The Kimbia crash should make us re-think community crowdfunding efforts

But not for the reasons you think...

This afternoon I read an article about The Pittsburgh Foundation’s efforts to pressure Kimbia into making restitution for the disastrous crash of their system on the national Day of Giving a few weeks ago. For those of you who aren’t aware, Kimbia’s system is the back-end giving solution that many community foundations use to solicit and process gifts to their community crowdfunding campaigns.

Let me be clear. I’m not anti-Kimbia. I happen to have met the guys who run Kimbia a long time ago, and I think highly of them. They’re smart, passionate people who are committed to enhancing capacity in the nonprofit sector. It’s unfortunate that their system crashed, and that they weren’t able to fulfill on the commitments to their clients because of that.

However, I’ve never been a fan of this single solution provider approach to community days of giving.
Community foundations promote these giving days as major revenue-generating opportunities for nonprofits in their cities, counties, etc. And for some, maybe they are. There’s a lot of buzz surrounding these things. People who otherwise might not give to charity are activated on this day through social promotion, email, and peer-to-peer campaigns. Millions of dollars are raised across the country on this single day. You could argue that these are all great accomplishments to be celebrated. And to some degree, I think I’d agree with you.

But there are four important reasons why I also question this method of community engagement and fundraising:

1. This type of campaign takes the focus off the cause and puts it on the process. What we know about donor preference is that they are bonded to causes. Truly inspiring donors is about engaging them in ways that connect them to causes they care about and showing them how they can make a positive impact.

2. “Day of” campaigns result in what we call episodic donors. These donors are similar to those that give in response to natural disasters (often called disaster-only donors). The challenge with these donors is that they’re very difficult to retain over time, they tend only to give to day of type campaigns, they give smaller gifts (for example, the typical “day of” type donor might give a $35-$50 average online gift, while the typical mission-driven online donor’s average gift is anywhere from $100-$250).

3. The donor experience gets butchered in these types of campaigns. If you’ve ever given to one of these campaigns you know that they are processed through a third-party platform (in many cases it’s Kimbia’s). The platform in many instances is tied to the local community foundation in a city. So if I’m a committed donor and I want to give to my favorite charity, when I go to do that I can hardly tell the gift is going to the charity I’ve chosen. The donation page in many cases isn’t customized to my favorite cause. The automatic receipt I get talks much more about the transaction platform and the community foundation than it does the charity I’m supporting. And it might take 30 days or more for the the foundation to send my gift information to the actual nonprofit I designated. That means the likelihood of me getting a prompt, personalized thank you note, appreciation phone call, or any other communication from the nonprofit is next to zero. I have to be 100% committed not just to the cause, but to this particular organization for me to stick with this charity. And most donors aren’t.

4. The amount of time and effort that organizations put into these crowdfunding campaigns is insane. I’ve seen organizations put so much focus on these things that they overlook other opportunities that could generate much more revenue for their organization. Recently I talked to an organization that decided not to hire a major gift officer so they could instead hire a social media manager to focus on their giving day efforts. Last year they raised $53,000 from their giving day efforts. That was gross revenue — as in, before costs.  With a dedicated resource and focused effort, a major gift officer could raise somewhere in the neighborhood of $100,000 – $300,000 each year for this organization (given their current file size and composition).

Having said all of that, I can’t deny the vast amount of money these campaigns raise every year. If your focus is maximizing cash flow to fund your organization, then these are worthwhile efforts. But they shouldn’t be the focal point of your organization’s fundraising. That’s dangerous, and as we see in the Kimbia case study this year, could be devastating if something goes wrong.

Here’s what I’d offer as an alternative. Use the promotion and pre-event marketing around these day-of campaigns to your advantage. Send your own emails to your donor file promoting the event, pitch it on social media, etc. But instead of forcing donors through these 3rd party platforms, direct them to your own, fully optimized (I hope!) site. This way you’ll capture more of the revenue, you’ll be in control of the donor experience, and you’ll have full technical control of what happens in your campaign.

Cheers!
Andrew

Please note: I reserve the right to delete comments that are offensive or off-topic.

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