Slam Dunk or Snake Oil?

Everyone wants to raise money with social media. But is it possible?

Check out any nonprofit Web site these days, and in addition to an About Us page, you're likely to see icons for Facebook, Twitter and MySpace. These social-media widgets have fast become wallpaper on almost all charitable sites. But does social media really work for fundraising?

To answer this question, get a sense of how much money nonprofits are actually raising via social media and garner some advice on best practices in using these tools, I went straight to the expert. Check out my interview with Geoff Livingston, author of "Now Is Gone — A Primer on New Media for Executives and Entrepreneurs" and chief marketing officer of Zoetica (a new company he formed with social-media guru Beth Kanter).

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Jocelyn Harmon: It's clear that a majority of nonprofits have jumped on the bandwagon when it comes to using social media to promote their issues, friendraise and increase brand awareness, but serious questions remain about the effectiveness of these tools to raise money. Are nonprofits raising money via social media? If so, how much?

Geoff Livingston: If I were in charge of development for a nonprofit, social media would not be the first place I would look to build my charity. I've heard lots of ballpark numbers, but none higher than 2 percent to 3 percent of total cause sector funds raised. Now, some organizations are great at social, while most are just terrible, so I question whether a mean average applies. But seriously, hire an experienced development director first.

Social media to me is a better awareness and community development tool. It can be used for fundraising (tinyurl.com/y684bgy), but without a die-hard community in place first, that's not going to happen quickly. In fact, you will spin your wheels and think that "social" doesn't work.

I would focus on building a social community. Whatever you want to do online, having real relationships with people that care about your cause and are influential in their own social networks is the essence of success. Then, after it matures, begin harnessing willing community members for online grassroots fundraising.

In addition, be smart. Integrate donation capabilities into your social efforts. Meaning, use the social-site real estate to give people an option for donating. If you have a blog, and there's no prominent donation badge, shame on you. You just lost your very captive, interested social-media community who wanted to donate money — even if it's just 1 percent to 2 percent of them. Twenty online donors every month is better than none.

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JH: It's almost three years since the launch of Causes on Facebook, and more than $21 million has been raised. But, according to Giving USA, this compares to more than $300 billion raised in total by nonprofits in 2008. Blackbaud analyzed this data and suggests that of this $300 billion, approximately $15 billion was given online. In short, even if you only focus on online giving, the numbers don't seem to add up. Is social media, in particular Facebook, a good tool for fundraising?

GL: I am not a big fan of Causes. It's platform-specific and doesn't enable the cause to have access to the database for further cultivation and e-mail. Further, their reporting mechanisms are frightening and hard to analyze.

Lastly, the numbers as referenced here are unimpressive. Alone, Twestival, the Armstrong Foundation, 12 for 12K and Tweetsgiving account for one quarter of that total — in one year. There are much better ways to fundraise online and in social media. For example, start by growing your e-mail list.

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JH: You recently raised more than $5,000 for the Lance Armstrong Foundation in a few weeks using social media like Twitter. What did you learn from this experience that other organizers and nonprofits can follow?

GL: I wrote a whole post on the individual things I learned (tinyurl.com/y82erut), but strategically I would tell nonprofits to have a grassroots fundraising coach in place to encourage people through the process. It can be a slog, and having coaches there to help, encourage and make suggestions is a win-win for all of the parties involved. I think this is no different than having a development director who handles mid-tier donors. In essence, that's what this staff person is doing: cultivating individuals who are willing to solicit on behalf of the charity.

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JH: Many folks have talked about the "long tail of Facebook fundraising," i.e., the fact that contrary to the popular belief in the democratizing power of social media, fundraising on Facebook is still a drop in the bucket for the smallest charities. What do you think about this phenomenon?

GL: Facebook is just the tip of the iceberg. All of the major social networks are easy to focus on, but if you think about Facebook, it's the McDonald's of social networks. Everyone goes there at least once a week, but no one wants to have a date or family night there.

Like McDonald's, Facebook has everything: chat, direct messaging, update streams, photos, videos, on and on. It does none of it well. In each instance, there's another social network (Skype, Twitter, Flickr, YouTube) that does these individual things better than Facebook.

In contrast, consider TuDiabetes (tudiabetes.org), which uses the big social networks as beachheads to fuel its topic-specific social network of more than 10,000 people. These 10,000 people all have their own social networks, making the TuDiabetes network a brilliant use of all the social tools to fuel a cause. They get that the majors are just the tip of the iceberg.

Consider what happens when TuDiabetes makes an ask of its die-hard network and how that can spill out into the larger social Web. I can envision Obama-campaign-like ripples. (For an in-depth examination of the TuDiabetes.org Web site, see Sarah Durham's Brandraising column at tinyurl.com/y4cd9zm)

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JH: Similar to raising money for memorial gifts in traditional fundraising, raising money for special events like anniversaries and birthdays seems to be working for some nonprofits. Can you expand on this theme?

GL: This is an intelligent use of social media for fundraising. It plays to two core aspects of social media that most charities fail to realize when they try to fundraise with these tools.

1. Relationships: If it's just you on Twitter, Causes, etc., your network is going to yield very few donations in the long run. The people within your network make for the best agents of both change and fundraising. They have real relationships with their social networks, whether they are 200, 2,000 or 20,000 strong. An ask from them for a birthday or an event means something within that network. Enlist and empower them to make the ask instead of you.

2. Long tail: Alone, most charities get frustrated with the limited fundraising power of their Twitter/Facebook/blog reach. By creating a real program that harnesses hundreds of fundraising volunteers who can bring in $200 to $2,000 per birthday or event, you've suddenly replicated the mastery of Amazon and Twestival.

This is the long tail, where you assume that collectively many small impacts can make a large statement. A successful grassroots campaign allows you to create mass fundraising totals via many microdonations. Consider that the Lance Armstrong Foundation is on pace to raise well over a million dollars via its grassroots platform this year (tinyurl.com/y36krmx).

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JH: We can't leave this interview without a discussion of the many social-media contests being run by huge consumer brands that invite nonprofits to compete for funds via social media. These contests include Pepsi Refresh, Chase Community Giving, America's Giving Challenge, the Members Project from American Express and more.

What to do you think of these contests? Are they a viable revenue stream for nonprofits, and should charitable organizations invest the time and energy in competing for these funds?

GL: Frankly, not much. I am really thrilled that companies are getting more involved in cause-based activity, and they should. They are active members of society, and they bring both positive (jobs, etc.) and negative (pollution, etc.) contributions to society. Participating as a member of the community is the right thing to do.

The contests, crowdsourcing social good, often strike me as rudderless. Pepsi is a great example. Consider how they are investing in America by letting the crowd decide which charities matter most (tinyurl.com/y7jzpnz). To me, this leaves a lot to be expected of the crowd, especially given how wrong crowds can go, as evidenced by MIT Media Lab crowdsourcing research as encapsulated in the book, "Honest Signals" (tinyurl.com/5omnaq).

While Pepsi may have won the crowd with its gladiator-esque Super Bowl moves, I don't see a theory of change. How can we measure impact? And frankly, I don't see how this matches Pepsi's culture other than they want to be everything to everyone. But is that what Pepsi really stands for?

Companies like Pepsi are innovating, and they need to be congratulated for new steps in cause marketing. At the same time, evolution dictates more than a contest. We need change that's measurable and purposeful.

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JH: Anything else you'd like to share about using social media?

GL: Like any kind of fundraising, you need a relationship for this to really work. If you use social media to simply ask for money, you will have an empty wallet.

But if you cultivate relationships and build a community of friends or followers, there will be a larger purse. You will be so much richer for it. Because you will have friends, allies, ambassadors and so many intangible benefits, you will be grateful for the day you started having conversations instead of asking for dollars all the time. FS

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