Charitable Innovation - Disrupting for Good
The operational model for charities in this country is an ideal candidate for disruptive innovation. It strikes me as odd that charities, the organizations that really have the least to spend on marketing, spend such inordinate amounts of money and time on marketing to raise money. Does spending lots of money on fundraising actually work?
Let's stop for a moment and look at how AIP defines acceptable charity performance:
- Spending 60% or more of a charity's budget on programs, and spending $35 or less to raise $100 in public support
Groups included on AIP's Top-Rated list generally spend 75% or more of their budgets on programs, and spend $25 or less to raise $100 in public support.
Unfortunately, many charities don't even meet the acceptable charity performance definition:
- "It is sad that cancer charities, one of the most serious and popular giving categories, perform so poorly - half of the cancer charities that AIP rates in this Charity Rating Guide receive a D or F grade and only 37% receive an A or B."
If we look across charity organizations as a whole, it is not a stretch to imagine that the aggregate reality is probably somewhere around spending 50% or less of their budgets on programs, and spending $50 or more to raise $100 in public support.
What greater positive benefit could we have on society as business innovators than to help create a disruptive business model for charities? What if we could stand the traditional, and hugely inefficient, model of list rental, telemarketing, direct mail, and list saturation on its head and instead imagine something different?
There has to be a better business model that we could collectively create as a gift to society that would increase the percentage of charitable revenue that actually goes towards the charities' intended missions. If we created a new best practice that could be adopted across the industry, think about the impact we could have (equivalent of up to a doubling of monies raised).
I think we can distill the disruptive possibilities down to the following five key principles:
- Give consumers a way to offset negative side effects with a positive action
- Link fundraising efforts more closely to the benefit delivered
- Reduce fundraising friction
- Maximize existing communication channels to highlight benefits that others provide
- Improve Efficiency
Please download and read the white paper to look at the disruptive possibilities and charitable innovation opportunities each one presents.
And, if you would like to help evolve the ideas in the white paper, please post a comment with your thoughts, additions, or refinements, or join our Continuous Innovation group on LinkedIn and contribute to the discussion there.
What do you think?
Braden Kelley (@innovate on Twitter)
Labels: Braden Kelley, Charity, Innovation, Non-profit
posted by Blogging Innovation at 8:07 AM
4 Comments:
I think point number two offers promise. One of the ways I think nonprofits can do this is by building "public milestones" i.e. destinations that everyone can clearly see and are meaningful enough to invest in.
Great observation! I believe open innovation is a possible solution. The WE is mightier than the ME. Instead of asking for my money, ask for my help. There is always an overhead converting help into money and money into help. Communities of Practice can be used here to push the charity cause forward with very (relatively) little expense.
A worthy and interesting white paper. Many charities lack fundraising skills and key contacts. What if fundraising could be eliminated from their operations? This could be done (assume it is probably being done already to a degree) by centralising fundraising via an agency or a series of agencies. Another model would be for charities to do away with the need for fundraising by relying on partners to deliver all critical services, products, manpower and expertise to get programmes done.
I'm not sure if it is true elsewhere but in Washington state where I live, commercial fundraisers (outsourced fundraising) are providing less than stellar results. Here is an excerpt from an article on the subject:
"Secretary of State Ralph Munro and Attorney General Christine Gregoire today issued figures showing that, in many cases, less than half or even a third of the money you donate through a commercial fundraiser actually gets to the charity being represented. The report is released annually at the beginning of the holiday season, the time of year when charitable solicitations - and donations - are most intense.
The report summarizes the activities of commercial fundraisers — businesses hired by charitable organizations to solicit donations in Washington state. By law, commercial fundraisers must register with the Secretary of State and disclose certain financial information, including how much of the money raised actually went to the client charity.
Commercial fundraisers soliciting in Washington state reported raising more than $225 million in charitable donations during their most recent fiscal year. Of that amount, $131.5 million went for fundraising expenses and profit. The remaining $93.5 million was retained by client charities — an average of 41.5 percent.
More than a third of the 80 fundraisers listed in the report provided their charity clients with 20 percent or less of their contributions they collected. Of those, seven provided their clients with ten percent or less, including one whose charity client received less than three percent of the total funds raised."
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