A paradigm shift in how people make buying decisions has swept through commercial marketing. But, argues Richard Turner, fundraising is mired in the old ways of doing things and seems to have little interest in change.
There has been a fundamental paradigm shift and we fundraisers need to catch up. The prize on offer is truly engaged supporters, extraordinary Return on investment (RoI), and transformational growth.
What worries me, despite the prize, is it doesn’t feel like the sector has acknowledged the change. I’m a great believer that the best innovation comes from solving a problem. So to innovate you need to know what the problem is. This primes your mind to look out for solutions (a bit like spotting the gorilla when you know it’s there).
In my opinion fundraising is dealing with the symptoms of rising acquisition costs, falling response rates and incremental growth without understanding the problem. The mistake has been to attribute these symptoms to the recession. Yet I predict these symptoms will continue because although the recession is over there has been a huge paradigm shift that has been well documented in books such as Sticky Marketing by Grant Leboff and the New Rules of Marketing by David Meerman-Scott. The world of sales and marketing has changed and the sector hasn’t captured what this means for fundraising.
What does this new paradigm look like? Think what you now do when you want to buy a camera. You no longer believe the marketing even from brands you might be considering like Sony or Panasonic. Chances are you will do one of two things: ask a friend what camera they use, or go online. And when you go online what do you do – you check out the customer reviews.
“The world of sales and marketing has changed and the sector hasn’t captured what this means for fundraising”
The signs are already there that the same principles apply in our world. New Philanthropy Capital’s recent Money for Good study found the number two and three reasons for donors to give were to sponsor a friend, colleague or family member, and because they were asked/recommended by a friend, colleague or family member (the number one reason was because they were a previous supporter). For people earning at higher levels these personal motivations were the two top reasons.
We need to inspire our donors, give them a great customer experience, and equip them with our story so they can easily tell their network. This engagement approach needs an holistic view to fundraising where you don’t value someone based on the RoI they directly bring, but the influence and the ‘social capital’ they have with their network (a term coined by Beth Kanter in her fabulous book The Networked Non-Profit, which was recommended to me by David Dixon, chairman of The Phone Room).
And the evidence is building. A contact at The Phone Room recently told me of great results they are having with some of their smaller charity clients by calling donors to thank them for their support, and to ask them to consider recommending the cause they already support to a friend or family member (and then providing them with the means to do so).
The Ice Bucket Challenge works so well because the ask (the nomination) comes from someone you know. It leverages the ‘social capital’ of supporters that they have with their contacts (which will always be greater than the social capital your cause will have with their contacts). It recognises supporters are a channel themselves not just a source to extract money from.
At SolarAid we have been doing our best to apply this approach. It takes time to make the shift but the results are coming. Attending a summer festival that used valuable time, staff resources and raised little, led to a former volunteer we met to engage a trust on our behalf landing one of our largest trust grants six months later. A supplier recommended us to a philanthropist leading to a major gift. A donor knocked on the doors of her neighbours showing her solar light and recruited her street (at first we couldn’t figure out why a run of new donors came in from a particular post code). We believe this is just the start.
We are now focusing our energies on partners who share our beliefs. Chances are their supporters, customers and followers will share those beliefs too. In Scotland we are collaborating with Keep Scotland Beautiful to engage schools and communities to help Light Up Malawi. We are working together with Friends of the Earth who have already promoted an appeal of ours to their supporters. This Christmas, the Big Issue, who share our belief in a business based approach to tackling poverty, will promote our new Light the Way appeal asking not just to give but to ask their friends too.
From the outset of adopting this approach we have been inspiring our supporters with a clear purpose – to eradicate the kerosene lamp from Africa by 2020 – and equipping them to engage their network on our behalf by giving them stories to share. It seems to be working. Our growth in fundraising income last year? 100 per cent. And we look set to sustain that level and aim to grow again by 40 per cent in this year. This growth is critical to help achieve our mission goal.
Who will lead the change?
While anyone can adopt this approach I don’t see a movement to help us make this shift. Institutions that represent voices for the sector continue to defend the old ways. ‘We have the right to ask’, comes the pervading cry.
I don’t see big charities embracing the change. It’s too unknown. Many, established through growth in direct marketing, are now set up as efficient machines to deliver and sustain incremental growth. Senior staff are too ingrained in managing the current set up (I speak from experience here!), and are nervous about making a radical change when they have a machine that needs feeding by replenishing lost donors with new ones and getting the most out of existing ones. In such a role you have little time to step right back and really think about the problem. It was only when I was between jobs that I could dedicate the time to understand what was going on. It’s only when you see the problem that you can start coming up with the solution.
“Institutions that represent voices for the sector continue to defend the old ways. ‘We have the right to ask’, comes the pervading cry”
Agencies take their brief from charities so it will be hard for them to lead the change, although with all their smart thinkers they must be increasingly aware of it. Even then it will be hard. Many of their business models are built on the status quo.
Small charities often take the lead from big charities and those that are adopting a new approach have little influence in leading the way (although that is changing). Many consultants will base their advice on past experience not new untested thinking.
Yet now that I am aware of the paradigm shift I can see examples of new rules for fundraising working – especially from smaller charities that just can’t afford the old ways, and from smaller markets outside the UK, that have a smaller donor base to draw from and so have to think creatively about how to make the most of them. In larger organisations there are bound to be instances, but these get lost due to the scale of their fundraising programme. When you know what to look for, like the gorilla, it’s easy to spot.
Instead the recession caused many charities to focus on RoI. The reaction is to shout louder, increase volume of measurable direct marketing, and drop areas of low RoI. That didn’t address the fundamental problem. If anything it exacerbated it. I suspect fundraising departments cut back on areas that didn’t deliver RoI – often the very activities that deliver high on engagement, such as events that help spread your story via your supporters. Looking at RoI in separate units or areas of fundraising prevents departments to think holistically and see how it all joins up.
What do we need to do?
This is a dramatic change. That’s what a paradigm shift is. A change in the rules. Here are three key steps we need to do to gain greater research and knowledge.
We need to share our learning, including successes and failures, and collect examples of this new approach to fundraising. Gathering the growing evidence and framing research will help inform the change that has happened.
We need to get together – fundraisers from big charities and small charities, fundraisers from a range of markets, consultants who see the change, agencies willing to embrace a new way. A summit. Can we draft the new rules of fundraising? We can then disseminate them in forums, training courses, and blogs.
To begin with we need to acknowledge what the problem is: i.e. that a paradigm shift has occurred. We could engage thought leaders like Grant Leboff, David Meerman-Scott and Beth Kanter alongside fundraising thought leaders like Ken Burnett, Alan Clayton and Tony Elischer to help us define the problem.
Only when we have defined the problem can we innovate to solve it. It’s going to take some concerted effort. When watching a film about Steve Jobs this quote jumped out for me: “You gotta have a problem you want to solve or something wrong you want to make right. You’ve gotta be passionate about it – otherwise you won’t see it through.”
If we continue with the same approach it won’t solve the problem. Broadcast ‘interrupt my day’ marketing that shouts ever more loudly will just get people’s backs up. There will be more exposure of cost of fundraising with increasingly influential and vocal critics. As we struggle to defend our stance, public trust in fundraising will slide. Fundraising will be misunderstood and dominated by shortsighted financial returns, stuck in silos.
Yet the prize is such a great one: supporters as advocates who engage their networks, collaboration with partners who share common beliefs, and inspirational supporter engagement and donor care. The result? Higher overall RoI and transformational growth that goes beyond just income to deliver social goals that make the world a better place.
- Richard Turner is chief fundraiser at SolarAid and a member of Rogare’s advisory panel.
In a sister blog on 101 Fundraising, Richard Turner elaborates on how to apply these ‘new rules’ to fundraising.
Sticky Marketing, by Grant Leboff
The New Rules of Marketing and PR, by David Meerman Scott
The Networked Non Profit, by Beth Kanter