Vinay Bhagat

Trends in the Nonprofit Sector

As a technology entrepreneur with a passion for marketing strategy and the nonprofit sector, around this time each year, I like to pause and make predictions as to the changes I foresee. As a change agent, I also like to articulate my perspectives on changes that I consider important to embrace. My predictions and recommendations are based upon working with nonprofits large and small, from following global technology and marketing trends, and from conducting formal market research.

Below are the top five predictions for the nonprofit sector in 2012.

• Online and new media channels will continue to extend their influence.
• Peer-to-peer marketing will continue to be more important.
• Donor fatigue will get more pronounced.
• Supporters want to control their experience.
• Integrated marketing practices will mature.

The following video offers more detail on each of my predictions.

In 2012, nonprofits will be challenged to think differently about the way they engage with their supporters. The macro economy continues to pose challenges to fundraisers. The presidential elections risk mindshare and potential contribution diversion away from nonprofits to the candidates. Consumer expectations continue to be set by for-profit marketers. New technologies continue to emerge and have more impact.

The nonprofit sector will have no choice but to become more sophisticated and savvy when it comes to supporter engagement. For those nonprofits that embrace new engagement opportunities and harness technology strategically, it’s a very exciting time that holds tremendous promise.     

A more detailed version of this post originally appeared on Guidestar's The Trust Blog.

Are Nonprofit Email Newsletters Really A Waste of Time?

Recently, Thomas Gensemer who led online communications for the Obama campaign said nonprofit email newsletters are “a waste of time and effort and should be ditched”.  He instead urged organizations to send “short, personalized emails to supporters giving clear instructions for participation”.  For the Obama Campaign, “fundraising and participation tactics included sending regular, short emails to supporters asking recipients to do one thing that day. Each email also told the supporter what their action would accomplish and what would happen next.”  He went on to say “Email newsletters don't get read, yet they take more effort to prepare than a 250-word email”.  He concluded, "email is still a killer application, but only when used properly."

Anyone who helps raise $500m online is worth listening to, but in this case I beg to differ.  While I concur that email messages should be as brief as possible and that it’s important that supporters see the impact of their contributions and actions, the notion that every email should ask a supporter to do something that day is in my opinion incongruent with maximizing donor lifetime value.  Political campaigns are short lived and maximizing participation during the campaign cycle is critical.  In contrast, nonprofits rely on building long-term donor relationships. As such, they should adopt a much more stewardship centered email strategy, regularly sharing stories about the impact of their work, interspersed with calls to action/ fundraising asks at the appropriate frequency. In fact, the ground breaking “Wired Wealthy” research into the online habits and preferences of mid-level and major-donors shows that many of your donors would indeed react negatively to Mr. Gensemer’s recommendations.

For many charities major and planned gifts represent a significant part of total contributions.  Major gifts are generally preceded by ten continuous previous smaller contributions over a number of years.  Planned gifts are typically given by people who have had multi-decade relationships with a charity.  Without a long-term communications orientation, you risk alienating your future major and planned giving donors.  As we learned in the research, the Wired Wealthy, major donors are increasingly online and assess where to direct their contributions based upon how they are engaged online.  Communication preferences vary, but so-called “relationship seekers”, a segment representing 29% of the donors are pretty avid readers of nonprofit newsletters – 42% of them reporting that they read 75% of more of the charity email newsletters they receive.  To quote a relationship seeker, “I do get lots of emails from all these organizations and if it’s got interesting content about their work, I’m happy to get them.  You pick and choose.” 

Many nonprofit newsletters are unfortunately poorly executed.  Far too many send organizational updates versus writing inspirational content.  In the Wired Wealthy research, only 8% agreed strongly that they charity emails they received are generally well written and inspiring.  This is not to say that nonprofit newsletters as a category are a bad strategy.  There are many nonprofits who are utilizing the email newsletter as an effective donor relationship strategy.  Conservation International is a great example.  Their high quality emails present donors with vivid accounts of their work, share successes, and place a significant emphasis on thanking donors.  They invest in writing high quality content that is always donor centered.  They will from time to time ask donors to take action – in their case, make a gift, but those requests are far outnumbered by high quality stewardship and compelling informational updates.

So to Mr. Gensemer, I say, let’s not kill nonprofit email newsletters as a category.  Let’s instead invest in building more donor centered and inspirational communications.  Let’s not sacrifice the development of long-term donor relationships by over whelming them with actions and requests today.

*The screenshot on the right is a great example of a successful, well-made newsletter by Conservation International.

Social Networks/ Media - what's your strategy?

At our recent client advisory board, we asked how much are you investing in social networks now and what results are you seeing.  I think it's fair to say that the interest level has dropped somewhat from 6-12 months ago, when Causes on Facebook had just launched.   Several clients commented that they were finding it hard to justify significant human resource investment on social networks/ media when using traditional ROI metrics that they use for direct response marketing.

While it's likely that social networks are not going to be a major contributor in the short term to revenue, I continue to believe they can be an effective tool for outreach and brand extension.  Certain groups like Oxfam America have also found success in recruiting new online activists through venues like MySpace.

New research by Virilion and Harris Interactive suggests moderate interest in "keeping up with nonprofits through social media": 30% of donors/engaged supporters were somewhat or very interested but 51% were not at all interested.

Our recently published Wired Wealthy research of $1000+ donors also found moderate activity levels in social networks/ media amongst this group of key donors (who are largely boomers)

    * 39% view videos (11% regularly)
    * 25% read blogs (9% regularly)
    * 20% use SMS (10% regularly)
    * 8% comment on a blog   (2% regularly)

We found marked differences by donor segment.  We looked at attitudinal or psychographic segments and found three distinct groups – “all business”, “relationship seekers” and “casual connectors”.  The participation in social media among the relationship seeker segment is MUCH higher.  Some verticals like animal welfare and environmental groups have a much higher preponderance of “relationship seekers” arguing for a proactive social media strategy in these verticals in particular.

Vinay 

A Reading Guide for the "Wired Wealthy"

Have you read the Wired Wealthy yet? If not, Tom Belford in his popular blog, the Agitator provides a great framework of questions to keep in mind as you read the paper.

“I finally got through my reading pile to a report released about three weeks ago by Convio, Sea Change Strategies and Edge Research. The Wired Wealthy is an important study of the online behaviors and preferences of major donors (i.e., individuals giving cumulatively $1000 in a year to a given cause, through any means).

Twenty-three nonprofits provided research access to their donors in this category ... typically the 1% of donors in their universe who give almost one-third of the money.

The report drips with valuable data and insights. In fact, if you raise charitable money and do not read this report, you oughta be fired!

On the other hand, the firms and individuals who produced this report, of course, deserve a raise! And kudos too to the groups who shared their donors for the project.

No single blog post can do justice to the richness of information in The Wired Wealthy. So I won't dribble out a bunch of teaser factoids here.

Instead, to encourage you to read it yourself, I'm simply going to list some of the questions you will find answers to (or at least guidance on)

• Can you treat all your "Wired Wealthy" alike? The authors found three segments within the Wired Wealthy universe -- Relationship Seekers, All Business and Casual Connectors. What are their critical differences and what are the implications for communicating with each segment online?
• How do these donors relate to whiz-bang online stuff like videos and social networking tools and sites?
• How do they grade (your) nonprofit websites? How often and why do they visit them? [Warning: some depressing news here.]
• How much of (your) email communications do they read ... and how do they grade them? [More depressing news! Clue: the report refers to an "inspiration gap."]
• What kinds of online communication would be welcomed by all three segments of the Wired Wealthy?
• Do they expect to be giving more money online in the future? How do they feel about direct mail?
• What online activities do they undertake in support of the causes and charities they contribute to?
• Just how important is it to be responsive to the individual preferences of these donors and to customize communications accordingly? [This is a Pass/Fail question!]
• To what degree are nonprofits honing special online approaches to the Wired Wealthy, and are the right people involved?

If these questions -- and insight into their answers -- are not important to you, then either you are not a fundraiser, or you are not a fundraiser with a future! Read The Wired Wealthy!"

Wired Wealthy Research - Follow-on discussion

Jeff Brooks of the agency Merkle-Domain publishes a great blog called the donorpowerblog, the premise of which is that "More than ever before, donors are insisting that you share power with them, not treating them like passive ATMs".  I very much subscribe to this philosophy.

Jeff and I however differ in our opinions on the value of donor research.  Jeff recently posted in response to our Wired Wealth Research  that:

"Before you rush out and change everything, remember: It's just a survey. When you ask people what they think, you find out what they think, not necessarily what they do. Actually, you really only find out what they say they think. If you really want to know something you can act on, watch actual donor behavior. When you see changes in behavior, that's the time to change everything.

Most organizations that pay attention to what their donors do will probably find these survey results to be a bit hysterical and slightly out of step with reality.

That said, this survey should get your attention. It signals a change in response medium that's likely to become significant quickly. Not only wealthy donors, but donors across the spectrum are turning more and more online to give and otherwise interact with charities. Donation revenue is migrating from the mail to the web, and that means we need to become effective at communicating online."

As Jeff points out, it is generally better to observe what people actually do vs. what they say they do however we must remember that current donor behavior is strongly influenced by how nonprofits engage them.  If we have conditioned our donors to respond via mail and don't make the online experience as compelling as their online banking, shopping, or travel booking experiences, surely it influences their behavior?

The point of a donor survey was to understand the "gap" between donor stated preferences and how nonprofits perform today.  Observed behavior and data is important but we should not ignore the voice of the donor in helping derive next generation strategies.

Back in 1999, if I just observed what donors were actually doing online with nonprofits vs. observing their behavior with commercial entities and surveying them about their preferences, I would never have started Convio!

Vinay Bhagat

Founder & CSO Convio

Wired Wealthy Study co-author