While we know that internet advertising offers tremendous business potential, display ads and other online marketing tools are playing a critical role in building civil society and the social sector. In previous generations, small non-profits required capital to start fundraising programs and build a base of support, limiting new organizations. Today, with relatively little money, people can launch efforts to promote all kinds of change.
This blossoming of civil society has helped countless worthy causes find their base, and has brought new and diverse issues to the forefront of public consciousness. It's also made a significant impact on financing for non-profits. In the past, small donors have been expensive to maintain, coming in primarily through the mail and telemarketing. While low-level donors collectively can add up to big money, the investment -- even for organizations with large existing bases of support -- has been very high. Many non-profits have given up acquisition, effectively dooming their programs to long-run failure.
But these days, minimal investments can offer pay-off from in acquisition. Blackbaud's 2011 Donorcentrics Report indicates that gifts acquired online are, on average, larger. They tend to come from households with higher incomes, and have much larger cumulative giving.
This is an especially critical renaissance of acquisition coming at a time when the population of major donors is aging. Today's micro-philanthropists are tomorrow's major donors. Any organization that doesn't understand that today's continuum of giving starts with social media, display ads and online donations will lose money in the generational shift of wealth.
There is a flip side to the non-profit bonanza online: it is leading to a proliferation of charities doing similar work and competing for the same finite philanthropic dollars. Many of these organizations could join forces to make an even bigger impact. Nonetheless, it's a particularly exciting time to be thinking about revenue generation in the non-profit space.
1 comment:
Building on what Stephanie said, the importance of digital marketing for non-profit organization is becoming extremely importance. Not only digital marketing is making the current non-profit businesses more efficient, generating the long waited streams of revenues, but it is also creating new business model opportunities.
An example of that it’s the NGO ” Adopt a classroom”. The organization is a fundraising platform for US teachers/classrooms. Their business model is entirely based on digital marketing. Teachers are encouraged to have a facebook page and a classroom page/profile where they can introduce their class, describe the educational activities that they are doing and explain to a potential donor what resources they need to work with their class. They can upload pictures, videos, everything they want to try to make the connection with the potential donor more real, like if the donor was in the class to see what his/her money are used for. The donor can choose the specific classroom he/she wants and donate whatever amount of money he/she likes. Thanks to the power of digital marketing this NGO managed to create a very unique fundraising experience.
As Stephanie was pointing out, the negative side of this revolution is that the cost effectiveness of these new types of business is incentivizing the proliferation of similar organizations. Together with ” Adopt a classroom”, we, in fact, have “Donorschose.org” and I’m sure there are many other similar NGOs. However even though initially we will have a high dispersion of resources distributed among many small NGOs, after sometime the efficiency of the market, as in private sectors, will probably award the most efficient and effective organizations, leaving behind the rest. If the application of private market mechanisms to the non-profit sector is ethic or not, it is something I leave to your personal judgment and opinion.
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