SWEET Online Fundraising Blog

Social Networking Software for Nonprofits

I'm happy to say that Blue Sky Collaborative will start its 5th year next month.  I'm happy to say that we've remained independent, we continue to learn, and we adore our clients. 

Over the last 5 years, I've seen tremendous improvements in software that is available to nonprofits.  As I watch this market evolve, I see evidence that organizations are increasingly being shaped and driven by their donors.  And not just the wealthy major donors but communities of donors that are active and engaged in the mission. 

I'm not surprised.  Customers are in the driver's seat these days at nearly every link in the supply chain.  Technology has made that possible.

I see this evolution in the nonprofit sector as well.  Donors are finally exerting their undeniable influence.  And nonprofits have to respond.  Some of them are.  Blogs, message boards, and mailing lists filled with development directors and executive directors asking how they can leverage the social web, rss, tags, etc...

My crystal ball foresees a real shift in the way nonprofits employ their online software.  Years ago, the challenge was getting a website and an online payment processor.  Then came donor management software and now we're on the cusp of the social network era for nonprofits.

I'm not talking about nonprofits getting a MySpace page.  I mean, thats ok but it has its limitations and risks.  I remember when we created a MySpace group for a client.  They absolutely loved it and were giddy about the prospects.  The day after they launched the page, 2 donors wrote strongly worded emails about the perils of MySpace.  Yikes - not a good situation.

Instead, I'm talking about social networks that represent an evolution of the donor management software that exists right now.  Don't get me wrong, donor management has its benefits.  But it's getting stale.  Even the term, "DONOR MANAGEMENT," implies that the organization is somehow managing the individual is kind of creepy.  Salesforce is the creepiest.  Donors enter the dataset as "leads" and then are bumped up to "opportunities" till they are "closed."  Organizations keep comments about donors in there.  For example.

"Had a conversation with Syam on the phone today.  We can get $500 from him.  He says he would be willing to attend 2 events this year.  I'll schedule a call for 2 weeks from now.  Whoever is making the calls that day - remember that he's a jerk.  Just put up with it for 5 bills"

I'm not kidding.  It's creepy. 

The very notion of an organization managing its donors just doesn't seem right these days.  Who's managing whom?  The tables are already turning.  Donors of all ages are aligning themselves with organizations that are DONOR DRIVEN.

So what's a nonprofit to do?  What if you've already spent $30K on your Blackbaud or dole out $1000's every month to your donor management vendor?  It's ok.  Any organization can still become a donor driven organization.  One way is by creating its own social networking site.

A private site open only to members and people that are approved or invited.  Kind of like a MySpace but just for your nonprofit, without the sexual predators and without the equally as disturbing marketing firms scraping everyone's information. 

It's really simple to do and the benefits are astounding.  We created a private social network for a client last year.  They have a membership database of 2000 people.  So far, 800 people have signed up, created profiles, and shared information with the organization.  Just this process alone seems so much less arcane than the data importing that goes into populating up a donor management system.  I've seen teams of volunteers and the office excel "expert" combining data from wherever they can find it onto a spreadsheet and importing it into a database.  With social networking software, donors freely give their information because they want to hear from you and be involved.

But we are seeing benefits that extend beyond the registration process.  People are engaging with each other and the organization!  They leave messages for each other.  Hundreds.  Every month.  They invite each other to event and attend the organization's events.  They form and join groups.  They volunteer.  They donate.  They comment on news from the organization.  They make suggestions and get responses from the people in charge - real discourse.  It's inspiring to see the home page of the site and instantly recognize that the iceberg underneath is huge and growing. 

These are donors that are involved! 

And behind it - is a database - just like with the donor management software.  But it's so much more vibrant.  In donor management software you may see entries by a staff person that read, "Donor Prospect: John Doe.  Lead: Warm.  Action: Followed up on phone call from 2/12/07 and Left Message 2/27/07." 

In a social networking database you'll see, "John says:  Hi everyone.  Can't wait to see you at the event next week.  Can someone tell me where I can buy tickets online?  Am i missing something?  Thanks. Go Sox!  Strikeout ALS!"

Now, you'd have to be a real curmudgeon to not see the inhernet benefit for an organization to have this kind of involvement.  But the social networking paradigm works even for the data-centric botom line type.  In both databases, you have records of an interaction, a date when it happened, name of the contact, etc...

But in the social networling context, above that layer of data is the donor engaging the organization and community.  It's great stuff and has been a real eye opener for me. 

The Social Web may fall out of favor soon.  You can still hear the "POP" of the Web 1.0 bubble that left companies scrambling.  There will come a day - probably soon - when Venture Capital won't invest in Web 2.0 companies.  So what?  Nonprofits should seriously consider a private social networking software as an alternative to and evolution of their existing donor management software.

THE MAN in nonprofit fundraising

Billy Starr is THE MAN.  The undisputed king of nonprofit fundraising.

Starr is the man behind the Pan-Mass Challenge (PMC), the Super Bowl of American athletic fundraising events.  Look at the numbers: (from www.pmc.org)

1980: 36 Riders $10,200 Raised
1985: 472 Riders $250,000 Raised
1990: 980 Riders $1.3 million Raised
1995: 1,715 Riders $3.5 million Raised
2000: 2,847 Riders $12.5 million Raised
2005: 3,883 Riders $23 million Raised
2006: 4,270 Riders $26 million Raised
2007: 4,800 Rider $27 million Goal

Notice the consistent gains in riders and dollars.  Also note that Starr's PMC raised $250,000 in 1985!  Most nonpofit directors don't see that kind of performance for their events in 2007.  But those numbers don't tell the whole story. 

The most astounding number to note is this one.

1%

That is the PMC's expense ratio.  In other words, "99 cents of every rider-raised dollar goes directly to cancer research and treatment at Dana-Farber Cancer Institute through its Jimmy Fund."

How many development directors can boast that kind of efficiency?  Probably none.  Think about this when some software vendor like Kintera, Convio, GetActive wants you to give them 5% just for their software.  Starr has software like you but he only spends 1%...on everything.

So how does he do it?

1. Streamlined operations.  Starr heads the firm that organizes the PMC.   There is only a handful of paid staff which is supported by a legion of volunteers that play a significant role in the event.  The PMC holds their volunteers accountable and expects them to do good work.  If a volunteer skips an assignment - they get an email to let them know that their absence did not go unnoticed.  By emphasizing volunteer effort and accountability Starr keeps his expenses way down.  Compare this to Pallotta Teamworks (remember those guys?) who employed hundreds of paid staff and had ridiculously high expense ratios for their AIDS rides.  It's not suprising that the PMC has stood the test of time and Pallotta has lost much of its luster.
2. Focus.  Starr and his staff spend all year to plan this one event.  Everyone, all year for one weekend.
3. Third Party Fundraising done right.  In case you didn't know, the cyclists that participate in the PMC, including Starr, raise the money.  Each year they sign on to meet a fundraising minimum.  The PMC now has the cache to actually charge participants this amount when they register.  But it wasn't always that way.  To get to this point Starr was uncompromising with regard to the fundraising minimum.  If you signed up you HAD to raise it.   Now matter what.  So people did.  And now it's just part of the culture.  The cyclists feel its their responsibility and take charge to meet their fundraising goals.  Starr gives them the tools and software to make their lives easier.  He checks in with them often.  And when they show up in Massachusetts in the summer, they are treated to a first-class event.  It's a winner's culture and not one of entitlement.
4. Billy Starr.  Some people just have it.  If you studied PMC's operations (you can because there is a Harvard Business School Case about it), you still couldn't replicate it.  It's like when car manufacturers visit Toyota plants to learn how they produce such flawless cars.  No matter how well Toyota is documented, no one can replicate their process.  It's too organic, too engrained and almost alive and homeostatic.

Starr will readily admit that there may have been a "lightning in a bottle effect" with the PMC.  In the early '80's cycling was becoming very popular.  Cancer was and still is something that touches everyone.  So the opportunity and market was there.  Like all successful entrepreneurs, he identified the opportunity and made it happen.  And like all good entrepreneurs he made it a success with Other People's Money (OPM).  The brilliance of Starr is the he didn't have to do all the asking.  He made Other People Ask and he held them accountable.

Development Directors and Nonprofit Execs should take note if they haven't already.  www.pmc.org