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Tuesday, January 16, 2018

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The new keys to success in fundraising today (Part 1)
Mal Warwick

September, 2010

In recent months, I’ve been developing a new perspective on fundraising, born of the increasing frustration I’ve felt trying to understand today’s fundraising environment through the lens of yesterday’s truths. Below is the first part of a long article I’ve drafted to begin laying out my new approach. Please let me know what you think.

What I’m about to tell you is certainly not news to you—that the world of nonprofit fundraising has changed in fundamental ways in the past two decades. You know that. But if you’re like most people engaged in the business of raising money, you may not have a handle on what those changes mean from a practical perspective—what the implications are for how we go about our business on a day-to-day basis.

When I began raising money professionally more than 30 years ago, the fundraising field consisted primarily of people who worked on major gifts, foundation grants, corporate giving, special events, and, increasingly, direct mail. And those people really didn’t talk to one another. Fundraising today is vastly more complex—and we can’t afford not to understand at least a little about what everyone else is doing.

So in these few pages, I’m going to take you on a tour of this strange new world of fundraising in the 21st Century. This will be a quickie tour, a Big Picture tour. I’m not going to write about click-through rates or fundraising ratios or data mining. Instead, I’ll attempt to give you an overview of the new guiding principles that I believe have to be followed if we’re to be successful in fundraising today and tomorrow.

You see, I don’t believe the roadmaps of the past will help us anymore. In fact, following the old directions can quickly take us way off course. We can’t think about fundraising simplistically as a matter of hiring a collection of specialists in different fundraising techniques. We have to think about fundraising in a holistic fashion. We can’t even cleanly separate donors into institutional and individual donors anymore, because they’re often the very same people!

What we’re facing is a truly new fundraising environment. Not just a bewildering profusion of new technologies, but new generations of donors . . . with new and unfamiliar attitudes . . . and new levels of acceptance and rejection of the techniques we use to raise money for the causes we care about.

Maybe things will become simple someday, when all our communications technologies truly converge and we all plug into one big network in the sky. Pundits have been telling us to expect that for the past two decades. But convergence is a long, long way off. And as the economist John Maynard Keynes famously told us, “In the long run we’re all dead.”

Today’s route to riches?

So what are the routes to fundraising success in this new, unfamiliar world? Can you get there by doing something simple? “Telling your story, maybe?” Or being “creative?” There are people in the field who seem to think easy answers like that will do the trick.

You know, of course, that life is never that simple. And you probably have a healthy degree of skepticism about the assumptions of the past—the conventional wisdom. But before we start exploring the central principles of fundraising today, let’s take a look at three of the most common bits of conventional wisdom of the past few years.

Myth #1: Online fundraising will make direct mail obsolete.

First, let’s consider the widely accepted belief that online fundraising will make direct mail obsolete.

Ever since the World Wide Web went public in 1992, pundits and some online practitioners alike have been telling us that direct mail is doomed. By tomorrow—or the day after tomorrow, at the latest—donors will move online to give, and direct mail will go the way of the buggy whip.

Guess again! In the United States, direct mail still accounts for at least 20 and perhaps as much as 40 times the revenue brought in by online fundraising in all its varieties (and that includes email, the Web, and social networks).

Now, some experts will tell you that online revenue already accounts for 5% of all philanthropic gifts in the U.S. Unfortunately, that’s just not true. Their methodology is flawed. It’s true that online revenue is rising rapidly—probably 35-40% per year, except for last year—but today online activities really account for no more than 1 or at most 2% of revenue. It will take a very long time for that 1% to grow to even 10%—and that would still be only about one-quarter as much as comes in by mail.

Myth #2: Younger people will all go online to give.

Now here’s another widely shared misconception: that younger people will only give online. For starters, people under 40 really don’t give at anything even approaching the rates of people over 40. They may not have any money to give. They’re active consumers and use their money to buy stuff. And it may take many years and a lot of life experience for them to accept the importance of sharing through philanthropy.

But that’s only half the story. Convio’s study this year of 1,500 recent donors turned up some very interesting data. For example, take people like me who are too old to be Baby Boomers. Seventy-seven percent of us gave via checks by mail compared to 24% via the Web. No surprise there. But contrast that with the Millennials or Generation Y. Those are the people who were born from the mid-1970s to the early 2000s. Twenty-six percent gave via mail and just 29% via the Web. In other words, the youngest people studied responded just about as well to direct mail appeals as they did online!

Myth #3: Social networking is the key to success in fundraising.

Maybe you’ve already discovered for yourself that social networking isn’t the route to fundraising riches. Yes, there have been success stories about raising money via social networks. Recently some nonprofit organization reportedly raised a couple of million dollars that way. But stories like that are few and far between. They’re what social scientists call outliers. Social networks aren’t even on the radar screen as a route to success in fundraising.

Could this change? As Facebook becomes ever more strongly embedded in the flow of people’s day-to-day lives, as now seems to be the case—well, maybe. Eventually. Not today or tomorrow.

Where’s the yellow-brick road?

What’s the route to success in fundraising today? How do you get onto the yellow-brick road and follow it to the riches we all know are out there?

Now, keep my warning in mind: I’m not going to give you any simple answer. I won’t reveal a step-by-step five-point plan to meet all your fundraising challenges. I take you—and myself—more seriously than that.

OK, then. There’s no map, and you certainly won’t get there in a straight line. But there is a way to get there. And it’s all about how well you treat the people who care about the work your organization is doing.

In Part 2, next month, I’ll begin to explore what I regard as the “new signposts for the road.”


This article appeared recently as a blog post at Mal Warwick chairs the board of Great Nonprofits.


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