Digital Transformation Shaping the Non-profit Sector

For over two decades I’ve been dedicated to helping organizations find better ways to raise money, increase awareness for their cause, and bring hope to those who need it most.

The biggest shift I have witnessed in the sector occurred when websites became the norm for nonprofits. Online donations started to grow in popularity, and the ability to accept donations more quickly really changed things.

Since 2015, the digital shift has been happening faster and faster. Resources that weren’t as accessible to smaller charities are now becoming more common. Tools are more available for organizations to implement on their website. For instance, third party donation platforms, like those provided by Zeffy and CanadaHelps, facilitate the complete transaction process, making it easier and faster for organizations to collect money online and funnel it back to the charity.

While the number of overall individual donors in Canada decreased 0.5% per year from 2006 to 2015, the 2018 CanadaHelps Giving Report shows that the number of individual online donors steadily increased to 20.5% over the same period. Online donors also increased their annual donation amounts at a much higher rate than the average donation amount for all dollars (2.8% vs. 1.2% per year).

In fact, findings from the 2020 CanadaHelps report show that online donations have been rising year over year since 2011. “In 2017, online growth rose 17% from the previous year,” says Shawn Bunsee, Vice President of Data & Analytics for CanadaHelps. That’s nearly three times higher than the growth of overall donations. It’s clear that offering a simplified and rewarding online experience for donors results in increased revenue for charities that have invested in the technology.

In 2020, 1.1 million Canadians donated more than $480 million through CanadaHelps to nearly 30,000 charities, more than double the amount donated in 2019. Following the declaration of the pandemic by the World Health Organization in March 2020, the online giving index shows online giving suddenly accelerating nearly every month that year in nine of ten charitable categories (The Giving Report 2021, p.7).

Studies show that the pool of donors is getting smaller but online donors have increased, and they’ve increased their amounts at a higher rate than the average.
The potential for fundraising is much bigger since technology has lifted so many barriers to giving and increased our capacity to reach larger, wider audiences. Digital fundraising offers a bigger potential for an increase in new donors, even if the organization’s traditional donor list is diminishing.

It’s not only who is giving that is changing but it’s what they are giving as well. Some organizations are already accepting Bitcoin and other types of cryptocurrency, so the transformation is just going to continue in new and interesting ways.

 

Donors are becoming more selective and demanding accountability

Technology plays a big role in the sector’s transformation because access to information has been made easier and forced a new expectation for transparency. This new level of accountability for an organization’s actions means demonstrating their impact is more important than ever. People can now give money more easily, thanks to digitalization, but they won’t part with their hard earned dollars unless the organization can prove that they are worthy of the donation, that they are credible, and that the money will be well spent.

Today, more and more donors and funders are Googling an organization to vet them before making a gift, looking them up on the Canadian Revenue Agency website in order to make better-informed decisions. As easy as it is to get a bad rating as an Uber driver, organizations can get bad ratings as a charity, tarnishing their hard-earned reputation. There are websites that rate the quality of a charity based on how they manage their donations and how they operate. How many charities are looking up their own organization to see how they measure up? The tools are out there, and organizations need to stay on top of these tools to mitigate risks.

It’s no longer enough to say, “We’re a non-profit, of course we’re doing good.” There is increasing pressure from funders, investors, employees, and partners to “Do good better,” and provide evidence of the social change organizations are creating through their direct activities. In order to live up to the claims of doing good, the organization has to learn how they can ensure that they are maximizing their positive impact and minimizing their negative impacts. At the same time, on the funder’s side we are starting to see a shift away from simply expecting grantees to meet financial reporting requirements, and toward an expectation that evidence be provided of improved programs and deeper impact.

If you want your organization to continue to create effective outcomes, you can—and should—be intentional about providing evidence that you are achieving what you set out to do for the people you support, the larger community, and the planet. Having impact means lasting change and value creation. We each have a responsibility to recognize that our own ways of being and working have positive and negative impacts on others, whether intentional or not—and these positive and negative impacts often have much farther-reaching consequences than we are aware.

Impact measurement is what will set organizations apart in years to come. Technology is key to tracking, evaluating, and measuring impact in a more systematic way—so the sooner organizations have the proper tools in place, the easier it will be to measure the outcomes of their work.

 

Social media is the new soap box

The ability to support a cause you care about is literally at your fingertips. Not only can you become a donor, but you can become an advocate or influencer, just by sharing on social media the fact that you support an organization. When you make a donation through Facebook, the first thing the platform offers is to tell all your friends that you just gave to that fundraising activity, and to share it with your network. The donor goes from being simply a donor to now being a key player in the communications strategy, which also brings more satisfaction to the donor because they are no longer just a donor—now they are also an ambassador.

This new dynamic can make or break your reputation. If a donor has a bad experience, it can be problematic. In the same way, if they had a great experience they can be your best advocate.

This new level of influence in the hands of donors has shifted the power dynamic between the giver and the recipient. Yet even with the many opportunities that the fastpaced changes in technology have brought us, fundraising practices within organizations have not been as swift to adapt. Many charities are still stuck in the one-to-one mode of fundraising and have yet to embrace the one-to-many dialogue that social media requires.

Traditionally, most organizations would send out appeals once or twice a year and wait for the cheques to be mailed in. Wining and dining large donors was also common practice. Relationships between donors and the organization were slow and steady, and for those who knew how to steward donors well, they would benefit from the donor’s loyalty for years to come. Today, however, social media allows organizations so many other touchpoints and opportunities that go beyond a once-a-year letter to engage donors.

 

Our motivation has changed, our language is changing

In the past, people would often give out of a sense of obligation, tradition, or religion. Now, though, more and more people are giving as a social investment.

Even language is changing in the sector. Organizations are less and less comfortable with the word “charity,” because it implies a sort of pity. We are seeing clients replacing the language for the donate button on their website from “Donate now” to “Invest now” because they feel this wording is more impactful. Donors will feel even better about giving their money because they feel like it’s going to be invested, not just spent, and the donor will get a social return on their investment. As the sector professionalizes, the language is starting to change around money and how we talk about it in the sector, which is really fascinating.

At Charity Water, their monthly donor program is not called a monthly donor program. Rather, they name each program based on the outcome of the money received. There is an invitation to be part of their community and not just perform a transaction. There’s a whole shift in power, a sense that the donor is closer to the work that’s being done—and when it’s done well, it creates a stronger spirit of partnership.

Larger organizations do this really well. They have very slick marketing, with copywriting and development officers who really know how to steward their donors, bringing donors along on what’s called a “donor journey.” Most often it’s the larger donors who get treated like partners: they’re given special reports with details on projects they funded and receive information on tangible results, with metrics and touching stories of the lives they’ve improved. For many organizations, once a funder has made a donation, they’re kept in the loop and consulted for more than just taking their money: they’ll actually be brought into the work in a more intimate way. Donors are showing a keen interest in wanting to do more than just give money. At the same time, charities are realizing that there’s a benefit to involving some larger donors who can lend their expertise, for instance to become a good board member, committee member, or ambassador. The lines then blur, the engagement deepens, and that partnership grows because the donor is involved on different levels. It’s not just transactional anymore. We’ve gone from an obligation, religious duty, or tradition to this idea of partner, being consulted, and being part of a community working towards a common goal.

With an international development client, Tostan, they often spoke about their community of practice and leadership circles – they saw how important it was to build a wider community around the mission. And the more you do that successfully, the more donors will stay loyal, want to see their investment grow, and want to be part of the solution.

Technology has also improved other areas, beyond fundraising. When we were making a website for Logifem, a woman’s shelter in the Montreal area, one of the things that we talked about was how administratively heavy the process was for recruiting and organizing volunteers. We introduced a volunteer sign-up form where the organization could collect all the data on the person interested in volunteering, get it organized, and put those people to good use. Websites are no longer just handy to facilitate online giving, they can also be used for reducing administrative tasks that take up hours and hours of an employee’s time unnecessarily. Showcasing that kind of efficiency, and thus working more effectively, really impresses donors, resulting in a win-win-win outcome.

 

Leadership is key

The nonprofit sector’s slower pace of adoption to technology is ironic, in that many board members are successful business people who use technology day in and day out. And yet, they don’t typically approve budgets or suggest investing in their nonprofit organization’s technology.

Dan Palotta, the TED Talk speaker and humanitarian activist, has been very vocal about how the sector needs to change its scarcity mindset. For far too long there’s been this notion that a charity is supposed to be lean, and donors often evaluate how much of their dollar is going to overhead and operations rather than to “the cause.” Technology, along with administrative costs, marketing, and fundraising expenses are all normal costs of operations, and yet we have a double standard with charities. If charities can’t keep up with the changing pace of technology, they will continue to fall behind, their missions will be negatively affected, and society will suffer.

 

Technology has transformed the way we do everything

Our recent digital revolution is not much different than how the world adapted to the Industrial Revolution. Think of the people that didn’t want to use electricity, wanting instead to continue using oil lamps. At a certain point they had to accept electricity as the new normal and adopt the way of progress. In today’s world, technology has transformed the way we learn, the way we communicate, the way we move around, the way we see the world and each other.

Mobile phones provide another example. In the early 2000s no one would have imagined how quickly cell phones and smartphones would take over our lives. In 2019, just under half of Canadian households (45%) reported they had a cellphone and no landline, up from 10% in 2010. Nearly 85% of Canadian households with a respondent under 30 years old reported they had a cellphone and no landline in 2019. By 2020, over 54% of seniors owned a smartphone. Having access to this technology is also impacting how and when donors interact with your charity. They might be reading your newsletter on their smartphone while waiting for the bus on the way to work. They might be reading your annual report on their device while in line at the supermarket. They might scan a QR code off a poster while on a walk and feel moved to donate online without even speaking to anyone at your organization. They might be on social media and see a friend’s peer-to-peer fundraising campaign, and decide to support their friend—and, by extension, your cause.

We now live in an “on-demand” world where we can order food from anywhere at any time, we can watch a movie or the TV show of our choosing with a simple scroll and click, we can meet the love of our life by swiping right or left. There is an immediacy to how we operate as a society today that the nonprofit sector was just not prepared for.

Many organizations feel they are no longer in the driver’s seat because donors and potential donors are able to access information from multiple sources and access the organization in multiple ways. It can be overwhelming for the organization and its limited staff, which is why developing new strategies is essential for not only surviving this new digital world but to be able to thrive in them.

The digital revolution is opening doors for smaller organizations. Today, smaller charities have many of the same fundraising tools and opportunities as the big charities have. While the smaller ones may not have the same resources as their larger counterparts, they are more agile and can make quicker decisions than larger institutions. We may see another significant shift in the near future, where the smaller sized nonprofits have greater opportunities for impact because they’re more nimble and faster to adapt to the changes that technology and digital solutions provide. It’s going to be interesting to see the changes that take place over the next five to ten years as technology continues to evolve and pick up pace. I look forward to the day when board members agree to invest in technology and capacity building for their organizations. Maybe then we’ll see more charities live their missions more effectively, to bring about the much-needed positive change in our communities.

 

Moving from transactional to transformational

In my career I’ve witnessed far too many cases of charities who aren’t taking good care of their donors. Whenever we’re hired to do a digital transformation for a client, I always take the time to live their donor’s giving experience firsthand—like a secret shopper hired to uncover what is going well or not in a particular marketplace. In one particular case, for a larger and rather successful hospital foundation, I was shocked by the online experience. The donation form was difficult to use and when I got my confirmation receipt, the receipt came from the name of the platform, not the name of the organization. The email confirmation thanked me for my gift, and it gave me a donor number for future reference. In the blink of an eye, I went from feeling good about supporting a local health institution to being reduced to a number. Not only was it difficult to make my online donation because the organization hadn’t invested in a good design and easy-to-use platform, the email confirmation said that I would receive my tax receipt in the mail in three to six months! With today’s available tools, donors should be receiving their tax receipt immediately.

Making changes to the platform your organization uses, and changes to how you send a “Thank you” confirmation, can make all the difference. Every organization should invest in their online experience and in the follow-up communications. One has only to look at many of the successful online retailers to see how that investment pays off.

 

Data is the new currency

With all of this added technology and the change in donor behaviour, we’re able to collect valuable data easier than ever before. Collecting the right kind of data and taking the time to analyze it can help an organization make better decisions and improve their strategies.

Many organizations I have worked with have a very big database but don’t really know who their donors are. It is unfortunate that they are not maximizing the many communication and fundraising methods available today to get closer to their donors. When an organization is not leveraging their tools to foster closer ties with their donors, they are leaving money on the table.

I witnessed this firsthand with an organization I had been volunteering with for over ten years. When I received their annual spring letter, it made no mention of me as a volunteer, let alone one of over a decade. The letter went straight into who they were (as if I didn’t already know them), what they did, why the charity needed help, why my donation is important, and why I should give now. I immediately threw the letter in the recycling bin. I was insulted, hurt, and angry that they didn’t recognize and communicate with me as a special person in their community. Had they added one sentence at the beginning which said that in addition to being a great volunteer we would really value my donations as well, I would have reacted quite differently. I was their volunteer, first and foremost. If an organization isn’t tracking that in their database, or if they are tracking it but not using the information for effective segmentation, then it can be more than a wasted opportunity, it can be a complete turn off.

 

Trust and respect are timeless

Donors and organizations have a shared responsibility to one another. They have to respect and trust one another in the relationship, regardless of what technology is being used to facilitate the exchange. No one wins if the power shifts too much into the hands of one and so is taken away from the other. As in any relationship, such as one with a spouse or partner, we know that if the power dynamics are unbalanced, the relationship is going to be a struggle or end poorly. The same can be said in fundraising. If you had a friend who only ever called you when they needed something from you, you would grow tired of the relationship and begin to resent that person or avoid interaction with them. Yet organizations carry out that very same behaviour when they only ever contact their donors to ask for money. Organizations that are successful in fundraising and stewardship are the ones who are investing time and money into the donor journey, into crafting communications to keep donors and stakeholders informed of their progress. They are sharing impact stories and bringing people along for the ride.

 

Work smarter, not harder

There has never been a better time than today for an organization to rethink their way of working. Technology is forcing nonprofits to rewrite their playbook so that donors and funders can see the organization as credible and accountable. Fast-paced changes in the digital world require organizations to have benchmarks for success and adjust goals as things change. With better planning, nonprofits can make proactive choices instead of reactive decisions that often put them between a rock and hard place. Armed with a new strategy for a new digital world, staff and volunteers will be excited to work towards a common goal and will be motivated to do their part, while donors will feel part of the solution and trust that their money is being well invested.

Kim Fuller

Kim Fuller

Founder and CEO Phil Inc.