An Effort to Revolutionize Fundraising Points to a Sector Challenge

 

April 20, 2017; Dallas Morning News

Billionaire Todd Wagner’s current passion is the Dallas-based Charity Network. He’s taken the money he earned as a pioneer in video streaming and turned his efforts toward changing how nonprofits raise funds.

According to a recent Dallas Morning News profile, Charity Network, a for-profit venture, has “assembled four subsidiaries in a network that holds global online auctions and sweepstakes, produces videos and commercials, creates broadcast content and comes up with ways to make sure that donated money is being put to its best and most-leveraged use.”

Wagner has homed in on the need to shift philanthropic focus more effectively to digital media. According to Wagner, “If you want to reach millennials, you’ve got to become part of their digital landscape…And hiring one person to handle Tweets, posts, emails, and God knows what else that’s about to come to the forefront does not an online strategy make. That’s like saying, ‘I have one technology person, and now I have a technology company.’” Since he believes that most nonprofits do not have access to “20 people who will each write a million-dollar check,” they can only meet their future needs if they more effective in digital fundraising, and with some new technical tools, nonprofits can revolutionize the way they raise philanthropic funds.

A year ago, when NPQ’s Gayle Nelson looked at Wagner’s efforts, she concluded that “sadly, Wagner’s description of his efforts as ‘disrupting traditional fundraising” could not be farther from the truth.” It’s not that Charity Network does bad work. Quite the opposite; last year, it raised $40 million for its clients and helped them to expand their reach with effective digital tools. And, it is important for organizations to pay attention to their digital capabilities and use them as part of an overall fundraising strategy, particularly for smaller nonprofits.

However, while the overall amount of U.S. philanthropy has been growing, the number of smaller donors has been declining. In an interview with NPR from December, the Institute for Policy Studies’ Chuck Collins pointed to this as a critical change in the world of philanthropy.

A lot of the growth in giving is coming from very wealthy donors and their foundations. And there’s a decline of low and middle-income givers over the last 10 years, almost a 25 percent steady decline. So put those two things together, and we’re seeing what we call a top-heavy philanthropy sector emerging.

So, for nonprofits that may have access to mega-donors, old-style, relationship-based fundraising will not go away. In fact, remaining at the top of their game is even more critical.

For smaller organizations with less access to big givers, Todd Wagner’s vision is on target. Yet his approach has not yet demonstrated how it can be scaled. Yes, he has raised millions through digital efforts; yes, his firm kept only 20 percent of the funds to cover the costs of fundraising. But at that level, Charity Network is not yet profitable. So, how can their work with a miniscule portion of the 1.5 million 501(c)(3) U.S. nonprofits be scaled to meet the overall sector’s digital needs?

Do we need other Todd Wagners to use their resources to build similar ventures? Can he make his business into the Facebook of digital fundraising? It will be interesting to look a year from now at how this picture has evolved.—Martin Levine

  • Fundraisers absolutely need to look at every possible means diversifying their approach. But – and there is always a but – first principles still say look at who’s closest to you and how to reach and engage best with them. Digital platforms are likely to work well for new charities who have a powerful message, though weak or no ties to a widely distributed prospect base. Sustaining and growing donations will, nevertheless, require closer personal engagement than is likely to be achievable through social media alone.