Tuesday, August 4, 2009

It's Not (just) the Economy Stupid

Eeek! It's tough to shine the spotlight back on your organization and ask the tough questions about why your donations or membership numbers have declined. Brian Reich says it's not just the economy, there are many factors that affect fundraising and involvement and some of those factors have to do more with ourselves than with a slumping economy. Good read. Bunnie

It's Not (just) The Economy, Stupid
by Brian Reich, Managing Director of little m media

Donations to nearly every type of charity are down, in some cases fundraising has hit lows we haven't seen in a half-century. People argue that the economy is the reason people aren't giving -- that philanthropy is a luxury (e.g. you pay your bills first and then start making charitable gifts). And while the economy is a big part of the story, there are other important reasons why people are giving less money to support their favorite organizations and the causes they care most about.

1) Choice Paralysis

There are more than a million registered nonprofit organizations in the United States, and tens of thousands of new nonprofits are created every year. All those groups are communicating about their different activities, adding to the crush of marketing messages that people receive each day. They are also competing for the same dollars from the audience, making it challenging for donors provide the kind of support that will have a real impact. And they are all claiming success, while audiences have trouble seeing the outcomes in terms they can relate to and understand. In short, the audience is overwhelmed. There are too many nonprofits, too many messages, too many options and not enough success. The audience wants to understand what nonprofit organization or cause to support, but they feel paralyzed. When they can't make a decision, they don't make contributions -- especially in challenging economic times -- because they aren't confident they are making the right choice.

2) Nonprofits and charities are not doing enough to earn their donations

People make contributions to nonprofit organizations and charities for many reasons -- and whatever the motivation, every person has their own expectations of what the organizations they support will do, and what value they will get out of the relationship. Unfortunately, many nonprofits are now focusing more of their energy on growing and sustaining their organizations and not as much on improving the way they do business or deliver services. Organizations send millions of emails but settle for ridiculously low open rates, failing to talk about issues that resonate with their audience. People sign petitions online every day, with one click of a mouse, but audiences are beginning to realize those petitions rarely (if ever) change minds or impact the outcome of a vote. Put another way, organizations are serving their causes instead of solving their causes - and we are letting them get away with it. Or we have, until now. The audience knows and they increasingly feel as if their support is not appreciated, and that is reflected in less giving.

3) People believe they can do more to support an organization than donate money

The internet has empowered audiences in new and powerful ways. Technology gives each of us direct control over our information and the choices about how we spend our time and focus our energy. And we can use these tools to help organizations and address causes in ways that go well beyond donating. But most nonprofit organizations haven't embraced these new and different ways to engage and mobilize their audiences. Nonprofits invest much of their focus and energy on directing action behind a single, centralized agenda, instead of expanding their reach and looking for the best way to tap into the community (online and offline) to help address issues. Nonprofits seek short-term fundraising gains, often at the expense of developing deep relationships with their audience and providing the necessary education and support to keep them engaged. And audiences simply aren't interested in helping groups to sustain organizations in that kind of focus when they know individual efforts can have results as well.

Make no mistake about it, there are lots of incredible nonprofit organizations, focused on serving a particular community in need or addressing an important cause, and doing so efficiently and/or with an innovative approach that drives real, meaningful, measurable impact. But there are just as many, if not more, that operate inefficiently, that are duplicating efforts of other groups, or that are prioritizing talking about action over actually having an impact. In the past, the audience couldn't easily tell the difference. Today, with more information available, its easier -- and the audience is paying closer attention. The economic slowdown may have attracted new attention to the struggles that nonprofit organizations are facing in terms of fundraising, but it should not be assigned all the responsibility for the problem. The challenges that nonprofits have had in convincing people that they are worthy of support, and sustaining that support, have been brewing for a while. Addressing those issues will be even more important as the nation emerges from its economic downturn and audiences are even more determined not to make the same wasteful mistakes they did in the past.

Everything about how we communicate, get and share information, engage each other -- online and offline -- has changed because of the role that technology and the internet play in our lives. Information moves faster, people are more closely connected, and the expectations we all have for where we will donate, who will we trust, and what kind of relationship and support we want from an organization is changing. That means how organizations operate, educate, engage, and look at directing supporters and donors to take action must change as well.

We can use the tools that are now widely available online to conduct campaigns, and send notices, raise awareness of issues or solicit funds, and do so more efficiently and cost effectively than ever before. But, that doesn't mean that work should take priority over developing relationships and providing value to our audiences. We have prioritized telling a quick story that suggests progress over investing in long-term impact that both changes the world and drives people towards deeper commitments to organizations. We have become too accustomed to measuring success based on the size or popularity of an organization and not the value that the audience, who we rely on for support and donations, places on the work that groups are doing. As long as groups continue to focus on these wrong efforts, or blame the economy for its larger issues, nonprofits will continue to struggle.

Brian is the Managing Director of little m media. He provides strategic guidance and other support to organizations around the use of the internet and technology for communications, engagement, education, and mobilization. Brian is also the author of Media Rules!: Mastering Today's Technology to Connect With and Keep Your Audience (Wiley 2007).
He is also the Director of Community and Partnerships for iFOCOS, the media think tank and futures lab that organizes the We Media community, conferences and awards and Managing Editor of WeMedia.com. Contact Brian at brian@littlemmedia.com


  1. Brilliant Brian! Ready to rant some more?

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  4. As a nonprofit organization, we should not blame people, who are not part of our cause, as an excuse for not having enough funds for our projects. Sure, some are just oblivious about what we are trying to achieve, but the reason why we are an organization is because we teamed up to be different - and do something about problems we think, are critical. I've been doing accounting for non profit organizations during my spare time as an employed accountant for 3 years now and believe me, I know why we are losing money. Everyone needs help - these organizations, for example, need someone to monitor their budget. Every flow of money should be recorded because a nonprofit organization's budget is crucial to it's projects. I am well versed with nonprofit fundraising softwares so I volunteered to help them during my spare time. Maybe I am one of those people on #3 - I know I can do more help besides donating.