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  An examination of the best practices in fundraising for international development-based nonprofit organizations in the United States
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  • 1. Global Impact: An Examination of the Best Practices in Fundraising for International Development-Based Nonprofit Organizations in the United States A Senior Project presented to the Faculty of the Recreation, Parks, & Tourism Administration Department California Polytechnic State University, San Luis Obispo In Partial Fulfillment of the Requirements for the Degree Bachelor of Science by Gina Giannosa June, 2015 © 2015 Gina Giannosa
  • 2. ii ABSTRACT GLOBAL IMPACT: AN EXAMINATION OF THE BEST PRACTICES IN FUNDRAISING FOR INTERNATIONAL DEVELOPMENT-BASED NONPROFIT ORGANIZATIONS IN THE UNITED STATES GINA GIANNOSA JUNE 2015 Nonprofit organizations operate through the financial support of generous donors and sponsors. To encourage donor support, nonprofits must engage in various forms of fundraising. The purpose of this study was to examine the fundraising practices of selected international development-based nonprofit organizations in the United States. The researcher studied three different nonprofit organizations and analyzed their websites and social media sites to determine successful fundraising practices. Data for each organization was collected using a matrix of categorized questions developed by the researcher. Through the data, the researcher determined major findings and conclusions and made recommendations for each of the selected organizations. The researcher also provided recommendations for future application and studies in the nonprofit field. Keywords: nonprofit, fundraising, strategy, online, donor, partner
  • 3. iii TABLE OF CONTENTS PAGE ABSTRACT........................................................................................................................ii! TABLE OF CONTENTS...................................................................................................iii! Chapter 1 INTRODUCTION AND REVIEW OF LITERATURE.................................... 1! Background of Study ...................................................................................................... 1! Review of Literature ....................................................................................................... 2! Purpose of the Study....................................................................................................... 8! Research Questions......................................................................................................... 8! Chapter 2 METHODS......................................................................................................... 9! Description of Organization/s......................................................................................... 9! Description of Instrument ............................................................................................. 10! Description of Procedures............................................................................................. 11! Chapter 3 PRESENTATION OF THE RESULTS........................................................... 13! Recent Organizational Growth ..................................................................................... 13! Partner Relationships .................................................................................................... 15! Online Fundraising Strategies....................................................................................... 16! Other Fundraising Strategies ........................................................................................ 19! Chapter 4 DISCUSSION AND CONCLUSIONS............................................................ 20! Summary....................................................................................................................... 20! Discussion..................................................................................................................... 21! Conclusions................................................................................................................... 25! Recommendations......................................................................................................... 26!
  • 4. iv REFERENCES ................................................................................................................. 28! APPENDIXES.................................................................................................................. 32!
  • 5. 1 Chapter 1 INTRODUCTION AND REVIEW OF LITERATURE Background of Study Charity is a familiar concept to people all across the globe. Early foundations of organized groups purposed for charitable giving or benevolent deeds date back to the colonial days of the United States (Hammack, 2002). Today, these types of groups are classified as “nonprofit organizations.” Essentially, nonprofit organizations (NPOs) exist to provide the public with some sort of benefit. Blackwood, Roeger, and Petiijohn (2012) determined 2.3 million nonprofit organizations currently operate in the United States and, in 2010, all registered NPOs collectively accumulated nearly $2.06 trillion in revenue. Examples of revenue streams for NPOs include general donations, grants, and program fees. Nonprofit organizations depend on the revenues generated each year for the successful and continuous operation of their programs and services. One of the most effective methods NPOs use to generate monetary support is fundraising. The specific goals and objectives of an organization determine the fundraising approaches it chooses to implement. Nonprofit organizations such as Pencils of Promise, charity: water, and Lifewater International utilize a variety of fundraising strategies in order to support their international development services and programs. The purpose of this study was to examine the fundraising practices of selected international development-based nonprofit organizations in the United States.
  • 6. 2 Review of Literature Research for this review of literature was conducted at Robert E. Kennedy Library on the campus of California Polytechnic State University, San Luis Obispo. In addition to books and other resources, the following online databases were utilized: ABI/Inform Complete, Academic Source Premier, Business Source Premier, Google Scholar, JSTOR, and Wiley Online Library. This review of literature is organized into the following topic areas: motivations for charitable giving, the relationship between organizations and donors, Web-based fundraising strategies, and fundraising events and campaigns. Nonprofit organizations are only able to exist through the help of charitable giving. Charitable giving is a key player in providing privately funded public goods in many areas of society (Osili, Hirt, & Raghavan, 2011). Some areas of public goods affected by charitable giving include educational institutions, youth development programs, international aid organizations, and religious-affiliated groups. Marx and Carter (2014) describe charity as “a two-way exchange motivated by benefits to each party in the exchange - the giver and the beneficiary” (p. 351). Nonprofit organizations benefit monetarily and promotionally, while donors generally receive more intrinsic forms of benefits. There are all different kinds of motivating factors that drive charitable giving. Bekkers and Wiepking (2011) determined eight mechanisms as the motivating factors behind philanthropic action and charitable giving: awareness of need, solicitation, costs and benefits, altruism, reputation, psychological benefits, values, and efficacy (p. 924). These factors are tangible and intangible, providing internal and external benefits to each
  • 7. 3 party in the exchange. Every donor is unique and attracted to NPOs for different reasons. Therefore, nonprofits’ fundraising practices must be tailored to fit both the needs of the organization and the donor alike. One of the major components of fundraising is the relationship between the donor and the organization. Fundraising is built on developing relationships with donor constituencies because donors are the most integral part of an organization’s fundraising success (Owens & Yarbrough, 2015). One way NPOs work to build relationships with their donors is through donor priority strategies. A donor priority strategy is defined as the application of various levels of donation associated with additional benefits dependent on the amount donated (Scherhag & Boenigk, 2013). For example, the Metropolitan Museum of Art has over ten donation levels, each with their own benefits packages. In return for their generous contributions, donors receive perks such as: free admission to special exhibitions, invitations to curator talks, and exclusive dinners (Scherhag & Boenigk, 2013, p. 444). Though the primary purpose of charitable giving is to donate to a worthwhile cause, many people feel more connected to and appreciated by an organization that provides them with some sort of tangible benefit because of their donation. The utilization of the Internet is one of the fastest growing trends for fundraising in the nonprofit sector. Hoefer (2012) discusses affiliate marketing, online donations and memberships, and information products as three tools for online fundraising success. Affiliate marketing can be described as a practice where businesses provide rewards to their affiliates (the NPO) for each website visitor, sale, or customer that navigated the site because of the affiliate organization’s marketing efforts (Brown, 2008). Nonprofit
  • 8. 4 organizations can begin to implement affiliate marketing strategies by connecting themselves to a company and promoting certain products that will directly benefit their target market (Hoefer). Over the last few years, the amount of funds generated through online giving has significantly increased. Between 2011 and 2012, funding received through online donations grew by 14% and many NPOs have increased the overall amount of gifts they receive by encouraging potential donors to give each month, year, or over some other set period of time (Grovum & Flandez, 2013). Many organizations allow people to easily make online donations directly through a link provided on the organization’s webpage or through email. Young Life, a Christian organization purposed to serve high-school teenagers, places a high focus on online fundraising strategies. Potential donors can access the Young Life website through all Web-compatible devices, making it easy for supporters to navigate the site and keep track of each donation they make (Young Life, 2015). Additionally, Young Life promotes the use of their website by including website information on all of their promotional materials. Young Life, like many other nonprofit organizations, uses social media as a promotional tool and a way to more effectively engage with the public. The ability for NPOs to implement social media marketing tactics provides them with substantial opportunities and cutting-edge resources to help their organizations gain a greater presence in society (Nah & Saxton, 2012). Palmer (2015) listed the most popular sites used by companies for social media marketing as: Facebook, Twitter, Instagram, Pinterest, LinkedIn, Snapchat, and YouTube (para. 4). These modern social media platforms open doors for communication opportunities that drastically differ from
  • 9. 5 traditional organization websites (Lovejoy & Saxton, 2012). Social media is instantly available virtually anywhere and, literally, accessible in the palm of the user’s hand. The vast accessibility of social media makes it an extremely smart and strategic way for nonprofits to provide more information about their organizations to current users and potential future supporters. According to Lovejoy and Saxton (2012), the three primary functions of social media use by nonprofit organizations are to: provide information, foster community, and call donors to action (p. 337). Providing information essentially means administering organizational news, such as reports, studies, or highlights from a recent event, to the general public. Social media can also be used as a social networking tool where organizations can interact with stakeholders, share ideas, facilitate conversations, and create an online community between organizations and followers (Lovejoy & Saxton, 2012). Social media combines traditional marketing techniques with new, innovative approaches. It not only provides open communication between organizations and donors, but also makes donor-to-donor interactions possible (Mangold & Faulds, 2009). Finally, social media plays a huge role in evoking action from supporters. Whether the action is to attend an upcoming event, advocate for the organization’s cause, or make a monetary donation, nonprofits use social media in this way to get some physical or emotional support from their followers. Clearly, social media communication has the ability to not only foster meaningful relationships with supporters, but also build accountability and trust between organizations and the public (Saxton & Guo, 2011). Another unique way nonprofit organizations innovatively fundraise is through events and mass-promoted giving campaigns. One of the most profound and recently
  • 10. 6 adopted campaigns is called #GivingTuesday. The global movement occurs on the first Tuesday after Thanksgiving and has become known as a national day of charitable giving. The event was created in 2012 by 92nd Street Y of New York in association with the United Nations Foundation and is a campaign in which people all across the world are encouraged to give back and make a monetary contribution to a charity of their choosing (#GivingTuesday, 2014). During the most recent national day of charitable giving, over 296,000 charitable contributions were made, resulting in a total of approximately $45.7 million (Indiana University Lilly Family School of Philanthropy, 2014). Jean Case, co- founder and CEO of the Case Foundation, stated, “Just as Cyber Monday and Black Friday are key indicators of consumer sentiment and economic health, this data on #GivingTuesday can serve as an indicator of the health of our giving economy” (Indiana University Lilly Family School of Philanthropy, 2014, para. 4). Mass giving campaigns are essentially online events that quickly generate large sums of money as well as increase overall organizational awareness. Fundraising through special events is extremely common in the world of NPOs. Events can range from casual bike rides to black tie galas. Fundraiser events are a strategic opportunity for nonprofit organizations to reach out to donors who are motivated by more than just their desire to support an organization (Webber, 2004). One common attribute of all nonprofit special events is that participants gain some sort of personal benefit by engaging in the event. Depending on the participant’s motivations for attending the event, they can gain both intrinsic and extrinsic benefits, such as making a generous contribution, feeling a sense of personal pride and accomplishment, or simply having fun.
  • 11. 7 Nonprofit organizations also utilize information products to attract new donors and sponsors. Information products can go hand-in-hand with social media strategies. Older, somewhat outdated examples of information products are books and pamphlets, and newer products include promotional videos, DVDs, or other digital marketing materials (Hoefer, 2012). Invisible Children, an organization focused on social justice in Africa, heavily implemented the use of informational products as a promotional tool during the height of their operations. Originally, their videos were used as an experiment to spread awareness about their cause, but in 2012 when their Kony 2012 campaign video went viral on YouTube, it received 100 million views in just six days and nearly four million people pledged their support for the cause (Invisible Children, 2014). The impact of the Kony 2012 video was significant. The video’s unprecedented success allowed Invisible Children to host a Global Summit in Washington, DC that brought together international leaders and social justice experts who committed their support to the organization’s work. The organization’s spike in support and additional funding that resulted from their use of informational products allowed them to further expand their programs in East and Central Africa. Though many nonprofits still utilize traditional models of fundraising, the majority of organizations have moved into Web-based fundraising practices. Primary strategies of online fundraising include affiliate marketing and marketing through information products, in addition to general online giving and social media campaigns. The most important aspect of fundraising for NPOs to remember is the importance of the relationship between the organization and their donors. Nonprofit organizations greatly depend on gaining and sustaining the public’s trust (Bekkers, 2003). Whether or not an
  • 12. 8 organization implements donor priority strategies, they should focus on fostering communication and trustworthy ties between themselves and the people or business whose support helps keep the organization alive. Purpose of the Study The purpose of this study was to examine the fundraising practices of selected international development-based nonprofit organizations in the United States. Research Questions This study attempted to answer the following research questions: 1. What online and offline fundraising techniques are currently implemented by selected nonprofit organizations? 2. What role does social media play in terms of fundraising for selected nonprofit organizations? 3. How effective are the fundraising practices of selected nonprofit organizations in terms of organizational growth and partnership development? 4. How do fundraising practices reflect the mission, vision, and values of selected nonprofit organizations?
  • 13. 9 Chapter 2 METHODS The purpose of this study was to examine the fundraising practices of selected international development-based nonprofit organizations in the United States. This chapter includes the following sections: description of organization/s, description of instrument, and description of procedures. Description of Organization/s A comparative analysis was conducted on Pencils of Promise (PoP), charity: water, and Lifewater International. Each organization studied is a registered 501(c)(3) nonprofit organization with the International Revenue Service (IRS). Pencils of Promise (2015) was founded by Brown University graduate, Adam Braun, in 2008. With its for- purpose approach, PoP exists to create schools, programs, and global communities around the common goal of education for all. The organization is headquartered in New York City and additionally operates in Ghana, Guatemala, and Laos. Pencils of Promise consists of 86 leadership and staff members, 11 members on the Board of Directors, and an Advisory Board of 21. The organization’s main programs include school builds, teacher training, scholarship, and WASH (water, sanitation, hygiene) instruction. Also based out of New York City is charity: water. The organization’s mission is to bring clean and safe drinking water to people in developing nations (charity: water, 2015). Since the organization’s founding in 2006, charity: water has completed 16,138 water projects in 24 different countries across the globe. The organization utilizes nine
  • 14. 10 different water project solutions intended to help end the water crisis in developing countries. Types of projects charity: water has completed include well builds, rainwater catchment systems, latrines, and water purification systems. Poverty, political stability, and water scarcity are the determining factors in deciding where to devel
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