By Guest Blogger Sarah Pierce
For a long time, on behalf of the nonprofit sector, I’ve been jealous of the corporate sector. Corporations have investors who, via financial interests, are tied to the future of the company. These investors seek out information on the corporation and identify themselves with the company. Is it possible to harness that relationship and help donors to be similarly invested in nonprofit organizations?
Last week, Rosetta Thurman and Allison Jones hosted the monthly Twitter chat #ynpchat with Dan Blakemore as guest host. The chat for young nonprofit professionals focused on fundraising and discussed how we define fundraising, what role we play in it, challenges it presents, and fundraising resources. As it is each month, the chat was filled with passionate individuals and fascinating side-conversations, including one spurred by Dan and Red Cross Development Director, Patrick Sallee: How does donating compare to investing? And what can we, as fundraisers, learn from the company-investor relationship?
The Company-Investor Relationship
In the corporate sector, investors are shareholders. As shareholders, each person legally owns a share of stock in the company. Shareholders also hold special privileges with respect to the company that can include the right to vote on or nominate directors, get dividends or share in the company’s success, and the right to vote on other important company decisions. All of this means that investors and shareholders feel a sense of ownership about the company and its future.
What’s more — the relationship is mutual! Every corporation has a legal obligation to work to earn money for their shareholders.
The Nonprofit-Donor Relationship
Nonprofit organizations have a similar ongoing structure that misses one key element: the return shareholders (aka donors!) get on their investment. At the heart of every nonprofit organization is the social good contract it maintains with the public. The organization does social good and the public supports it with donations. The key for every nonprofit organization is convincing the public that by donating to the organization, they’re investing in receiving a return – a social good.
If nonprofit organizations had a way to make their social good more like the return that shareholders get on their investment in corporations, donors would feel more ownership over the organization and the part they play in it.
I’ll never forget my Business Associations professor explaining that he invests in The Walt Disney Company because it felt good to be a part of The Magic Kingdom. Nonprofit organizations need to find a way to give donors some sort of return on their investment that helps them to feel a similar ownership over the organization.
Sure that’s nifty, but how do we go about doing it? How do we give them ownership and a return?
A feeling of ownership can be established through knowledge and power. Nonprofit organizations already have a pretty strong handle on the knowledge aspects. We educate donors through blogs, newsletters, emails, mailings, events, and just about any other existing channels. The more familiar donors are with the workings of the organization, the more they feel a part of it.
The harder things for nonprofit organizations to emulate are the power and return aspects of the company-investor relationship.
One of my favorite examples of empowering donors is the model that FORGE uses. FORGE is a U.S. based nonprofit that gives donors the power to select the specific project to which they would like to contribute, and educates them on how much the project costs overall and how much has been contributed so far. Thus, donors know exactly what their money is being used for and how they are helping.
The return aspect however, is still trickier. I think a big part is the message Dan gets across so clearly in this blog: stewardship. It gives donors the return of both the appreciation of the nonprofit organization and knowledge of what a difference their funds are making. Personalizing thank yous and appeals to each donor can make him or her feel some of the positive impact the gift made on the organization and ideally help to create a long-lasting and meaningful relationship.
But that can’t be the only way! Are there other ways to establish the company-investor relationship with donors? What should the “return” be? And are there downsides to doing this?
Guest Blogger Sarah Pierce is a third-year law student at the University of Iowa and the Director of Outreach at Child Soldier Relief. While in law school, she has interned at Human Rights Watch and the California Appellate Project. You can follow her on Twitter @sarahcpierce.