help drive strategy, execution and promotion. It’s a very positive development to be sure.

  • Jonny Greenhalgh's avatar

    BY Jonny Greenhalgh

    ON January 8, 2015 10:33 AM

    @Lea partnerships, collaboration, and open source information is what will enable these Social Enterprises to evolve. From what I’ve learned thus far, collaboration is key to any successful business. Finding solutions through connectivity and community connections is you solve the problems of today. Once those solutions have been fulfilled you move on to the next problem, and so on.

  • BY Scott McIntyre

    ON January 8, 2015 12:50 PM

    @Jonny @everyone, “finding solutions through connectivity and community…” is what I would call a definition of Crowdsourcing (I like to explain sometimes that Crowdfunding is an application of Crowdsourcing strategy)...but the funding part is what so many are rightfully excited about…including me. I volunteer and sit on the Board of Directors of the Crowdfunding Professional Association (cfpa.org/meet-the-board.html), so if i can be a resource on in the subject for @nyone, feel free to reach out. I speak on the subject quite often, maybe too much.

    And if it’s OK to mention, I’m always looking for like-minded colleagues because my company has numerous ventures in development at any one time and good people are the hardest thing to find. So if it interests you, I can tell you that I recently started a new company focusing on hyperlocal economic revitalization via entrepreneurship support and development, in my case starting with students here at Univ of Toledo. Temp site i threw together is at http://COcampus.org. The other ventures are linked in my expanded CfPA.org profile, link above. I’d love your feedback if you have a moment to spare. Regards, Scott

  • Jonny Greenhalgh's avatar

    BY Jonny Greenhalgh

    ON January 8, 2015 01:15 PM

    @scott Thanks for the info, I’ll definitely check it out and provide feedback.
    The company I am involved with ( http://www.OpenForChange.com ) is a new social network that helps charities and non-profits to crowd source and get members to vote on their cause.
    You should check it out and also provide some feedback. I would really appreciate it.
    If you would like to do so, my email is .(JavaScript must be enabled to view this email address)
    Thanks for your contributions to the discussion.

  • BY John W. Pearson

    ON January 9, 2015 01:42 PM

    Curt…Good stuff!  I shared it with a client.  I do wonder, though, what the long-term effect will be of the Ice Bucket Challenge (and similar wanna-be expressions).  Gimmick-giving, in my opinion, sends the wrong signal about generosity.

    You may have seen the take-off on the beer commercial’s “The Most Interesting Man in the World.”  The photo-shopped caption read, “I DON’T ALWAYS DONATE TO CHARITY, BUT WHEN I DO, THERE’S NO ICE INVOLVED AND I DON’T TELL ANYBODY.”

  • BY Scott McIntyre

    ON January 9, 2015 01:54 PM

    @John, that’s a classic. Have not seen that take-off, but I did go as that guy to Halloween last year!

    But on the subject of gimmicks, I agree that they can put off the wrong message, but creativity wields a heavy hammer in an otherwise diluted mindshare, especially of people used to being called on for donations. So any trick that gets the message out is usually worth the price of the cliche afterwards.

    As to generosity, I’m sure there’s some metrics that illustrate it better, but what I’ve seen since Crowdfunding hit the radar is that charitable orgs have benefitted most. So, those with better transparency seem to be enjoying better numbers…all the more where the beneficiaries are local.

  • Curt Swindoll's avatar

    BY Curt Swindoll

    ON January 9, 2015 02:12 PM

    @John, I don’t see the ice bucket challenge as a trend either, and my reference to it certainly wasn’t intended to suggest it was. I think it is noteworthy. It went viral, and it made outstanding use of social media which many fundraisers have struggled to do. The connection I DO see is the idea of being opportunistic and creating opportunities to give to something on everybody’s mind. Replicating the Ice Bucket does feel gimmicky and will likely fall flat. But if NGOs can use media-created awareness to focus attention on a cause people are inclined to give to, that’s something that won’t be perceived as gimmicky or donor-centered.

    For example, our firm helps the Univ of Alabama raise a lot of money in the wake of its recent run at the National Championship. We simply leveraged a lot of media attention and social media to drive people to “Plant Your Flag” on a map and to ultimately give to the university.

  • Sonia Stamm's avatar

    BY Sonia Stamm

    ON April 24, 2015 04:21 AM

    I’m late to this “party,” but eager to pose a new question: what impact will these trends in fundraising have on the board’s role in philanthropy? Been looking for research, expecting a shift toward more separation between board membership and donor influence, but not seeing much yet.  Would welcome thoughts.  Thanks!

  • Curt Swindoll's avatar

    BY Curt Swindoll

    ON April 24, 2015 08:27 AM

    @Sonia, why do expect to see greater separation between boards and donors? I imagine board responsibilities will shift as the nature of nonprofits change. But I anticipate they will continue to be involved, and if anything more deeply, in the future funding efforts of nonprofit orgs.

  • Sonia Stamm's avatar

    BY Sonia Stamm

    ON April 24, 2015 01:13 PM

    @Curt, thanks for responding. I should clarify—my comment was more about transparency than engagement. Robert Reich recently blogged about “the insidious ways colleges and nonprofits are beholden to their wealthy donors.” Made me wonder—if boards grow reluctant to bite the hands that feed their organizations, will the future bring a change in their governance capacity, fundraising roles, and/or relationships with donors?

    The experience of reading your blog and his—both insightful and thought-provoking—was striking!

  • Curt Swindoll's avatar

    BY Curt Swindoll

    ON April 24, 2015 02:17 PM

    @Sonia, it is hard to imagine it will. It’s a conundrum, isn’t it? Major gifts come from people who expect to have a say in how their funds will be used. A gift of $100 may be more significant to one person than $100,000 from another. But the $100 gift rarely comes with an expectation that the donor will be able to direct the decisions of the beneficiary. Organizations/institutions must ultimately decide whether their commitments to wealthy donors are resulting in a sacrifice of their integrity and their commitment to the social good of their constituencies. If so, that could ultimately hurt their standing in the community and decay other sources of funding. It takes strong leadership to weigh the impact and discern when the acceptance of a major gift will ultimately do more harm than good. I know plenty of leaders who have turned down major gifts. Donors have a right to stipulate how their gifts will be used, just as leaders have the right to just say no. But it’s hard to see how this is going to change the expectations of wealthy benefactors.

  • BY DC Wadley

    ON January 6, 2016 09:50 AM

    Buck4Good.com and Buck4Change.com are poised to be the best route for non-profits to harness crowdfunding. Also, organizations can create their own crowdfunding site, skinned to look exactly like their own site, linked to these for 1% of the cost of building their own and it is managed for them for a smaller % than GoFundMe or other similar sites.

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