Jul/Aug 2008

Nonprofit 2.0 – Leveraging Technology and Social Capital

by Vinay Bhagat, Founder and Chief Strategy Officer, Convio

I'm passionate about the impact that technology can have on nonprofits, and believe that smaller nonprofits in particular stand to gain significant efficiencies through its effective implementation. Technology can help them level the playing field with much larger organizations, many of whom can learn from their smaller peers.

Some of the most innovative nonprofits I've observed were founded in the last decade — a time when technology was frequently considered a lower cost alternative to hiring people. For these "youngsters," the Web was the de-facto place to begin their marketing efforts.

A common trait that unifies these innovative small nonprofits is that they have gained significant leverage through harnessing social capital, i.e. developing loyal supporters that help them recruit others and raise money for their cause. Embracing technology, many of these nonprofits have applied this social capital strategy to their online fundraising and outreach efforts. I think of these groups as Nonprofit 2.0 organizations — derived from the term Web 2.0 as defined by Wikipedia as "the trend in the use of World Wide Web technology and Web design that aims to enhance creativity, information sharing, and, most notably, collaboration among users."

Example: Trisomy 18 Foundation

Trisomy 18 Foundation, falls into this camp. With seven staff members and an annual budget of $250,000, the organization helps family members of children diagnosed with Trisomy 18, a genetic condition. Founded in 2002, the foundation has leveraged the Internet as its primary channel to educate and support medical professionals and affected families. Once it had established a constituency, it turned to the Web as a channel to raise money.

By empowering its constituency to recruit others and raise money, the organization gave individuals the chance to honor their children through tributes and memorials, to raise money through volunteer led events (e.g. golf tournaments), and to buy remembrance products. Working with Convio, Trisomy 18 Foundation grew its annual revenue from $50,000 to $250,000 in two years, with 90% of funds received online. Now, with a solid grassroots support base, the organization is beginning to mine its database for major donors and realizing promising results by leveraging technology, the Web, and a network of supporters.

Example: Mobile Loaves and Fishes

Founded ten years ago, Mobile Loaves and Fishes (MLF) is a rapidly growing social outreach ministry for the homeless and indigent working poor. MLF serves 400,000 meals per year, yet operates with only eight staff members. Its impressive efficiency comes through harnessing social capital and technology. It has a network of 11,000 volunteers, which it manages through an online platform.

MLF also is a progressive user of online fundraising technology. Using Convio, MLF is currently running a "multiplier campaign" in which volunteers are asked to recruit five sustaining donors, each giving $10-30 per month. So far, the organization has recruited more than 200 sustainers yielding $100,000 per year. This fundraising strategy has helped to smooth out holiday giving seasonality.

When we started working with MLF three years ago, the organization had annual revenue of $650,000; now, with Convio, its revenue has grown by more than 50% per year. The organization also has utilized social networks in creative ways. Beyond having a presence on most major social networks and media sites, MLF President Alan Graham "friends" key constituents and major donors on Facebook, so he can keep apprised of their activities. What a brilliant idea!

Leveraging Social Capital and Technology

Both of these nonprofits realized that leverage could be achieved through developing a vibrant network of supporters, i.e. developing their social capital. Both also realized that deploying technology and strategically using the Web could extend their capacity far beyond hiring an incremental staff member.

Their approach has married well with the changing preferences of donors, who increasingly are willing to go beyond donating by promoting their favorite causes. Similarly, potential donors are becoming more receptive to requests sent by friends or family than by organizations themselves.

Converging Channels

In addition to leveraging social capital and technology for developing a network of supporters, Trisomy 18 Foundation and MLF are seeking ways to leverage technology for all aspects of their operations, including their offline fundraising efforts, and mission and volunteer programs.

Until recently, Convio's innovation efforts focused on the role the Internet could play in outreach, communications, advocacy and fundraising. Over the last three years however, we have studied in great depth the impact that marketing channels have on each other*. Seeing significant convergence between 1-to-1 major donor cultivation, traditional direct response (mail, phone, DRTV), events and online marketing, and realizing that nonprofits want technology to manage all constituent types (not just donors) we sought to find better solutions to address this need.

We concluded that there's a significant opportunity to bring new technology innovation coupled with a more holistic CRM approach to the traditional category of donor management. While we continue to invest in integration to legacy donor databases, we are in parallel developing a new, full-blown nonprofit CRM system on top of the Force.com platform developed by salesforce.com™, the leading provider of Web based CRM systems to the commercial sector with 43,600 customers and 1 million subscribers (people using the system).

The Force.com platform is helping us to rapidly deliver an affordable, yet full featured and extensible, solution for nonprofits. We seek to provide open, user friendly and holistic CRM capabilities to serve the needs of Nonprofit 2.0 groups who realize that technology is strategic for their fundraising and mission. These same organizations know that the Web will only grow in importance, and that harnessing social capital is critical to their success. We are excited to be working with several such groups — including Trisomy 18 Foundation and MLF — for our CRM charter program, Common Ground (previously code named Aikido).

* In January 2007, we published the study "Integrating Online Marketing (eCRM) with Direct Mail Fundraising: Adding a New Communication and Donation Channel Increases Donations" with Strategic One, which assessed the impact that online engagement had on direct mail donor value. The report is available at www.convio.com/integratedmarketing. More recently, we worked with Sea Change Strategies and Edge Research, to understand the role and influence of the Internet on major donor development. Download a free copy of the report at www.convio.com/wiredwealthy.