Goldilocks and the Three Fundraising Bears

Copyright 2001 by Adam Corson-Finnerty

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My wife and I were reviewing the Goldilocks story in the car yesterday. We agreed that she found three bowls of porridge on the table. One was Too Hot, one was Too Cold, and one was Just Right. She also found a Just Right chair, and a Just Right bed. I can't remember if she found a Just Right Internet connection, but I'm sure it wasn't DSL. The three bears would have died of old age before she got it to work correctly.

As we have gone back and forth about vendors in our Cybergifts discussion, I have found myself thinking of the Goldilocks story. But my focus hasn't been on the girl, it's been on the bears.

Let's pose a question: What should non-profit agencies be doing about Internet-based fundraising, and what vendor services might they need? For me, there is no answer possible unless we separate the agencies into three camps: Small, Medium and Large.

We will call any agency with a budget under $5 million "Small." Medium agencies have budgets of $6-25 million. Large agencies are above $25 million and would go all the way to several billion (research universities). I have no idea if these dollar benchmarks are appropriate, but you get the idea: Small, Medium, Large.

If the Internet was a Goldi-mine in which nuggets lay in plentitude on the floor, then every agency of any size should be pouring resources into Internet fundraising. But it isn't.

E-Fundraising

One day quite soon, we won't be using terms like e-fundraising and Internet-based fundraising. We will just talk about plain old fundraising, and the Internet will be just another tool. Another channel for communication.

But that day has not yet arrived. None of us are familiar enough with the Internet to take it for granted. The fact is, it isn't "done" yet.

Even so, we already know that simply putting a "donate now" button on your website won't open up the philanthropic floodgates. For most non-profits, the returns from an online giving setup will be modest, perhaps so modest that the gifts will total less than the monthly fee for maintaining the site.

So what should the Baby Bears—the small non-profits—be doing with regard to setting up structures for e-fundraising? My advice is: Not Much. And the Momma Bears, the Medium agencies? My advice is: Not Much More. And the Large agencies? Well, they should be doing Quite A Bit.

How's that for incisive, tailored consulting advice? Pretty good, huh? That will be $2,000 please.

Here is what I suggest:

**Baby Bears: A modest Website that allows people to find you, learn what you do, discover your phone number and street address, and send email to you. Staff ability to send and receive email, and the capacity to search the Web for information (like Foundation Guidelines).

Momma Bears: Not Much More. A Web site that tells your story in greater detail, and that might include "ways to give" information, events that are worth noting, information relevant to your mission, staff email addresses. The CEO and the fundraising staff should have Internet-linked computers, and use them to communicate with clients, supporters, colleagues, potential donors, etc. It would be good to have someone on staff who knows enough HTML to maintain and update your site. Oh, and the ability to receive secure email, which means the ability to receive online donations.

Poppa Bears: Quite A Bit. A full-fledged Website with online giving, registration for events, information in depth, "permission" email newsletters and alerts, surveys, you-name-it. Lots to do, in other words, and plenty of "interactivity." One or more staff dedicated to creating and editing Webpages. All professional and clerical staff should have Internet-linked computers and the ability to send and receive email. One or more development staff devoted to e-fundraising evangelism (that is, working with development staff to help them think about how to incorporate Internet tools into their work). Time of top leaders devoted to thinking about how the Internet can enhance the mission and reach of the organization, and how e-tools can be used for integrated Public Relations and Outreach, as well as Fundraising.

At this point, I have probably made a lot of readers angry. How come the Big Bear gets all the porridge?

The answer is fairly simple. The Big Bear probably has a full-blown fundraising program in place. The smaller agencies often do not. And if a non-profit does not have a complete fundraising program, then an extra dollar spent on the Internet is probably a dollar semi-wasted.

A full-blown fundraising program includes Annual Giving, Major Gifts, Corporate and Foundation work, and Planned Giving. It may also include Special Events. If I missed mentioning any other traditional fundraising activity, it includes that as well.

Most Small agencies cannot afford to mount a full-blown fundraising effort. Most Medium-sized agencies are stretching to place a full team in the field. While these agencies should provide Internet tools to their fundraising staff, they should not devote dollars to elaborate e-fundraising schemes. Those dollars would be better invested in enhancing their traditional fundraising efforts—because the yield from those efforts will be greater.

This is particularly true of major gifts work. For most non-profits, 80% or more of the fundraising dollars will come from major gifts, that is, gifts of $25,000 or more. Therefore, if an agency has extra money to spend, it should probably spend it on enhancing the major gift program. Or on creating a Planned Giving program. Or on hiring a CFR officer. Simply put, the cost-benefit ratio is better.

With a Large agency, the story can be quite different. If we look at university fundraising, an area that I know, we will find sizeable development machines. We are talking about 200 to 400 dedicated staff. Researchers, major gift officers, PR people, alumni relations officers, international gifts officers, planned giving specialists, events specialists, and so on. The current donor base could be 100,000 or more. The donor management system could be maintaining 500,000 records. The internal and external email and call volume could be enormous; there could be scores of Websites and thousands of Web pages.

Notice that I said a "sizeable machine," but I did not say a well-oiled machine. Development shops of this size can carry a significant number of inefficiencies due to their very size and complexity. The internal and external communications burden can be huge. Balls get dropped, "customers" get lost, game plans get poorly executed, research gets put on a shelf, and opportunities knock and then leave when no one seems sure who is answering the door.

In this environment, the Internet can bring a fair bit of communications "oil" to the fundraising machine through the use of internal and external Web sites, listservs, online forms, customer self-service mechanisms, Web-to-print publications strategies, and customer relationship management tools.

Not only will such tools help to improve communications, they will also function as lead-generating and "sales" devices. They can play a powerful role in donor recognition and stewardship. And they will allow your gift officers to keep up with the bright, driven, Internet-savvy entrepreneurs who are going to be making major gifts for years to come.

(I have written about this in my online Cybergifts series, specifically Cybergifts, Part 10, "The Well-Tempered Development and Alumni Relations Office."

http://www.fund-online.com/musings/cybergifts10.html)

Buyers and Sellers

This article is part of an ongoing series, focusing on the possibilities and perils of using dotcom and start-up vendors to build your e-fundraising platform. Somewhere in the middle of writing it, I came across Professor Michael Porter's terrific article "Strategy and the Internet." (Harvard Business Review, March, 2001, pages 62-78) Porter argues that there is no "new economy," just an old economy with some new technology to deploy. He attributes the failure of many dotcom start-ups to the lack of any business strategy, to thinking that the Internet itself is somehow a money-maker, and to trying to aim too broadly at a customer base. "The most successful dot-coms will focus on creating benefits that customers will pay for, rather than pursuing advertising and click-through revenues from third parties." Or, I would add, on charging a toll for each cybergift.

Keeping Porter's comments in mind, I ask myself what the market really looks like, and who needs what from whom. Here is what I see:

Small non-profits: Most small agencies only need Web design services, Internet service, and a bit of training. They do not need e-commerce services, ASPs, PSPs, CRM, or any of that other folderol. Their needs can best be met by a small vendor for whom their modest expenditures are considered adequate.

Medium-sized non-profits: The majority of medium-sized agencies don't need much more than the small agencies. Their online donations will not initially be large enough to justify e-commerce enablement. Secure e-mail will handle gifts just fine, backed up by manual credit-card processing. Their Web site may be more elaborate, requiring in-house or outsourced design services and hosting. Their training needs will be greater. Even so, the best vendors for medium-sized agencies will still be small shops with modest ambitions.

Large non-profits: These agencies probably need and will want a host of services. Web design and hosting, full e-commerce capability, integration with back office systems, staff training, Customer Relationship Management tools, customized planned giving sites, multi-media capacities, chat and community software, and so on. Like large companies, large non-profits can use the Internet to good effect. As Porter puts it in the business context:

"Because every activity involves the creation, processing, and communication of information, information technology has a pervasive influence on the value chain. The special advantage of the Internet is the ability to link one activity with others and make real-time data created in one activity widely available…." (page 74)

Ambitious dot.coms should be focusing their activity almost exclusively on large non-profits. And Mom-and-Pop shops should probably not try to compete in this arena, except perhaps in Web design.

But, dotcom vendors will discover that the big, bad wolf has already gotten into grandma's house. Traditional vendors are already well-ensconced in large agencies. E-tapestry will have to compete with Blackbaud; GivingCapital and Convio will be up against IBM. Wecan-e-you will be lining up against wealready-got-you. And, frankly, most large non-profits would be crazy to change horses if the horse they are riding is learning most of the new tricks.

Porter argues that traditional businesses are in a stronger position to compete in the Internet arena. It is much easier for them to adopt Internet technology than for dotcom pureplays to adopt traditional business practices. Plus, I would add, many existing companies have an established customer base and a revenue stream. They are far more likely to be around to deliver the goods than a company that is only as strong as its next round of VC funding.

This is not good news for the vendor-bears. In fact, it's downright bear-ish. And that's no bull. (I think I've been watching Louis Rukeyser too much….)

So

So, once again, I seem to be arguing the case for dissing the dotcom vendors. But in my own e-fundraising I am using the services of same. How does that happen? Well, sometimes a dotcom is the best choice.

I was on a team that spent too-damned-long deciding which vendor to choose for e-commerce enablement. We drew up a list of desirables and looked at who could meet our criteria. The best company was a dotcom, and in fact, none of the finalists had been in business for longer than the blink of an eye. Forget stability and tradition. You want cutting-edge technology? You sign up with a young scout or guide the wagon train by yourself.

I am developing an information-lure, permission-based "portal" to attract alumni to visit the Penn digital library. We needed an information partner who could provide loads of full-text information and a great search interface. We found one, a start-up backed by private investors. Want to know who? Go to http://www.library.upenn.edu/portal and find out.

Here's the deal: Porter is right. A dotcom that can provide a valuable service that no one else can match has a "value proposition" for you. A dotcom that has a value proposition and a strategy has a chance to succeed, even in this difficult market. So sometimes start-ups will be the best of all possible vendors. When all is said and done, if you want to be in the circus, you've got to be willing to occasionally dance with the bears.

Copyright 2001 by Adam Corson-Finnerty
Development Officer, Author
and Occasional Consultant
http://www.fund-online.com
Contact and feedback: corsonf@fund-online.com

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