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Ask an Expert: Text Fundraising Campaigns

Posted by olga

Question

Dear SVP,
My nonprofit’s Board has become intrigued with the idea of doing fundraising through texting. I have heard mixed reviews of the effectiveness of this type of fundraising. Can you speak to the costs, feasibility and effectiveness?
Development Director, Boulder County Nonprofit

The following answers are based on our Experts’ experience and represent the opinion of SVP Boulder County.  This information should not take the place of advice from professionals acting on your organization’s behalf.

Answer

Many of us in nonprofit development have wondered about implementing a text (SMS) fundraising campaign when we see the hundreds of thousands of dollars in texted donations pouring in to organizations like the American Red Cross. In 2008, the American Red Cross raised $190,000 through 38,091 texts with its Text2Help campaign for victims of Hurricane Gustav, according to MobileGiving.org. And then, in January of 2010, CNN reported that the Red Cross had brought in over 8 million dollars in less than 72 hours. Very impressive numbers indeed, but how do these success stories translate for smaller local nonprofits like most of ours here in Boulder County?

The best thing about giving through text is that it is fast and ultra-convenient for the donor. Donors simply text a keyword to a 6 digit number to make a donation (i.e. by texting HEAL to 501501 in December, people could donate $10 to the AIDS Memorial Grove in San Francisco). Mobile users receive an automated response to confirm the donation, and the donation charge appears on the donor’s mobile phone bill. Because ask amounts are relatively small, many more people are likely to respond to these requests. Plus, because giving through text is so accessible and immediate, it capitalizes on the moment the donor is inspired. It feels good to be moved and be able to make an immediate impact. Even better, the donation is anonymous, so there are no strings attached and no annoying follow-up emails, letters or phone calls. But, for donors and charities alike, what isn’t included in the texting campaign is the fine print about where their money goes. Most donors aren’t going to spend the time doing that extra research for a ten dollar contribution. Maybe it doesn’t matter if they are making a donation that they might not make through any other channel.

There are three big things to consider when deciding whether a text fundraising campaign is right for your nonprofit: cost, feasibility, and effectiveness.

Cost   
So where does the money go? Easily accessible fine print regarding mobile donations includes reassuring language like “charges appear on your wireless bill,” “purchases must be authorized by account holder,” “tax deductible.” Deeper into the “full terms applicable” the legalese clearly outlines that 100% of a donation is given to the selected charity. Fantastic! One site lists well-known mobile carriers that participate and “generously remit 100% of your $5.00, $10.00 or $25.00 donation to the [foundation].” Wait, what foundation? I donated to our local homeless shelter! Companies that provide mobile giving platforms must, by law, set up 501(c)(3) foundations that they use to pass through texted donations. In doing so, a donation is fully tax deductible, and the campaign can state that 100% of your donation goes to your selected charity. The part they don’t tell you, which takes quite a few more mouse clicks to figure out, is that the company and sometimes its parent company (in one specific example both have the same CEO, who also happens to be the director of the foundation) charge your selected nonprofit set-up fees, monthly fees, transaction fees, and a percentage commission to get that initial “100%” to your nonprofit. These costs can add up to anywhere between $3000 and $10,000 annually, depending on the services you select. These mobile giving foundations do, however, provide valuable services such as approving qualified nonprofits and vetting fundraising campaigns not connected to legitimate causes. They also act as neutral and trustworthy third parties on behalf of the donor. And of course, all of this takes time—usually around 90 days, sometimes as long as 120.

Another outside and essential cost in any mobile giving campaign is marketing. How will you get the word out and let people know how and when to text in their donations? The key is to move your mobile donors to give in the moment, and print, radio, and television advertising is expensive. Shop around and come up with a projected annual mobile giving budget (including staff time) and see how much your organization will need to bring in to make it cost effective. Is this revenue projection realistic? Do you have a loyal donor you could approach to cover the set-up costs for the first year? Consider the awareness the campaign will raise as a real potential benefit as well. As with direct mail, online giving, events, and any other type of fundraising, mobile giving campaigns cost money. How does your projection compare to the cost/benefit ratio of your agency’s other tried and true fundraising methods?

Feasibility   
A nonprofit must qualify with one of these mobile donation foundations in order to set up a mobile giving platform with participating providers. Mobile Giving Foundation and The mGive Foundation, the two main mobile giving foundations, have strict requirements for 501(c)(3) registered nonprofits, including filing an 990 annually, and having gross revenue of at least $500,000 for at least one year. However, there are ways around some of these requirements through agencies such as Causecast, which enables nonprofits to utilize its mobile giving qualifications through its Community Impact Platform, and charges lower rates than the bigger mobile giving companies. Smaller nonprofits can also work with Application Service Providers (ASPs) to get through these mobile giving foundation qualifications. Both Mobile Giving Foundation and mGive Foundation can provide you with lists of ASPs with whom they partner. And, of course, each of these ASPs provides a variety of service packages as well. Check out www.redfishmedia.com for an example of one such ASP.

Effectiveness  
As with any fundraising effort, effectiveness depends on a combination of factors such as strategy, marketing, and the agency’s overall development plan and donor base. A texting campaign requires an event and a call to action.

  • What is happening right now, in this moment in time, that will move people to give to you IMMEDIATELY?
  • Who is your audience? (Hint: It’s not everyone.)
  • How will you communicate your message and for how long?
  • What other benefits, such as awareness, media presence, and impact reporting, will your organization gain in addition to dollars?

As with many areas of nonprofit development, times are changing, and you need to understand how mobile giving will align with the rest of your social media presence and fundraising strategy.  Can you utilize cell phone technology for non-texting fundraising efforts such as mobile giving apps? (See http://www.securegive.com/ for an example of an app for that.) If you do receive donations through your SMS campaign, there will be no way to follow up with these donors. Cell phone providers don’t release that information. Donor cultivation and retention are moot points when it comes to giving through text.

Are You An Early Adoptor?
Because mobile giving is so new, data on its overall effectiveness is all over the map. At present, it has proven incredibly effective for large national and international nonprofits with budgets in the tens of millions of dollars. The jury is still out for smaller nonprofits. If you’re not ready to jump in just yet, do stay tuned. Because many large agencies are experiencing tremendous success, and because smaller nonprofits are taking notice, more cost-effective mobile giving platforms undoubtedly will become available in the not-too-distant future.
Sounds like keeping track of this evolution would be a great project for some intrigued board members, don’t you think?

Jane Morton Sovndal, MNM, (c)JaneConsulting
SVP Partner

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