Seth Godin recently linked back to a post he wrote in 2011 about the economics of fund raising galas. To heavily summarize what many of us already know, he points out that it is difficult to get someone to give money to a cause, but if you wrap it in a social occasion, people are willing to spend a large amount of money with the knowledge that some of it will go to a good cause.
Of course the issue is, there is a lot of time and money being spent on organizing the event. When it is all over, there may be a significant amount left over to put toward the cause, but there would have been a lot more had there not been such a large amount of fundraising cost involved.
But that brings up the simple question about whether fundraising can be decoupled from the social element. The basic development office truism is that people give to people, not organizations. Donors need to feel a personal attachment and investment to the cause.
There is an event called an Un-Gala where you are supposed to stay at home and make a donation. But if you Google the term, you will find that a lot of people sort of missed the memo and are having big flashy events.
At the same time, donors are increasingly looking at the overhead costs of non-profit organizations. Organizations like GuideStar, Charity Navigator and BBB Wise Giving Alliance are pushing back against using overhead ratio as a measure of a charity’s effectiveness.
Then there are some like Dan Palotta who are really pushing back against the concept of overhead ratios and advocate for spending large amounts of money to fund raise enough to pursue big solutions.
He has no desire to decouple the social aspect from fundraising. The more galas, 5k runs and promotional efforts you can muster in order to raise awareness and forge a connection or investment with the cause, the better in his mind.
I find a lot I agree with in Palotta’s philosophy. His thoughts about people taking too conservative a view about fund raising bear considering. Maybe my next statement is reflective of that mental malaise.
I am not sure most non-profits operate at a scale on which his ideas would be viable. I think he is envisioning the steps large cause based charities focused on cancer, poverty, diabetes, environment, etc. An arts organization would probably have to adopt a vision on a statewide scale rather serving a city or town to be operating on the scale required to viably follow the approach he advocates.
I have generally viewed Kickstarter and similar crowdfunding services with a semi-skeptical eye. However, reading Godin’s post on gala economics, I have to admit crowdfunding is superior in some aspects. It does reduce the cost of the social element to some degree. There are costs associated with producing a video appeal and producing and fulfilling the donor benefits, just as with a gala event. However, the costs aren’t likely to be as great as for a fundraising gala.
I have heard some horror stories from people who severely underestimated the amount of labor and cost involved with meeting their crowdfunding promises, but I can attest to the fact people do the same with their gala events. Crowdfunding sites allow an opportunity to experiment and relatively quickly refine your approach over various iterations. Something that is not easily done when you are talking about organizing successive social events.
So it is possible in time people will become as adept at creating engaging crowdfunding presentations as they are with gala auctions.
While most crowdfunding sites are focused on projects rather than being optimized for annual seasonal fundraising events, I imagine that design might evolve over time. Just as likely, non-profit organizations may find the idea of anchoring fundraising around an event on a single day is inferior to a series of longer term appeals customized and delivered to specific groups.
A recent article on Nonprofit Hub notes that donor fatigue is not real. People are willing to entertain multiple requests for donations. The thing that wears on people is poorly designed request and follow processes. A targeted, online approach to both may be the solution and allow for more frequent solicitations.
The other little nagging consideration is if people are increasingly having their cultural experiences at home or on a handheld screen, what will be the future of gala events? Granted, everyone loves a good party and may show up for gala events when they never darken the door at any other time of the year.
I would be interested to know if anyone has studied whether people whose only connection with an organization is these semi-annual events donate as much as someone who involves themselves more frequently. It would be difficult to measure. The infrequent attendee could easily be swept away by the emotion of the night (and perhaps a sense of regret for not participating more often) and give quite a bit. Someone who participates often may not give as much because they are not wealthy, but attend the gala because they do feel a significant appreciation for the experience they have had.
The reality is, both approaches may ultimately be necessary. Currently crowdfunding sites tap as much into the participant’s wider social network as much as it does their direct connection and interest in the project. Live events appeal more directly to a person’s connection, but provide an opportunity mingle and have an enjoyable social experience that a video on a website can’t provide.