Over the past several years, a number of social fundraising or crowdfunding platforms have been developed and launched. Community foundations and other nonprofit organizations use these for online giving events based on a low-cost, all-in-one pricing strategy that focuses on the platform’s ease of use. But there is a much greater cost that is being “hidden in plain sight.” The real cost is the donor list of every organization in your community that participates in the event you sponsor.
A fundamental part of the business strategy of social fundraising platforms is to build a large database of donor contacts and leverage that data for their own benefit. A community giving event is a great opportunity for these social fundraising or crowdfunding platforms to build their own donor list and to do it with your donors!
In these “sponsored” events, community foundations are encouraged to put up matching funds, sign up nonprofits and then market the event. Once the event begins, donors select a nonprofit and make a donation. But who receives the donation and the donor information? The social fundraising platform and their affiliated foundation, and as the recipient of the donation, these organizations own and control the donor data — not the nonprofit and not the community foundation. As a result, participating nonprofits who are pursuing matching funds and encouraging their best donors to give are actually being encouraged to turn over their entire donor list. And they are paying them 4.9% to take it.
Organizations that have participated in these community fundraising events are often surprised to find that many of their donors are being hit with multiple emails shortly after the event. These emails market other nonprofit giving opportunities to the event donors, and to make matters worse, the opportunities are often for nonprofits outside of your community. Moreover, community foundations are often surprised to find that they are not entitled to receive full donor information because they only sponsor the event. Instead, data is retained by the third-party social fundraising platform’s affiliated foundation.
Today, nonprofits and community foundations that want to retain control of their donor data have only two choices: build a high-volume, multi-organization site at a cost of up to $2 million or use a platform like Kimbia, an Austin-based company that has partnered with the Council on Foundations to produce next year’s Give Local America event. If you’re not familiar with Kimbia, it is not a social fundraising site, but rather offers a set of tools used to construct a custom, extremely high-capacity website for each community foundation. And unlike the $200,000 to $2 million spent by some community foundations on custom-built sites, Kimbia typically delivers the site for $2,500 to $15,000.
Donor days provide a tremendous opportunity to build momentum for philanthropy in your community if you choose the right partner. However, it can be a mistake to select a social fundraising or crowdfunding platform that requires nonprofits give up the list of their best supporters and pay the platform company to take it. It’s the hidden cost of social fundraising platforms that is much higher than the 4.9% transaction fee marketed to you and your community’s nonprofits. Truthful marketing would be: “The cost of our platform is 4.9%, plus the donor list of every nonprofits that participates because after the event, we will own it.”
