17 June 2013

Appealing to (potential) Donors

Personalizing your NPO’s Fundraising Activities

NPOs are always looking for new ways to attract as many donors as possible. An important element of their strategy to achieve this is the way they present their projects to potential donors. For a long time the emphasis was mainly on citing statistics, such as: ’last year 1 million animals were able to receive our help...’. However, more and more NPOs came to realize that in order to be more appealing to potential donors they need to ensure that engagement between the content of their projects and their donors is realized. This called for a different strategy and has often been referred to as ‘personal fundraising’. So what does this term incorporate and how should NPOs go about when applying personal fundraising techniques?

Although the usage of statistics is in itself not a bad thing, it should be used selectively in order to provide some additional information to potential donors. People cannot relate to plain statistics, so fundraising should have a more personal touch. There are various ways an NPO can make fundraising more personal. Often you will see that NPOs focus on an individual who was helped, or will be helped, by the donor’s gift. These appeals often look like: ‘meet Sara, a patient helped by someone like you…’. In addition, it has also been proven effective if an NPO provides suggested gift levels as guidance. That is to say, you make it very concrete to the donor what his or her donation will be able to accomplish. Think about: “$50 feeds a kitten for one month” for example. This type of personal fundraising is often used with the combination of photo’s or videos to achieve a high level of donor engagement. Next to these types of personal fundraising, there is another way that has proven to be very effective, namely that of friend-to-friend fundraising. When an NPO contacts potential donors, the donors are likely not familiar with the NPO and the message constitutes just one of the many communications people receive everyday. However, if an NPO asks its supporters to contact their friends and family, it suddenly becomes a lot more personal. The supporters of your NPO can therefore function as a crucial intermediary and basically lend their “brand” to the NPO’s cause when they endorse it. It is important for NPOs to realize that people often give with their heart and not with their head, so friend-to-friend fundraising should be high on the priority list. 

ikifu has focused extensively on the way the projects of the NPOs are presented on its platform. Instead of merely stating statistical facts, ikifu has used engaging storytelling for its projects in order to appeal to potential donors. In addition, the platform also makes use of indirect friend-to-friend methods. If people make a donation and share this on their social media, their friends will notice and might be encouraged to get acquainted with the content of the project. Next to this, people are also able to choose how their donation will be spent, since the platform offers different ways to contribute to a project, which simultaneously makes it very transparent. Finally, the bono-point system on the website, although still in the initial stage, might be able to encourage donations if people see how others have contributed to the social good.

10 June 2013

The NPO Paradox

For-profit business models for NPOs

A slogan that has become widespread in the third sector is that of: ‘no money, no mission’. This refers to the fact that an NPO’s mission will simply fail if, despite all its efforts and good intentions, it lacks financial means. At the same time, governments are currently often faced with budget cuts and are therefore less willing and able to support NPOs financially. Nevertheless, society increasingly expresses the need for NPO activities, which generates an interesting paradox for the nonprofit sector. This paradox implies that the not-for-profit sector needs to increasingly rely on for-profit business methods in order to remain sustainable. However, resorting to such a strategy can potentially undermine the mission of an NPO and its public image. So what should NPOs do in order to prevent this? 

The issue that needs to be addressed is: how can an NPO embrace business practices to assure its financial sustainability while simultaneously not undermining its culture, mission, and public image. Three things are key here: governance, management and mission. As for governance, the NPO needs to recruit members who are driven by passion for the mission instead of the reward. For example, when a CEO is not motivated by the NPO’s mission he will be seduced by profitability, the marker of for-profit success, and this will harm the NPO’s public image. Management-wise, an NPO should aim for a horizontal organizational structure as this promotes a closer connection between the management and the staff. As a result, the management is continuously reminded of the mission of the NPO by the input of the staff. Too vertically organized NPOs will have the tendency to become disattached from their actual mission, since there is less input from the operational staff of the NPO. Finally, as for the NPO’s mission, society values the nonprofit sector because it satisfies recognized needs not addressed by government or the for-profit sector. Hence, NPOs need to ensure that their mission remains in-line with publicly valued services that, because they bring no profit, no one else provides.

Since i-kifu is still a relative small and young organization it has not resorted to any for-profit business models, like recruiting a more business-minded management staff and using external professional consultants for risk management. However, if i-kifu were to consider such business practices in the future it is important to keep the three above mentioned aspects in mind. That is to say, even if i-kifu were to engage in a full for-profit business model, it needs to ensure that its main mission of supporting NPOs in their fundraising activities remains a top priority over the actual profit making.

03 June 2013

Increasing your NPO’s Donor Retention

Cultivating your Donors

Donor retention should be one of the most important focus points of an NPO, besides its actual mission. Although it is said that it is easier to keep a donor than it is to find a new one, research proves otherwise. That is to say, a US survey shows that around 70% of first-time donors don’t make a repetitive donation. The question that follows is: why is this the case and what can be done about it? It is important to understand that first-time donors strongly believe in the mission of an NPO and will therefore want to support it with a financial contribution. However, when a new donor gives to an NPO, it's the responsibility of the NPO to take consecutive steps. This means that the NPO should try to build a sustainable relationship with the new donor, instead of only thanking them for their money and move on. The way this can be done effectively is through ‘donor cultivation’ and is graphically shown below. As the graph shows, donor relationships will become more sustainable if donors are properly cultivated during the retention stage of the relationship with the NPO.

Once a new donor gives, it’s up to the NPO to turn that minimal relationship into a true long-term affiliation. This means that the NPO needs to treat new donors as new customers who feel that the organization appreciates their (financial) contribution. This process is called ‘donor cultivation’ and should constitute a significant part of an NPO's fund-raising activities. There are various ways to cultivate new donors, such as: regular newsletter, coupons, calls, updates on projects, and invites to non-ask events. Obviously an NPO does not have the resources to personally address each donor, so it should set up a system that targets specific groups of donors. Preferably multiple donor cultivation systems are in play, since an NPO will have donors in different stages of the mutual relationship.

Recognizing the importance of donor cultivation, i-kifu also aims to build long-term relationships with its donors. That is to say, the people who donated to an NPO via the i-kifu platform receive updates on developments of the project they supported. These activity reports provide the donors with interesting follow-up information and can generate a higher level of donor engagement. In addition, keeping donors informed through newsletters on how they can physically contribute to projects is also an important aspect of the cultivation process and something that i-kifu could consider. Finally, donors should be given the possibility to participate in meetings with the NPOs they have supported, in order to get them more involved. If I-kifu were also to pursue this kind of donor cultivation, it could build sustainable long-term relationships with its donors, who will thereby contribute more money to the platform. Increased donor cultivation should therefore be high on i-kifu’s priority list.