Charitable giving and fundraising in a digital world

Today we're launching the third in our series of ICT Foresight reports, each of which looks at a different aspect of how ICT is changing how the sector works, and particularly the relationship between organisations and their stakeholders.

The report is free to download as a pdf (or you can request a hard copy by emailing Catherine Morgan). The summary for those with less time is below.

But first, third sector this week reported a new site called My Charity Page, which will launch in January. The site creators are billing it as 'the sector's facebook' which got me thinking.

Although it's hard to judge without actually being able to see the site, My Charity Page sounds like an interesting new entrant into the world of online fundraising. Like similar sites in the US it could go some way towards levelling the playing field for small and medium sized charities, allowing them to promote their organisations to potential donors alongside big brand names (as highlighted in our report). However, to describe it as the sector's facebook I think is misleading and misses the point of the key trend in social networking to which charities will need to respond.

As highlighted in our earlier report, ICT Foresight: how online communities can make the net work for the VCS, there is a shift away from bounded separate online communities and towards more fluid networks which individuals shape around their own identities and interests. It is therefore important for charities to get out there, onto Facebook and other platforms, to be where the conversation is happening and to ensure that their own websites allow people to link to them and to draw content from them. To set up yet another platform may be missing the point.

But back to the report's key messages:

The relationship between voluntary and community organisations (VCOs) and information and communication technology (ICT) is changing fast. ICT is impacting upon fundraising and giving, creating both strategic opportunities and challenges for VCOs. The report explores key trends and their implications, supplemented by working examples and expert 'think-pieces'.

The giving transaction

The internet and new media are changing the ways in which people give. As people gain confidence in using the internet not only to search for information, but to carry out financial transactions, there is a rising expectation of being able to give online. This is not limited to PCs as mobile phones increasingly function as computers and wallets, providing an alternative fundraising channel which is likely to grow. The flexibility of technology allows potential donors, to control what information they receive at what times, and therefore the opportunity to give on their own terms: at times that suit them without being asked.

Opportunities

  • Intermediate giving websites allow small organisations to take advantage of online giving.
  • Multiple small donations can be collected as low transaction costs open up the possibility of micropayments.

Risks

  • VCOs may focus their websites on donors to the detriment of communicating their mission and building relationships with a wider range of stakeholders.
  • Potential donors could be lost by VCOs that do not take advantage of new methods of giving.

Giving: the donor's perspective

ICT is empowering individuals to take control of their relationships with organisations. An increase in online information means that it is easier for donors to make informed decisions about who they give to. And this is not necessarily directly controlled by organisations, in the future donors may be increasingly influenced by personal recommendations through more widespread use of interactive websites. As individuals take more control of their online presence, they expect more personalised contact with organisations, and organisations may find that it is no longer enough to simply send donors the latest annual report. Giving is also becoming less of a private activity. As social networking sites allow individuals to share personal and political identities and actions with peer groups, some donors are publishing who they give to, how much they give and at times even using ICT tools to fundraise on behalf of organisations.

Opportunities

  • Personal online spaces allow individuals to fundraise directly for organisations.
  • The internet can attract more supporters by breaking down the barriers between giving, activism and awareness raising.
  • Social networking technology allows VCOs to more effectively target potential donors.
  • Websites that exploit expectations of being able to support particular projects are likely to attract donors.
  • Increasing expectations of feedback help ensure that VCOs are accountable and transparent.

Risks

  • Some individuals may cut out the VCS middleman by giving money directly to individuals or communities.
  • VCOs may allow a focus on the 'ask' to overshadow the importance of support without a donation.
  • If the wealth of online information about VCOs becomes unmanageable, it may be increasingly difficult for individuals to decide on which organisation to give to.
  • Donor expectations of being able to specify where their money is spent may reduce levels of unrestricted funds.
  • Growing expectations of feedback and personalisation require extra time and resources.

Fundraising: the organisation's perspective

The internet provides new ways for organisations to establish and manage donor relationships. The ability of the internet to create niche communities through fast and easy connections between people, means that it is much easier to recruit people to a cause, no matter how specialised. Once donors have been recruited, it is much easier to develop personalised relationships through the increasingly powerful databases that allow organisations to store data about the interactions they have with donors.

The traditional model of VCOs sitting at the centre of fundraising relationships is being challenged by ICT. Online activity such as blogs allow donors and recipients to directly share their own experiences with little technical knowledge, whilst online communities and networks mean messages can be spread horizontally between individuals rather than outwards from a central source.

Opportunities

  • VCOs can easily and affordably reach and bring together potential donors.
  • Technology can close the gap between donors and beneficiaries through more active and direct communication.
  • Organisations can more easily use data to build giving relationships with supporters and consider how individuals engage with their organisation more widely.
  • Distributed fundraising can help organisations to raise money and reach new people

Risks

  • As new groups around common identities are easily and quickly formed, it may dilute the hold that established organisations previously had over a cause.
  • It may be hard for organisations to maintain control of their messages if individuals are increasingly the source of information.
  • Use of third party sites may prevent VCOs collecting rich data from their donors.
  • There is a risk of 'giving fatigue' if viral fundraising methods result in too much information being received by individuals.

Conclusion: the giving market

The key message from this report is that although ICT has not increased overall levels of giving, it is driving more subtle changes in how people give and where power lies. Donors are increasingly using online payments to replace less convenient methods of giving and the internet and mobile phone technology have proved successful in allowing donors to respond rapidly to calls for giving. Power appears to be shifting away from organisations towards individuals. As a result the role and model of VCOs may change from being deliverers to facilitators and market makers. Power is also becoming more dispersed, internet technologies that require a minimum of technical knowledge are developing, allowing a wider diversity of organisations and individuals to reach people.

Opportunities

  • Micropayments provide a new fundraising market for VCOs which may increase levels of giving.
  • VCOs working in response to disasters will continue to benefit from the instantaneous nature of the internet.
  • The internet may level the playing field for smaller organisations if they can communicate their message convincingly.

Risks

  • Online giving should not be relied upon to increase giving in itself, the work that organisations do and how they communicate with potential donors remains the key driver for giving.
  • Competition for donors and funds will increase as more VCOs are able to promote their work online.
  • New intermediary organisations may take the place of VCOs who do not respond to shifting relationships with donors.

Giving may not have increased as a result of ICT, but VCOs should not underestimate the importance of engaging with new media tools to ensure that they maintain and increase levels of giving and numbers of donors. Those who do may loose out to their more technically savvy peers.

 

Last updated at 15:08 Mon 18/May/09.
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