Sunday, October 23, 2016

Facebook knows the True Cost of Fundraising, Do You?

Facebook shut down our nonprofit's "Friend" Facebook page and forced us to go the "Business Page" route.  We are supremely annoyed.  There are so many (free) advantages to being a friend as opposed to being a business.  Friend posts are viewed and shared organically, communication is 2 way and you can see your actual reach.  All we see in our feed now are notifications to pay to "boost" our posts to achieve "reach" numbers that are clearly inflated.  Why does Facebook do this?  Why can't they cut nonprofits a break?  Because they know the true cost of fundraising and marketing, and they want us to pay for it. If only everyone understood this.

You get what you pay for
I learned a long time ago that you get what you pay for, and when you ask for nonprofit discounts, you get nonprofit discounted services and products--- which simply means not as good.  How can we expect for-profits to give up a portion of their profits for us, you ask?  Because we've been brainwashed to think this can work. We've been trained to ask for free stuff and as hard as it is for us to ask for things, it's just as hard for them to tell us no.  They risk being seen as uncharitable. So they promise us free stuff they really can't afford and try to follow through. It's a sucky conundrum, especially because our donors love to hear all about these in-kind transactions.

The same concept applies in fundraising.  It takes money to make money and if you don't invest in it, you wont be successful.  If your business model relies on fundraising, and you are not heavily investing in fundraising, it's unlikely you'll survive.  You may die a long, slow painful death, but you're still toast.  You will probably last longer than a badly run for-profit business because you are a nonprofit after all, and people will feel sorry for you and give you a pittance here and there which will only prolong the agony.  You will probably still do some good along the way, so there's that.

The need to invest in fundraising is integral from the start. If I wanted to start a new nonprofit* the first thing I would do is find donations.  Say I convinced 10 donors to give me $10,000 each.  I now have $100,000 which is a nice, healthy sum for a start up social services nonprofit. If I were a business, I would invest this money in strengthening my capacity and sustainability.  Probably none of my investors would expect me to be cranking out products and services yet.  But since I am a nonprofit, chances are that my donors want their investments to "go straight towards program" immediately. This is really the crux of the problem: the inability to consider fundraising, or other capacity building costs, as integral parts of the program or cause.  Say that all of my 10 donors refuse to allow any of their gifts to go towards fundraising.  This means that I and my new nonprofit are done.  We are not even going to die a long, slow painful death - we're not making payroll, our creditors are suing, and it is over.

But what if we had invested 50%, 60%, 70% or even more of that $100,000 in fundraising?  We could have doubled, tripled or quadrupled that initial investment. Sure, this means that our overhead percentages would be higher than we've been trained** to believe is acceptable, especially in the beginning, but it also means we will not fall prey to the deadly Nonprofit Starvation Cycle.  We might have a chance to go on to improve programs and outcomes to the point that we start to solve complex, social problems.  Imagine that.

If you find this subject as frustrating and fascinating as I do, the Nonprofit Council's Nonprofit Defense Committee is hosting a breakfast event featuring special guests from the national nonprofit "watch-dog" organizations Charity Navigator and Guidestar.  These guests will describe how they came to write an open letter to the donors of America, and what the next steps are to change the conversation in the sector to one where we are honest, open, realistic and effective around the true costs of marketing and fundraising. 

Now just to liven things up a little, I'm going to bring up the Wounded Warrior Project (WWP) because this organization was maligned in the media and by the public for doing exactly what I'm advocating for here. They've been cleared of any wrong-doing, but the uninformed court of public opinion is still strongly against them.  Anyone interested in getting the real story should watch this video and read this report.  I include the graph to the right to further make the point that when you invest in fundraising, you raise more funds, but you spend a lot on fundraising and this makes people uncomfortable. This graph shows how much money WWP invested in fundraising and how much revenue they were able to generate as a result of that investment - in comparison to other veteran's charities.  WWP was able to raise a lot more money and serve a lot more veterans, but sadly, if we don't change the conversation, they will not be able to continue or replicate this kind of success again, and the rest of us will also still be up a creek.

Come to the breakfast this Friday and find out how you can help change the conversation and change the world. 

*I would never start a new nonprofit because no matter what cause I chose, there would already be a nonprofit out there that could use my help.


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