Connecting with the Crowd: How Small Nonprofits Could Benefit the Most from Online Fundraising

by Katherine Buoye, @kebuoye, The PIN Team.

Small nonprofits face numerous operating challenges, but fundraising is often the greatest cause for concern. Unlike their larger counterparts, small organizations lose donors to attrition at greater rates and lack the resources to mount strong and consistent funding campaigns.  Recently, however, small organizations have seen surprising success in the burgeoning arena of online giving.  Online spaces invite individual donors seeking real, meaningful connections and enable small nonprofits to turn these connections into lasting giving relationships.  Does their size give small nonprofits a big advantage?  How can more small nonprofits maximize the value of their size to connect with the crowd?

CrowdFunding

Following the Crowds and Finding A Niche

“Two’s company, three’s a crowd” – Online there is no such saying.  The Internet not only welcomes crowds, followers, fans and communities, it encourages them to gather, share, comment and interact.  Businesses, entrepreneurs and news outlets have all tapped into the power of the crowd via social media, websites and blogs to build their brands and attract new readers and consumers.  The nonprofit sector has also begun to seize on the diverse marketing and fundraising opportunities available online with organizations of all sizes working to expand their web presence and direct donors to their cause.

While online spaces offer all nonprofits clear advantages – they are cost-effective, easily updated and maintained, and efficient communication channels – they also serve a less obvious and more interesting function for small nonprofits.   When it comes to fundraising, as one expert recently pointed out, “online giving is often directed to smaller, niche organizations that can efficiently find supporters online.”  Where large multifaceted organizations can come across as impersonal and overwhelming to individual donors, the intimate grass-roots quality of small nonprofits translates well through the online medium.  More small nonprofits have been using crowdfunding platforms to fund specific initiatives, finding that small peer-to-peer campaigns help them reach their funding goals faster.

While the success of crowdfunding can be measured by something tangible (monetary gains), it is important to remember that overall online performance – from simple, streamlined websites to active social media feeds on Twitter, Instagram, Pinterest, and Facebook – promotes engagement, which is crucial for small nonprofits seeking to retain donors.  Recent research indicates that while overall giving for small nonprofits has grown by just 3.6%, online giving in particular grew by an incredible 18.4% – much higher than mid-sized (11.3%) and large (12.7%) nonprofits.  Another report concluded that small nonprofits are also outperforming on Facebook, generating more viral posts and attracting more people to like and share their content.

Ultimately, finding a niche, or target audience (and future donors), requires a sensible marketing plan and solid research to understand who your individual donors are and where they congregate online.  Promoting sociality between donors and fostering a sense of community and transparency is as important to long-term fundraising goals as crowdfunding can be in the short-term.  The digital content shared across these channels may not always lead to measurable fundraising gains, but they create connections with individual donors that feel real and personal.  Some small organizations might feel frustrated by social media – garnering recognition but seeing few capital returns.  It may take time, but direct and personal appeals to donors can eventually yield greater donations, while building loyal donor bases – the ultimate lifeline and source of stability for small nonprofits.

The Crowd, aka Individual Donors

When we talk about the ‘crowd’, what we’re really talking about are individual donors.  Individual donors continue to be the main source of charitable giving for nonprofits (currently 72% of total giving according to the 2013 Giving USA Report) and more and more are beginning to donate online.  Online giving is growing faster than all other forms of donation – rising 14% since 2011, a huge increase considering overall giving rose just 1.5% in the same time span.  Individual donors play a big part in the new trends and this is particularly true of Millennials and Gen-Xers, the younger donors who represent your future donor base.

  • Why do people give?

Why do donors give to your particular organization?  Individual donors can be capricious, at times giving spontaneously and abundantly, at times not at all.  Understanding the whims and logic behind giving can inform an organization’s marketing strategy, but it can also serve to underscore the unpredictability of individual giving.  Consider, for example, the anomaly pointed out in Adam Alter’s book, Drunk Tank Pink, that statistically “people donate more often and more generously to causes that share their initials.”

  • Donors are Human

Psychological findings on unusual donor behavior can be bewildering, even frustrating, but they also remind us that donors are human beings.  At once compassionate and complicated, their behavior and decision-making processes are inextricably tied to the conscious and unconscious parts of themselves.  Being human is also what drives the remarkable urge to give in the first place.  At its core fundraising is a profession concerned with another human compulsion: relationship building.  Capturing new donors is necessary to build larger donor bases, but maintaining and engaging the individual donors who already give is critical.

  • Impact is Important

A 2012 survey on nonprofit donor engagement found that while the majority of respondents reported giving to the causes they most believed in, a significant number also supported their favorite charity for social reasons.  Individual donors give greater support to the organizations they feel most connected to and, as another recent study found, they feel better when they are “aware of their positive impact”.  In the study, conducted by American and Canadian researchers, participants could choose to donate to one of two real charities, either the United Nations International Children’s Emergency Fund (UNICEF), or Spread the Net (SPN), a smaller affiliated organization that buys bed nets to stop the spread of malaria.  Researchers selected these two real nonprofits due to their similar missions aiding children in developing countries and their differing aims and appeals.  Both nonprofits do important work helping children in need, but participants reported greater feelings of happiness when donating to SPN.  Why?  Because when they gave to SPN they knew exactly how their donation was spent – buying a bed net.  A donation to UNICEF, on the other hand, felt like the proverbial drop in the bucket.  The researchers concluded that “failing to provide information about impact may be akin to failing to have an impact in terms of the emotional consequences for donors” and failure to do so is very dangerous indeed when individual donors give more to the nonprofits with whom they feel most connected.

  • Feeling Connected Feels Good

Another way to interpret the SPN vs. UNICEF study is that while SPN was more successful engaging donors directly through a clearer objective – one bed net being a real concrete gift – it also took advantage of its physically smaller size to do so.  While global organizations such as CARE and Oxfam can form lucrative partnerships with major corporate sponsors like Walmart and Nike, their very size and sheer number of initiatives can leave individual donors to feel unconnected (i.e. an ambiguous donation risks leaving an ambiguous impact).  If individual donors value meaningful connections more often than not, then smaller organizations should capitalize on the strengths of their size and create the space to make those connections happen.

Bottom line: Crowd Connections Work for Small Nonprofits

It may seem that larger nonprofits are in a better position than their smaller counterparts to create community interest through their online media outlets, but studies continue to disprove this myth.  The evidence suggests that when small organizations appeal to their donor base online they have greater success in terms of overall giving.  It’s possible that small nonprofits could benefit the most from online fundraising.  The smaller your organization, the better opportunity you have to truly connect with your donor base through social media, email and other online tools.

For small nonprofits, often operating on shoestring budgets, or working in rural or developing countries with limited staff and resources, the mere idea of establishing an online presence, like fundraising itself, can feel overwhelming. The potential rewards, however, are too great to ignore.  Whereas traditional fundraising relies on brochures and newsletters to keep donors engaged, the increasing use of social media and new online tools finally offer small nonprofits the resources they need to cultivate a sense of community and belonging among their individual donors.  The relationship between increased individual giving and increased online giving is a boon for small nonprofits.  It all comes back to understanding individuals.  They are the greatest givers for reason – they care, they feel good knowing where their money is going, and they want to feel like more than just another face in the crowd.

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Interested in Contributing to the PIN Blog? Email us at practicalinitiatives@gmail.com

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