Online Social Networks – Fundraising Hype or Reality?

By Jon Biedermann, of member firm DonorPerfect Fundraising Software

Facebook, Twitter, LinkedIn – What or even how do these social network tools impact fundraising?  Are they essential components, like newsletters or websites, or are they simply add-ons that can assist more traditional campaign activities such as direct mail and special events?  As these online social networks mature, the answer may just surprise you.

Online social networks are relatively new, but their ancestry can be traced back fairly easily.  Before web browsers even existed in 1995, there was another place that millions of people visited- using their computers- to check up on their friends and social networks.  It was called America Online (AOL).

But AOL is a shell of its former self, replaced by these newer networks, and AOL barely impacted fundraising and nonprofits even in its heyday.  But what about the new social networks?  What makes it ‘different’ this time around?  Is fundraising via these tools hype or the new reality?  Depending on who you listen to, it’s not so easy to answer.

The 5%, .003%, and 6% Facts

Actually, fundraising using ALLonline tools is still a very small portion of overall fundraising in the US.  Depending on different sources, it’s estimated that only 5% of all giving in theUS came from online tools in 2010.  While it’s growing at a rate of approximately 30% per year, it will still be many years before online fundraising will have a substantial impact to organizations, and that’s only if the trend continues.

What’s more surprising is how little money is generated directly through Facebook.  Currently, there are a handful of companies that facilitate fundraising on Facebook.  The largest and most well known is Causes, which allows nonprofits to collect donations directly through Facebook.  From 2007 through June 2011, Causes advertises that over $35 million dollars have been raised this way.  While that may sound like a lot, it’s a proverbial drop in the bucket compared to the approximate $1.2 trillion dollars (Source: 2011 Giving USA Foundation Report) that was given to charities during the same time period.   That makes it just about .003% of the total, or to put it another way, for every $1 raised on Facebook Causes, $33,333 was raised through other means!

Certainly, Causes doesn’t represent all of the giving through Facebook, it’s clearly the largest and most focused on Facebook.

Why is so little money raised directly through Facebook?  Well, similar to theAOLsocial network 15 years ago, the answers are surprisingly simple:

  1. The vast majority of your donors are not on Facebook.
  2. Your donors don’t connect Facebook with fundraising.
  3. If your donors use Facebook, it’s to interact with younger generations, not to give money.

As we know, the average age of a typical donor, for most nonprofit organizations, is around 60 years old, and older still for direct mail (68 years old According to a Chronicle of Philanthropy article: (http://philanthropy.com/article/Direct-Mail-Beats-Predictions/62859/).

According to a June 2011 study by Pew Research, these older demographics don’t use social network sites very much.  Only 6% of Americans age 65 or older use these sites.  (Source:  Pew Research, June 2011.  http://www.pewinternet.org/~/media//Files/Reports/2011/PIP%20-%20Social%20networking%20sites%20and%20our%20lives.pdf)

Simply put, the average donor does not visit these sites, and while growing, it will still take many years before the impact becomes meaningful.

But should you abandon these tools?  The answer is clearly NO.  Despite the lack of fundraising results, these online tools DO provide a way for your donors to interact with your organization and allow them to get to know you.  Like your organization’s website, online social networks will likely take the same trajectory as the ‘go-to’ place to get information and interact with like-minded people talking about your organization.  Just don’t expect to reap a substantial amount of money for a very long time.

What Works – Social Network Fundraising

All is not lost however – there are proven fundraising techniques that, when combined with online social networks, have a multiplier effect on your actual fundraising results.   Traditionally called “Social Network Fundraising”, this special type of fundraising thrives when combined with tools like Facebook, and even more powerfully with simple email.

Social Network Fundraising is actually a very old concept. Before email and the Internet, many successful organizations ran special events that depended on their constituents social networks to raise money. Constituents would participate in an event, such as a walk-a-thon, and ask their friends, family, and colleagues to sponsor them through personal interaction, the telephone, or even the mail. They would collect check and cash donations from their supporters and turn them in during the event. The process, while sometimes inefficient and time consuming, was still very effective because of the personal connection between the supporter and the person being solicited.

The basic tenets of modern Social Network Fundraising simply uses technology to make it much easier for supporters to communicate their personal story of why your cause is important to them, and easier to reach out to many more people. This is primarily done via emails, blogs or their personal websites where they can provide a link to seek donations. They can also leverage very popular social network sites such as Facebook and Twitter and by providing supporters graphical icons (widgets) that they can place on their pages to promote their support for your cause.

Besides making it easier for supporters, today’s technology also improves the donor’s experience by making it quick and easy to give online. It also provides immediate recognition via automatic email receipting, and potentially via recognition on your supporter’s webpage.

Modern social network fundraising software can be used in conjunction with sponsored events like Walks, Bikes, Runs, and Dance-A-Thons, but it can also be used for capital campaigns, workplace giving or supporter-driven fundraising. Board members, volunteers, and committed supporters are typically happy to have an easy and efficient way to share their passion for your mission.

So is fundraising via online social networks hype or reality?  The answer is pretty clear – for certain fundraising activities like special events, the effect of new social network fundraising software is substantial and growing every day. For social networks like Facebook – while growing, the net effect is still quite small.  Similar to direct mail, telephone, and even email, fundraising via social network tools will still take years to develop. So while it’s important to take notice of them, it’s equally important to not get carried away by all the hyperbole.

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