Tech in the third sector: a gift horse with a nasty kick?

Downturn, coupled with our recent change of government, has sparked off a mood of self-examination in the third sector. Whatever Cameron’s ‘Big Society’ turns out to mean, there’s a lot of debate right now about the role of the sector in our public life. Can or should charities be involved in delivering statutory public services? How effective are they at delivery, and can they prove their value? Are charities doing the right things and servicing the right needs?

Size is an issue. In particular there are worries over duplication of purpose amongst the UK’s many smaller charities, and over their financial stability. On the other hand, innovation is important for everyone and this is an arena in which smaller players could punch above their weight, unencumbered by the slower decision-making of their larger counterparts.

Could technology help? Certainly there is an extraordinary breadth of new tools on offer to charities, most of which are cheap or free and easily accessible: from business applications to  email marketing and online video. The new wave of web 2.0, or cloud-based, technologies offer the dual promise of streamlined administration and reaching out to donors in new and compelling ways.

But of course all charities are competing for the same pool of donor funds and if a new technology is available to you, it’s also available to others. It’s an arms race rather than a silver bullet. There are also some types of innovation where brand and budget really does win out. These could prove disruptive within the sector, even increasing the disparity between large and small charities.

I gained a flavour of this at an interesting conference that I spoke at a few weeks ago, Empowering the Charitable Sector with Interactive Technology, put on by AIME.

Mobile giving has both fantastic promise and a dark side

The conference covered a variety of technologies, including social media, interactive TV, email marketing and mobile giving – in particular the latter.

Mobile giving has fantastic promise: numerous presenters gave evidence of its capacity to engage the widest possible audience. According to Rory Maguire from mobile operator 3 there are 42 million mobile users in the UK, and 26% of these have no other way of paying electronically except via text message. The immediacy and convenience of mobile also puts it way ahead of other channels in supporting what Keith Brown of Paythru called the ‘impulse donation’, particularly when combined with mediums such as poster advertising.  The case studies given really were compelling. Last year’s Comic Relief, for example, raised £7.9 million by text donation alone – nearly 10% of its total income.

But several also admitted that mobile giving has a “dark side”: the very real possibility that mobile campaigns may actually lose charities money.

There are two ways in which this might happen. Firstly, setting up a mobile giving channel involves a fixed cost, usually paid a year in advance to a mobile service provider (such as WIN plc, Paythru or others). You must be certain that campaigns over the year will generate enough donations to cover this fixed cost. Secondly, mobile donations return a lower percentage to the charity than because of the commission on every donation taken by the operator and most service providers. So you must also be certain that the convenience of mobile is not encouraging those who would have donated anyway to switch from other, cheaper, modes of giving.

One fundraiser from a large UK charity told me that their experience has caused them to put all mobile projects on hold while they try to understand the rules of this new medium. This seems eminently sensible if it’s not obvious why one project makes money whilst the next loses it. Neil Lovell from Kids Company said that his charity was also not yet planning further mobile campaigns, despite a greatly successful trial run. The vendor had covered most of the costs as part of its own charity exercise, so more consideration is needed before taking on the risk of a live paid-for campaign.

So is there a way to reduce the risks of mobile giving for charities? Simone Schmidlkofer of Cause2Connect argued persuasively that these risks make it inaccessible as a fundraising tool to the UK’s 157,000 small charities. She also made the case that increased adoption of mobile giving amongst large charities will increase their overall share of donations, thus widening the gap between large and small. Simone is working to bring the Mobile Giving Foundation to the UK – this is an organisation which intermediates between charities, donors and mobile providers in North America, acting as a universal certification body, regulator and standards-setter to reduce costs and risks to everyone.

But clearly the picture is complex, and not just about fundamental costs. Other factors in the balance apply equally to most other forms of fundraising. Promoting the campaign in the first place, for one thing: as one presenter remarked, “it’s not enough to have a shortcode and a keyword”. Promotion, whether via billboards or Facebook, is and will remain the most important factor, however charities choose to take donors’ money. Of course the most lucrative offline channels are mainly inaccessible to small charities, too. Comic Relief wouldn’t be what it is without its TV support.

Then there are what you might call etiquette issues: respecting privacy and donor preferences, and knowing the best way to say thank-you (which also has tax implications for mobile donations). Rupert Daniels of Y6 Media wondered if the way forward was for charities to use mobile giving as a broadreach tactic to replace “chuggers and tin-shakers” (who, as we all know, raise plenty of the same issues).

Conferences such as this are part of the solution, enabling charities to share ideas and learn from expertise already developed in the private sector. And my initial worries about exploitation by tech vendors, who are accustomed to working with for-profit companies, turned out to be unfounded. Yes, they are looking to make money, but there is also much pro-bono work going on. Several charities told me that they have had excellent experiences with vendors, who have proved both helpful and accommodating.

But, I was also told, the vendors are “not very strategic”, which is not really surprising: no charity can expect a for-profit technology company to know what the right fundraising strategy for them is. So this really is uncharted territory, and for now the UK’s major charities are out in front trying to steer the right course for everyone.

Social media may be a headache for senior managers

Unless the mobile industry can create a less costly framework for donations, I suspect it will remain just as unaffordable to smaller charities as mass-market advertising. So to avoid losing their share of an already-dwindling donation pot to larger counterparts, small players will need to maintain their visibility by other means. In particular, most need to radically improve their use of social media and other online tools.

Social media also holds huge promise for charities looking for new ways to engage donors and supporters. It has the advantage of not requiring much, if any, investment but is perhaps more complex to understand. It incorporates a great breadth of different tools, which change and adapt frequently, as well as a new approach to communication across the board. So again there are risks involved, and expertise to be acquired.

This is proving a real challenge – and not just for charities. The average UK CEO is in his or her mid-fifties and frankly struggling to understand the new social media channels. One excellent exponent of social media was the Devon Air Ambulance Trust, a medium-sized regionally based charity. PR manager Sarah Burden explained the importance of an engaged, bought-in CEO and how this support had enabled the charity to experiment with a variety of new tactics.

Large charities are at an advantage since their big brands are better able to attract the marketing talent that they need. But senior managers in any charity need to change their mindset if they are to learn how best to incorporate the use of Facebook, Twitter et al into their activities. Ignoring it is not an option – but neither is delegating the entire thing to junior staff simply because they are enthusiastic. Alex Pashby of JustGiving – the successful online fundraising tool, made massively popular via its links into social media platforms including Facebook – explained that a charity’s choice of channels has to reflect its overall strategy.

A new spin on old fundraising concerns

Of course there are many, many other ways to use technology. For my part, I nominate email marketing as an unsung hero since it offers a good way to keep an existing supporter base engaged – just as important as attracting new supporters. Despite the well-known limitations of email, there is more space to convey longer stories – and the cost and complexity of putting together nice looking, well targeted email campaigns has dropped dramatically. Daniela Martino of WSPA spoke about developing the understanding of a charity’s supporter base by analysing their responses to campaigns, which email is well adapted to.

In the end, perhaps we need more reminders that the really important parts of fundraising are the old-fashioned ones: knowing your audience, having a compelling message, choosing the right channels not just the new ones, creativity, good general oversight and of course leadership. The new technologies put a new spin on these concerns and all charities need to follow the trajectory carefully if they are to stay relevant.

(Originally published on Knowledge Peers)

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