Fundraising isn’t easy. Donors often come with their own preferences, systems and bureaucracy. Add to that the new kinds of givers emerging–corporates with their CSR money and short attention spans and philanthropists with a world view shaped by their business histories.
But there is a third group of donors that many nonprofit leaders haven’t focused on: ordinary citizens, or retail givers. And the reason that retail giving has not received the kind of attention it deserves is because it is believed to be hard and complex to execute.
If it’s so hard, why should you do it?
Corporate money can be whimsical. It goes away when strategy changes, when sectors are no longer ‘fashionable’ or when companies leave the country altogether.
At CRY we had an accurate early warning system of economic trends. Before bankers, government officials and economists could predict a slowdown, we would see it coming because corporate fundraising would get difficult. CSR budgets were (and will always be) the first budgets to be cut and the slowest to recover during a downturn.
Retail money, on the other hand, is far more resilient. In fact, donors are almost sympathetic to bad times. In the wake of the Gujarat earthquake, one of our donors wanted to give us more money, saying, “I’m sure many donors have shifted their attention to earthquake relief; so here is some more to ensure your regular work continues.”
Retail giving lets you set your agenda and stay mission-oriented. Virtually no institutional donor gives you that kind of freedom. And in a sense, that helps change the power dynamics between a nonprofit and an institutional donor.
Retail giving lets you set your agenda and stay mission-oriented.
Individual donors also have the lowest requirements–they really just want to know that you are honest and doing good work. They are less inclined to pay for critical institution-building costs or your nonprofit’s ‘overheads’, but then neither will corporates. Only progressive philanthropic foundations tend to fund these kinds of organisational costs, if at all.
However, in the programmes that retail money does pay for, you will have the flexibility to adapt your activities to achieve the desired impact, without donor interference or approvals.
It is much harder for governments or other powerful entities to target an organisation that has a million donors compared to one that is funded by a foreigner or even an Indian corporate or foundation.
Related article: Crowdfunding: What can philanthropists do to support it?
Creating awareness for the cause and the organisation is as important as the money. A fundraising channel that raises money but doesn’t build awareness about the issue it is addressing, is not worth the effort. With almost any cause, the shifts in public attitudes are the real prize, not merely more resources for service delivery or lobbying.
The ALS campaign is a case in point. Also known as the ‘ice-bucket challenge’, it raised more than USD 115 million in 2014 for LouGehrig’s Disease, a cause that not many had heard of until then. To put that figure in perspective, ALS Association’s total revenue in the previous year stood at USD 23.5 million.
More importantly, awareness about ALS went up. Searches on Charity Navigator for ALS went up from around 500 to an astounding 68,000 in August 2014 during the campaign.
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If it’s this good, why haven’t more people done it?
In the short run, raising funds from retail givers is certainly hard work. Hiring someone to write proposals seems much easier than setting up a system–technology, data handling and customer service management–to raise money from large numbers of people.
You need to build a brand by turning your cause into a compelling reason for thousands of individuals to trust you with their money.
It is a communications endeavour. You need to build a brand by turning your cause into a compelling reason for thousands of individuals to trust you with their money. This is not easy to do, especially for issues that appear complex to the public at large.
You need to go beyond the founder. When attempting to resonate with the public at large, you need the organisation’s messaging and work to have broad-based appeal. This becomes difficult when founders become surrogates for their nonprofit, making it difficult for their organisation or cause to stand alone.
Most people who start nonprofits in India, or work in them, are middle-class and have the typical Indian middle-class squeamishness about asking for money.
We prefer more sanitary ways of asking. We would rather make a presentation with words and numbers or write a proposal than have a conversation with people on the street about why they should give. As a sector we need to overcome this.
To build a retail fundraising engine, you needed to invest in building a backend and marketing system that could target and service thousands of individuals.
If you wanted to raise a little over INR 1 crore, given the average donation amount of INR 3,500, you would have to convince 3,000 people to give. With a response rate of 0.4 percent that traditional direct mailers achieve, it meant reaching out to around 750,000 individuals. This wasn’t easy and required fairly sophisticated skills and expertise.
However, this is changing very rapidly. Digital has changed the economics of retail giving completely. The likes of Dana Mojo that provides donation management services to nonprofits, have changed the need for in-house skills and expertise.
Unfortunately, what hasn’t changed is the awareness around it. Nonprofit leaders still don’t know enough about individual giving and it is high time that changed.
What next?
A host of factors are converging today to make retail a very attractive proposition, especially for smaller nonprofits. Avenues such as marathons, payroll giving and, most importantly, digital, are changing the rules of the game and making the playing field more equitable and accessible.
So while retail will not solve all your funding woes, it should form an important component of your funding portfolio. Ultimately, the goal should be a mix of income streams–philanthropic, corporate and retail. It’s easier said than done but then again, what is autonomy, sustainability and resilience worth to your organisation?
Disclaimer: IDR is published in partnership with Ashoka University’s Centre for Social Impact and Philanthropy (CSIP).
