In the new normal that the pandemic has imposed, the most common challenge that nonprofits face today is the ability to raise sufficient funds using techniques developed for online fundraising.
In the recent past, fundraising activities consisted primarily of asking for donations through in-person door-to-door collection. In the last 20 years, however, new forms have emerged, linked to the mass diffusion of digital technologies, which are transforming fundraising strategies. Such forms feature a full integration of digital and require nonprofits to diversify their approach towards an increasingly articulated omnichannel approach.
Although the term “fundraising” typically refers to efforts to raise money for nonprofit organizations, it is also sometimes used to refer to investors or other sources of capital for for-profit businesses. In this post, we will deal exclusively with the first case, the one that involves the nonprofit world. We have talked about nonprofit organizations, with particular reference to those engaged in medical research and the key role they played in the past year, here.
What is fundraising: The legal definition and related dimension
In the Italian legal system, fundraising is defined in art. 7 of the Third Sector Code as: “the set of activities and initiatives carried out by a Third Sector body, even in an organized and continuous form, in order to finance activities of general interest. The financing of the activities of general interest can take place through different modalities such as the request to third parties of bequests, donations, and contributions of a non-remunerative nature.”
The term “fundraising” therefore refers to all the activities involved in seeking and collecting voluntary financial contributions. It is a process that can become very complex, involving different channels, and can involve individuals, companies, charitable foundations, or government agencies. To succeed in reaching and convincing different donors over time, each fundraising activity must be carefully planned and must be carried out with urgencies as well as medium and long term objectives in mind. In the case of the crisis caused by the pandemic, digital tools have been formidable assets to allow online fundraising and thus give continuity to the performance of services, even remotely.
Donors: The reference markets for fundraising
The different fundraising markets are distinguished based on different categories of donors. Here are the main ones:
- Public administration: Local, regional, national, and international public bodies that provide resources through contributions or calls for proposals
- Individuals: Individuals or groups or small and large supporters who donate their resources (income or assets), according to particular motivations and interests
- Companies: Small or large businesses, large-scale retail trade, or professionals who donate company resources or participate in partnerships in favor of Third Sector entities and their projects
- Foundations: Entities whose mission requires them to distribute their assets in favor of nonprofit projects through contributions and/or calls for proposals
The importance of relationships for online fundraising for nonprofits
The website italianonprofit.it emphasizes the relational aspect of fundraising initiatives, placing a strong emphasis on the importance of establishing solid and continuous relationships with possible donors. As we mentioned in a previous paragraph, it is precisely these relationships that make it possible to activate the resources needed to achieve nonprofits’ objectives. Third Sector organizations then function as intermediaries in the relationship between the organization and the donor, and they make it possible to activate the necessary resources of money, time, goods, services, ideas, relationships, skills, etc.
Being able to create a lasting bond is therefore the most effective way to motivate people, organizations, or businesses. On the other hand, to engage any specific donor in a given context and within given circumstances, it is necessary to use the most appropriate tool.
Fundraising tools: From events to online fundraising for nonprofits
Obviously, fundraising does not consist only of the traditional collection (collection of donations from several people), but constitutes a complex of initiatives that can be planned and carried out according to each of the markets we have identified above. The ways in which it is possible to raise funds are, today, even more varied than in the past: The spread of digital technologies has greatly contributed to expanding techniques and methods. What are the tools of fundraising? Here are the main ones, divided into traditional and digital tools.
Fundraising before the Internet: Traditional tools
- The main purpose of fundraising events or campaigns is to raise funds for a cause. In addition to raising funds, events are used to increase the visibility of the entity organizing them and gain more support. A fundraising campaign usually consists of several special events, which could include formal dinners, benefit concerts, and walkathons, and can also include methods such as raffles, charity auctions, and contests with a list of prizes raffled off to donors. Events can also be officially supported by sponsors who, by supporting a particular cause, enhance their reputation at the same time. A special category of events are solidarity auctions, where an organization can auction its own material goods for the purpose of charity or donate the proceeds to a nonprofit.
- Direct response TV is a technique borrowed from direct marketing that consists in the creation and distribution of a television commercial. It is an extremely costly fundraising tool and is currently used mainly in emergencies and for awareness campaigns on topical phenomena, often related to the news.
- Face-to-face (f2f) is implemented when the goal is to reach new donors. It takes place in public and private places through the use of volunteers or professional fundraisers who interact directly with the public.
- Grant-scouting (search for calls for proposals and funding): Once the funding has been obtained, the relationship with the public institution that issued the call for proposals (the call for proposals is a public act, for all intents and purposes) must be carefully cultivated, even if it develops with a different logic from that which underlies the relationship with other donors.
- Bequest campaigns establish the inheritance of assets after the death of its possessor.
- Telefundraising is fundraising that takes place via telephone (telemarketing).
- Donor care includes all the activities of nurturing and retention of donors, such as conversion, reactivation, updating, involvement, and thank yous.
- SMS campaigns are mainly used to maintain a long-lasting relationship with donors.
Online fundraising for nonprofits: digital tools
Online fundraising (also called digital fundraising) is articulated through the use of various digital tools. It is becoming increasingly popular for a number of reasons: The spread of social networks, the increased security of online payments, and the effect of the pandemic, to name a few. It’s a modality that increasingly exploits mobile technology.
With online fundraising, the fundraiser must make use of profiling criteria, they must optimize the funnel through which donations are made, and they have to optimize the flow of communication with potential and existing donors.
Here are a few online fundraising tools:
- The entity’s website, which offers not only informative and inspirational pages, typically within the corporate blog, but also transactional pages (often landing pages) where visitors can easily donate with just a few quick clicks. A careful SEO and SEM strategy is applied to content on all channels involved, and it allows better results in terms of traffic and awareness. The best-performing platforms host content that activate mechanisms that support greater interaction and therefore more incisive user participation. This includes, for example, personalized interactive videos that have intuitive features and contain guided paths or easily navigable microsites.
- Social networks, which allow a more precise targeting of recipients, are updated quickly and therefore more suitable for communicating emergencies or emergencies and allow greater involvement thanks to live streaming (especially Instagram with its IGTV videos). Social networks, YouTube in primis, together with video conferencing tools are also the virtual place where it is possible to organize events entirely online.
- Crowdfunding aims to seek supporters especially among small- and medium-sized donors and funders, generally through a web platform specifically developed to enable donation-related operations
- Email marketing is performed by sending emails. The emails are more effective if they are included in a reasoned flow of newsletters.
- Personal fundraising is word of mouth applied to online fundraising to support specific causes or nonprofits. Organizations, aided by numerous crowdfunding platforms and social media, can leverage the relationship capital of their donors.
- Solidarity auctions and solidarity e-commerce make it possible that the proceeds in both cases go to the cause of interest. The mechanism of auctions is exactly the same as we saw just above, but it takes place entirely online.
Video marketing and smart content marketing are not so much simple tools as actual systems for creating and distributing highly profiled content. Both can contribute to enriching the potential of non-profit digital marketers’ “toolbox.”
Video marketing
Video marketing is one of the resources that brands and organizations use in their content strategy. Thanks to its exceptional ability to penetrate, a large number of viewers watch video on an ongoing basis, and brands use it to integrate the cause into viewers’ personal narrative.
In online fundraising, personalized videos have taken on a leading role in this pandemic-torn 2020, where they seem destined to continue in the evolving “new normal.”
Case in point? Personalized videos. Doxee Pvideo® have exceptional communication potential that can be employed for the needs of third-sector entities, whether it’s facilitating conversions (e.g., along the fundraising funnel) or offering engaging stories for the individual recipient. These videos are unique because they are composed of scenes selected based on the data of each recipient, and they contain personalized text and banners, ad-hoc chosen images, and personalized voice thanks to the text-to-speech and audio library.
Smart Content Marketing
Smart Content Marketing and dedicated sites and platforms are particularly useful because they:
- Allow the provision of continuous services even in emergency conditions
- Strengthen the touchpoints with users because they are able to respond quickly to requests for information, give rise to an integrated and engaging narrative experience, and simplify some basic actions that are otherwise perceived as labour-intensive or unsafe, such as those necessary to make the donation
- Contribute to transform touchpoints into profitable and productive contact opportunities because they capture the attention and interest of the customer
- Adequately exploit mobile devices, facilitating the connection with the organizational website and online payment mechanisms
Among the most advanced solutions available today, Doxee Pweb® is the product dedicated to the production and distribution of personalized micro-sites that present each user with interactive and highly personalized web content, supporting them in multi-channel mode.
Doxee Pweb® combines the flexibility and interactivity of a web page with the engagement capabilities of personalized content, maximizing conversion rates and providing customers with informative and inspirational pages as well as transactional pages (often landing pages) where people can make a donation with just a few quick clicks.
2020: the effects of the pandemic on online fundraising for nonprofits
A recent European Fundraising Association (EFA)1 report about the effects of the pandemic on nonprofit fundraising paints a mixed picture. While nonprofits have been hit hard by the pandemic–more than six in ten respondents expect their 2020 revenues to be lower than expected–the use of digital tools to raise funds, interact with supporters, and provide services has increased considerably.
While more than one-third of respondents report that overall donation income decreased during the pandemic (according to 70% of Italian respondents) and that structural capacity reduced (with declining staff or volunteers), more than half of organizations were able to continue operations thanks to new ways of receiving donations online.
Nearly half of respondents (47%) reported an increase in money donated online – a finding particularly evident in Italy (58%), Germany (56%), and France (53%).
The first three problems reported by the interviewees in terms of severity and complexity were the obstacles in raising sufficient funds, the difficulty in acquiring new donors, and the impediments in retaining and involving actual supporters. Thanks to the development of online tools, distributed through various digital channels, the approach to service delivery has changed for the vast majority of nonprofit organizations, so much so that only 14% say they have not made any changes in service delivery.
Regarding the future prospects of the nonprofit sector, only one in 10 respondents said that the strategy implemented by their organization would probably remain the same. The other nine, on the other hand, recognized the usefulness of digital fundraising and the valuable role played by digital tools for online fundraising during the crisis.
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