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Fundraising Into the Future – and BEYOND!

Published by Mitchell Hinz on

There’s a debate in the fundraising industry about the future.  Not whether we will all have jobs;  no, everyone’s pretty sure about that. The world’s problems aren’t going away, and in fact we seem to be creating problems at about the same rate we’re solving them, so the world will probably need NGOs in the foreseeable future, (and they will need funding), but that’s another blog.

No, the debate is about the digital revolution.  First we had the “internet” (small “I”), then the Web, and now we have the portable Web – its called a “smart phone” in case you just climbed out of a cave – and a new place where people talk to friends and family, share things, even donate already, called social media, which right now is mostly Facebook and Twitter, but which will grow and diversify with Tumblr, and Pinterest, etc.

So the REAL QUESTION is this:  has the advent of the digital medium “changed the game” of fundraising?  Or has this simply expanded the methods we use to fundraise?   To put it in MBA terms,  do new digital activities raise *incremental*  income, that would NOT have been raised otherwise, if we couldn’t ask for donations over the Web or phone? Or is it just taking over the more tied-and-true methods?

To answer that, we really only have to ask ourselves one question:  are people DONATING more?  Globally?  I mean, think of Amazon.com. Do people buy MORE books now that Amazon makes it so easy, or do they simply buy them differently?  Or, has Amazon.com actually created more readers?

To come back to donating, it seems the answer is:  a little bit of both.  More people do seem to give now, and those who gave before do give a little more.  But there is also a third answer.

Let’s look at the data:

Global giving is tracked fairly well in the United States, and every year, US citizens donate about US$300 billion dollars to charities and nonprofits. (If you want to know where this money all goes, the answer is: mostly religion and education. The rest of us fight for the remaining 20 percent or so).  The key metric, however, is that this amount has grown over the years only at about the same rate as inflation (in other words, at the same rate as the money supply.)  The Combined Average Growth Rate (CAGR)of charitable giving in the US, which has gone from (roughly) US$ 110 million in 1970 to US$ 300 million in2010 is about  2.8%, as we can see.  The inflation rate for the US is, historically, between 2 and 3%.

So overall, in the big trend, the advent of digital giving has not turned us, globally, into an army of Rockefellers or Carnegies.  US citizens still give pretty much 3% of their income to charity (in the UK, its closer to 4% by the way) .

But there has been a shift.  Look again at the bar chart:  You can see that, for years,  global giving rose steadily until about 1995, and the CAGR for that time was a bit over 2.1%, from 110 to 180 billion.  But from 1995 to 2000, it rose from 180 billion to 240 billion in just five years, 60 billion in just 6 years (of data). That’s almost 5%.  And then in 2000 to 2004, it didn’t just flatten, it shrank.  Then rose from 240 to its current 300 billion, and then it shrank again, and now we’re back to 2005 rates, with another spike in the middle.

So giving suddenly increases, and then it spikes, and then recedes, but all generally within the same range, after years of being steady? Yup, that’s right.

Well,  what happened in 1995 that caused giving to start these updwards (and downwards) trends?  Duh.  Web giving.  Welcome, new donors:  International Red Cross, Concern Worldwide, and a few other visionary groups were suddenly able to provide real-time crisis images and news onto the Web, along with real-time opportunities for giving. And new donors, younger donors, did  begin to give.  Not in huge numbers, but enough to start the scale moving up a bit more quickly. In the same way that pornography drove the VCR revolution, international crises have driven the growth of digital giving, going to scale during the Asian tsunami in 2004, and the Chinese earthquake in 2008 in Sichuan, where more than a billion and a half dollars were donated in one direction, just a few months, and much of it online. (And, in turn, the 2010 Haiti earthquake heralded the real appearance of mobile giving, where relief groups got huge responses for requests for mobile-related gifts.)

So the helicopter view actually tells us three things: more people are giving (at least, we had a trend for a bit there), they are giving a bit more, but even more importantly, they give when they need is there, but then many of them stop when the need is not there.  So what we are doing better now, via the digital medium, is responding to crises, and perhaps even more importantly, we are moving money around a lot faster, and getting money to where it needs to be a lot better.  But only when it is needed.

So:  game changer, or not?  Honestly, difficult to tell.

(end of Part 1.  Tune in soon for Part 2!)


Mitchell Hinz

Mitchell has more than 25+ years of fundraising and communications experience at NGOs, the first 20 in the USA and the last 5 globally in Europe, East and Southeast Asia and South America. Currently, Mitch is based in Singapore. Experience in all forms of private sector fundraising including Individual, Corporate, Major Donor, Special Event and Legacy. Specialist in individual and membership programs, public direct marketing of all types.

12 Comments

Adrian Salmon · April 5, 2012 at 3:27 pm

Hi Mitchell – interesting article but I’m afraid the comparison with the UK is wrong. A recent study by academics at the University of Bristol confirmed that charitable giving in the UK has stayed static at 0.4% of household spending for about the last 30 years. Moreover that proportion decreases the higher you go up the income bands. So depending on the figures you choose for US giving, we’re about 5 – 10 times less generous than the US, not more…

    Mitch Hinz, WWF · April 9, 2012 at 5:31 am

    Adrian, thanks for the clarification. I’ll pull out the ppt that I grabbed the stat from. By way of the argument of the piece, is there a similar in-depth monitor of UK on-line giving? Would be helpful to have that, as I could only find the Blackbaud stats. Cheers.
    – Mitch

Stephen Pidgeon · April 8, 2012 at 11:35 am

This is a sublime leap of imagination, sorry Mitchell. On-line offers great opportunities and one day will be a major influence, but I do wish its advocates weren’t so desperate to shove it down our throats. You posit that the 33% rise in income from 1995 to 2000 was the result of the web. Yet on-line income in US last year, and I’m quoting the recent Blackbaud figures, was only 6.3% of total income, DOWN from the Haiti induced 7.6% of 2010. If Haiti, which attracted more income on-line than any other disaster, bigger even that the Asian Tsunami, could only bump up US on-line giving by a percentage or two in 2010, then the web was not the cause of the 33% rise a decade and a half earlier. And if it was, then why was giving static 2000 – 2003.
Giving in 1995/96 was hugely influenced by Rwanda and Bosnia and my agency’s clients raised many millions, the merest sprinkling of it through the web.

Mitch Hinz, WWF · April 9, 2012 at 5:35 am

(sent via email, reposted here)

Actually Stephen we agree. You gave away my denouement (watch for Part 2). What I’m saying is just that – web giving helped give crisis relief groups, and their (very effective) agencies like yours more ability to raise lots of money almost immediately. Which also dries up (as it did in 2000-03.) The web did not change the fr game, just added to the size of the turf, (by adding a new channel, albeit one with sub-channels), which thankfully helps clients and programs more than it “helps” marketers. So we agree: its about fundraising and need, not the tool or the medium.

Point of clarity: I didn’t say it created a 33% rise, just helped crisis relief to push it from 3% to 4% annually, on average, and did absolutely point out that, after the rise, it shrank (the graph is quite clear on that, no debate there). When IRC partnered with IBM to show some of the first “live” crisis footage on the Web, they saw their giving rise in direct mail. And yes, I nowadays rely also on the (very solid IMHO) Blackbaud figures as well.

Great dialogue. Thanks for joining. Please comment back if I misunderstood you.

Cheers, ironically, from my (oh so mobile) blackberry, from some airport in Asia.

Mitch

    Mitch Hinz, WWF · April 9, 2012 at 8:26 am

    And to support the position we seem to share: (from Forbes Magazine):

    “In recent years, online giving, as tracked by Austin-based Convio, has grown at a double digit pace similar to the growth rate of e-commerce retail sales, while overall charitable giving has tracked the struggling economy. Giving USA and the Center on Philanthropy at Indiana University estimate that [despite that rise in Web giving] individual contributions to charity in the U.S. rose a modest 2.7% in 2010, after two years of decline. (The 2011 Giving USA estimate hasn’t yet been released.)

    “In 2010, online contributions, as tracked by Convio, grew 20%, thanks to a spurt of giving after the catastrophic January 2010 earthquake in Haiti. The March 2011 earthquake and tsunami in Japan produced a far smaller U.S. donor response and the number of first time on line donors to disaster and international relief agencies fell by a median of 25% in 2011. Growth in revenue from special team events, in which participants solicit donations from friends based on, say, how many miles they walk, also was slow in 2011—a reflection of the fact, Convio says, that it’s a more “mature” market. Excluding special events, online contributions grew 19.7% in 2011.”

Stephen Pidgeon · April 9, 2012 at 12:27 pm

Well…sounds like you’re quoting somebody else who’s trying to show online giving is taking over the fundraising world. I distrust people who switch from means to medians to make their figures look better. Blackbaud – 2011 – on-line giving only 6.3% of total giving. Double-digit my hat!! Ho ho!

    Mitch Hinz, WWF · April 9, 2012 at 5:14 pm

    Again, Stephen, I completely agree. I’m quoting the “generous” numbers to give us some margin for error. Even if its 10%, its still only 10%.

    Then again, I do think Ellen raises a relevant point. The election of President Obama would be a perfect example: could any of the “old” candidates (like McCain himself) have raised the amount of money needed to get elected? I doubt it. It took someone who ‘adapted’ to the new Web-based audience to make it work. Which is why the Web-champions are so sure of their position: they do have some examples of extraordinary successes, like Charity: Water.

    So, there are those (especially smaller, or activist, or new, like Avaaz) groups who adapt early to the new medium stand to benefit, often in stark contrast to those who don’t.

    That doesn’t make them dominant, as you say. But doesn’t make them irrelevant, either.

    You said you were tired of people shoving Web giving down our throats. My biggest complaint is people that dismiss (or worse yet, have disdain for) other forms of giving that still, mostly, far outperform digital giving — for now.

    After all, I don’t know about you, but I still have to hit next year’s numbers.

    Mitch

Ellen · April 9, 2012 at 12:38 pm

Interesting discussion Mitchell. If I understand correctly, you state that the ‘digital revolution’ isn’t a game changer, because overall the giving has not shown a substantial (and constant) increase, right?

True maybe, that overall people probably don’t give more, but (to me) that doesn’t mean the game hasn’t changed. People not only give through other channels, they also have other expectations and demands, e.g. for interaction, for reporting, for follow-up on their donation. So, as non-profits, we have to change the way we interact, we communicate with our supporters. In fact, the way we do our business. To be sure we maintain the (increase in) income level we’re used to.

It would be probably be very interesting to see if and how the donations have shifted to the new (and smaller) NGOs and/or NGOs that have been able to adapt to this digital revolution.

    Mitch Hinz, WWF · April 9, 2012 at 5:26 pm

    Ellen, could not agree more. See my comments above to Stephen, a well-respected and seasoned fundrasier, who has helped raise tens (and probably hundreds) of millions of dollars for his clients.

    I think the problem is that we’re talking in absolutes. I think you are right that, for Web donors, the game probably *has* changed, they want more (follow up, reporting, etc), since they (and I suspect you, with no disrespect intended) are part of the “me” generation. Forget trust (in institutions): I want to know what they are doing with MY money.

    And as I said, referring to Obama, who DID know how to take the presidential fundraising game into the digital realm (with a bit of help from MoveOn.org), there are great examples of *people* and institutions who are playing “the new game”, and Charity:Water and Avaaz are two of them.

    Stephen’s point, and mine, is that this is still a small piece of the game, for now. Because, like the “social capital” described so well in Robert Putnam’s “Bowling Alone”, charitable giving is still based on the idea you cannot “buy” social change (well, you can, its called bribery, and its usually illegal), but you can *invest* in it. But as every investor knows, if you think you can hand over your money without risk, or some amount of trust (even if you trust nothing else except your own ideas or instincts) then you are kidding yourself.

    It would be great if someone were to research what types of NGO’s have adapted to new technologies, and who has benefited (and who has lost). Know any PhD’s?

    thanks for writing in.

    Mitch

Ellen · April 9, 2012 at 6:33 pm

Mitch, we absolutely agree. Yes, the digital revolution, or better yet, the ‘new’ generation of donors, require a new way of thinking. New business processes even. For the most part, in my honest opinion, a big step forward. E.g. in terms of transparency and in involving your donors, most charities have a long way to go there. Also true that we have to draw a line somewhere. There has to be a basis of trust, trusting that the charity in question will make the right choices. Trusting that the part of the donations that aren’t directly allocated to the charity’s mission are allocated wisely.
Most likely all these smaller initiatives, that can allocate the money and report directly, have an negative impact on the trust towards the bigger and established charities. Something we can not neglect.

But indeed, the online donations (apart from disaster giving) are only a (very) small part of the overall donations. Traditional fundraising channels and traditional donors still contribute the overwhelming bulk of the income of most charities. And will do so for a considerate amount of years to come.

Personally, I would like to think more in terms of integration. Of channels, and of ‘the best of both worlds’. E.g. I do believe that an online presence, opening up to and interacting with to your donors, will influence the donations through other channels. So, this might not directly show up in an online donation figure, but it will have its effect.

Anyway, great post, thanks!
P.s. no, though irrelevant to any discussion, I do not consider myself part of a ‘me’ generation.

Adrian Salmon · April 10, 2012 at 2:07 pm

Hi Mitch – sorry, I don’t know of any similar stats on online giving specifically for the UK. But I wonder whether this increase in giving, then shrinkage, then increase, is explained purely by the behaviour of US GDP over the last 20 years?
Which grew roughly 5% year on year between 1995 – 2000, then shrank, then recovered, and then fell off a cliff in 2008 (-5% growth!)

And if US giving as a % of GDP has stayed relatively static over the last 20 years, then this, not web giving, would completely explain the figures…

Frank Barry (@franswaa) · April 12, 2012 at 6:57 pm

Thanks for the insightful post Mitch … and for the great dialog going on in the comments. Awesome stuff.

@franswaa

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