Mobile Fundraising for Nonprofits

Author: Jesse Feiler & Katrin Verclas on 19 April 2010 | 0 Comments

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In the last few months, nonprofits in the United States have started to pay attention to fundraising via text - donations delivered to charities by donors simply sending a text message.

In aftermath of the January 2010 Haiti earthquake text donations to the Red Cross and other charities received enormous publicity, and generated a significant outpouring of donations. (SMS is an alternate term for text message - a 160 character message sent over the mobile network)

The swiftness and the magnitude of the response made many nonprofit organizations take note. Appeals to donate swirled around via social networking sites such as Twitter, YouTube, and Facebook and generated numerous article in the traditional media.  There was even a widely seen public service announcement recorded by First Lady Michelle Obama.  An overview and list of organizations running mobile donations for Haiti is here at MobileActive.org.

Within 72 hours of the earthquake, donations exceeded $8 million, according to CNN, and the number has continued to rise. The latest figures for text message donations for Haiti Relief well exceed $30 million as of the time of this writing. The amount raised through text-based giving in all of 2010 is likely to exceed the total amount raised in 2009 by at least an order of magnitude (within a week of the disaster the American Red Cross was reporting that ten percent of their over $220 million donations was received through text messages - that amount is roughly seven times the total amount for 2009). CNN reported that the total in 2009 for all mobile donations was approximately $4 million - putting the $30 million dollar number into perspective.

Naturally, text giving is now considered with great interest by many nonprofits as a tool in their fundraising efforts. Nonprofits should indeed understand clearly the strategies and technology behind donating via a mobile phone not just in times of catastrophe and emergency.  As more and more people have access to text messaging features on their cell phones (and as more and more carrier service plans include at least a minimal number of text messages a month), it is time for nonprofits to evaluate and clearly grasp how they can use mobile giving in their ongoing fundraising operations.

This article examines the process of using this still-new method of raising donations for charities -- what it is, how to use it, and some of the issues to think about and plan for.

How It Works: From the Donors' perspective

For a donor, the steps to give via text message are simple:

  1. Decide to make a text-based donation. Donations in the United States are possible at a $5 or $10 donation per text message at this time. The amount is specific to a given campaign and determined by the organization, so the user can only decide whether or not to make a donation, not which amount to choose.
  2. Create and send a text message on a mobile phone. Typically this text message is sent to a short code -- a five or six digit number. The message consists of a keyword -- a single word such as AID, HAITI, GIVE or the like.
  3. An automated response consisting of a text message is sent back to the userʼs phone. This message asks for a reply to confirm the donation -- usually a single word such as OK or YES.
  4. A confirmation text message is sent by the system, and received by the user.
  5. On the donorʼs next mobile phone bill, a charge is shown for the amount of the donation. Prepaid customers (those who buy airtime as they go) can, at this time, typically not make a donation via text message.

This entire process can easily take less than a minute. Because the amounts involved are relatively low, many people treat mobile giving much as they do casual donations such as collections at an event and fill-the-kettle fundraising on the street.

The same techniques that you use for those campaigns can apply to mobile giving. The first step -- the decision by the donor to give -- is often spur-of-the moment. If the moment passes, it is unlike to recur. The credibility and reputation of the organization asking for money is critical here.

Although the donor normally does not see them, there are a number of safeguards in effect. The first is that the amounts of donations are set, and the second is a monthly limit of less than 5 (we have seen number anywhere from 2-5 donations per month) total donation transactions for a specific campaign. This means that a donor is not going to suddenly see an enormous charge to a specific campaign on the monthly bill.

In addition, the nonprofit organization has only limited information about the donor -- basically the telephone number. You can use it to send a follow-up text messages to a donor asking for more information such as an email address or to ask a donor to opt into other text message campaigns using text message that the organization may be running. Concerns about credit card numbers and identity theft do not apply.

A donor can opt out of further communications by replying to a message with the single word STOP or NO. This is a best practice recommendation by the Mobile Marketing Association in its publication, "U.S. Consumer Best Practices;" and it is not limited to mobile giving but apaplies to all mobile marketing.

After a STOP message is received (either directly or as a reply), only one more message should be sent to the user: a confirmation of the opt-out.

TIP: We strongly recommend that nonprofits considering mobile marketing or mobile fundraising campaigns read the materials provided by the Mobile Marketing Association that spell out best practices for issues such as how to generate ethically legitimate mobile lists to how to phrase opt-out language. You can find these materials here.

HOW IT WORKS: The Ecosystem of Mobile Giving in the U.S.

The donorʼs confirmation of the gift (OK or YES in reply to the automated confirmation request) sets the billing process in motion. The amount is added to the userʼs bill and the carrier transmits the money toward the charity (via a trusted third party, more on that below) on a regular basis. It often is sent after the money is actually received by the carrier; in the case of natural catastrophes such as the Haiti earthquake, some carriers have advanced the money before donors have paid their bills, but this is not the normal process.

Because of the complex nature of the money transactions in mobile giving, the timelag between a donor making a donation and the charity actually receiving the proceeds is long - it can take up to 90 days before a nonprofit receives the donation.

Note that the carrier transmits money toward the charity. The actual path is slightly more complex. There are two nonprofit organizations in the United States that work with the mobile carriers to facilitate mobile giving via text message. They are the Mobile Giving Foundation which completed its first full year of operation in 2008, and the mGive Foundation, which was founded more recently in October 2009.

They function in similar ways. Both are nonprofit organizations themselves, which is a critical feature in the way the money flows in the mobile donation process. Their primary role is to serve as a trusted third party (TTP) between mobile carriers and eligible nonprofit organizations. They provide accreditation of the charity so that a mobile carrier knows that donations made through their system actually go to a legitimate tax-exempt 501(c)(3) organization and so that a charity knows that donations made on their behalf to a carrier will be credited to the charity.

The process by which this happens is similar to the way in which community foundations work. The money goes from the carrier to the TTP as a contribution. It is reported by the TTP on its Exempt Organization tax return (IRS 990). (Although both TTPs are relatively new organizations, as time goes on, their IRS 990 tax returns on Guidestar will detail their operations.

The TTP then re-grants the appropriate amount to the nonprofit organization. The donor normally does not deal directly with the TTP.

HOW IT WORKS: Contractual Agreements

The entire donation process is automated, but there is a paper trail that documents the relationships among the parties. Each of the TTPs has contracts with the mobile carriers.

In addition, there is a contract between a TTP and each nonprofit organization with which it deals. Not that once these contracts are in place, they do not need to be revisited for individual campaigns a charity may choose to run, Each of the TTPs has its own standards for participating nonprofit organizations. These standards are similar in many ways, but there are some substantive differences so you should review both of the respective TTP documentation to see if any of the differences matter to your organization.

The standards for The mGive Foundation are called Charitable Participation Standards, and the standards for Mobile Giving Foundation are the MGF Guidelines.

Among the common standards are requirements that the nonprofit be a 501(c)(3) charitable organization and that it conduct its operations in accordance with commonly accepted financial and management standards.

You will also note that the organization must have raised at least $500,000 in the previous year. That seems to excludes a vast number of small nonprofit organizations. However, the Mobile Giving Foundation has a relationship with Causecast.org which it designates as a "mobile agency." 

Through Causecast, a small nonprofit organization also can create an account on Mobile Giving Foundation. There is a one-time fee for setting up a nonprofitʼs account at a TTP. Service fees are described in the following section.

HOW IT WORKS: Application Service Providers

There is one other type of player in the mobile giving process. A nonprofit organization works directly with an Application Service Provider (ASP). These companies bring mobile communication expertise to the table so that the nonprofit organization can focus on its operations and not get into the technical details of running a mobile marketing platform.

ASPs are typically for-profit organizations although there are some nonprofits involved. The ASP typically owns the five- or six-digit short codes to which text messages are sent. The ASP also manages the keywords that are used for individual campaigns so that they do not conflict with other organizations' keywords using the same shortcode. (Short codes are commonly shared codes that are delineated for specific campaigns by keywords. A nonprofit can lease it's own shortcode if it desires but the costs for that are steep - anywhere from $500/month for a generic code to $1,000 month for a vanity code).

The short code/keyword combination identifies the campaign and the donation amount. Consider the keyword 'Haiti' to the mGive shortcode 90999.

ASPs often can provide a variety of additional services such as easy-to-use web platforms for managing campaigns and messages, metrics and analysis tools, and data integration with commonly used nonprofit databases.

The ASP is the primary point of contact for the nonprofit organization; it arranges the contract with the TTP for the nonprofit organization. The Mobile Giving Foundation lists the ASPs with which it deals on its website.

The mGive Foundation currently partners only with the ASP mGive.com/Mobile Accord.

HOW IT WORKS: What are the Fees?

Application Service Providers typically charge three types of fees. (See the comments about choosing an ASP further below.)

  • There is often a set-up fee that covers creating an account for the nonprofit organization at the ASP and the TTP. The Mobile Giving Foundation set-up fee is $350. This does not apply to signups through the Causecast agency); the set-up fee for mGive.com which is the for-profit ASP associated with mGive.org is $500 which covers both the ASP and TTP set-up fees.
  • There is generally a monthly fee that is accompanied by a twelve-month contract between the organization and the ASP. This fee ranges from $99/month (Causecast) to fees of $250 (MobileCause), a number of $400-500 monthly fees (the mGive.com basic plan is $400 and $1,500 for the most expensive plan). Some ASPs offer more than one keyword in their pricing (for example, Give On the Go -- http://www.giveonthego.com-- includes four keywords in their monthly $500 package). Note that pricing is not standardized in any way among the ASPs, and nonprofits are advised to clearly understand the fees associated with mobile marketing and fundraising through these service providers.)
  • Each donation that is processed through the ASP is charged a small transaction fee. This can be a constant amount (such as fifty cents on a $10 donation) or it can be a combination of a fixed amount and a percent of the donation amount.
  • There may be some additional transaction fees that are paid back to the TTP by the ASP. Make certain to find out what they are so you are not surprised. These fees are not deducted from the donorʼs contribution which is passed on in its entirety by the TTP to the nonprofit; instead, they are charged back by the TTP and ASP to the nonprofit organization in the form of a bill. Because there are so many variations on the types of fees and the fee amounts, it is not easy to compare pricing. Read on for some suggestions.

What to Do Now: 7 Tips to get Started

1. The first thing for a nonprofit organization to do is to decide whether or not to explore the possibilities of mobile giving. Here are some things to consider:

  • First and foremost, ask yourself how mobile donations fit into your overall fundraising strategies. What are your goals? Who is your audience? What are your current tactics? How does mobile fit in? Consider more fine-grained questions such as this: Does reaching out to new donors, maybe from a different demographic, make sense for your organization? Are your current organizational programs conducive to mobile giving (for example, do you run large events on a regular basis where building a mobile list and text donations make sense?)
  • Can you cover the start-up and overhead costs for a mobile giving campaign (more on that below "Don't Worry About Breaking Even" section that follows).
  • Is mobile giving becoming a factor in fundraising for comparable nonprofits in your field?
  • Can you afford not to at minimum explore the possibilities of mobile giving? This is not just a matter of the money involved: it is a matter of demonstrating to your supporters that you are aggressively pursuing your organization's needs and goals, that you are savvy in the use of technology (if that matters to your brand), etc.
  • Although the TTP and ASP provide the technical support, nevertheless you need some support for a new technology. How willing are your staff and volunteers to explore new ways of working?
  • For some organizations, you may be helping your donors to make their first text message-based donations. Will they need reassurance and support? Can you provide it?  

2. Collect Mobile Numbers.

If you do not already collect mobile numbers, do so and make certain that you provide the appropriate information about how you will and will not use that information. If you want to let people know about a mobile giving campaign, sending messages to them (if permitted) or using your existing lists can be a way to raise attention to the short code/text fundraising campaign. If you have to start scrounging for mobile numbers at the point of wanting to raise money, you are behind. Here are some easy ways to collect mobile numbers.

  • On your website when you have people sign up for your newsletter, etc (see MMA materials for opt-in web samples/insert).
  • From your existing email list/constituent list.
  • At event registrations.
  • On Facebook and other social media (some ASPs offer simple Facebook widgets)
  • On feedback you collect for mail donations, reservations, or any other communication to and from your constituents.
  • Through polls and and games or competitions.

3. Find the Right Provider

The easiest way to find the right ASP provider is exactly the same way you consider any other vendor. Ask around, read articles, participate in discussions, and keep your eyes open. Just as you might ask a colleague for recommendations to an event planner, ask for recommendations to an ASP from an existing client.

4. Understand the Fees

As we noted, the fee structures for ASPs include one-time costs (the set-up), fixed monthly costs (which often include other services such as text message campaigns or extra keywords), and the transaction costs for donations. This can make comparing ASPs difficult; it also can mean that it makes the decision to actually go ahead with a mobile giving campaign harder. You have no way of knowing how much money will be raised, but at the same time you must commit to the overhead of the set-up and a yearʼs worth of monthly fees.

This is quite similar to any fundraising initiative that you have not done before. The first time you plan for a fundraising dinner, you have the same problems. Once you have one or two such events under your belt, you have a good sense of the costs and benefits.

5. Integrate Mobile Giving with Your Other Fundraising Tactics

Do not make the mistake of making mobile giving a separate project apart from your other fundraising operations. Remember that the donation process starts when a donor sends a text message. That action happens as a result of the donor having an existing relationship with the organization and/or some external prompt: a news article, an e-mail from you or a friend, an announcement at an event, a news story, or a message on a blimp, for that matter.  The precipitating event for the donation uses exactly the same communication tools that you can and have used in other circumstances. Although you integrate mobile giving with your other fundraising activities, your donors may not do so.

Keep track of who is using what medium and how well each technique is working. Track and evaluate mobile giving the same way you track responses to direct mail, Web, and phone solicitations. (This is another reason for integrating mobile numbers with your donor database and should be a decision criteria when choosing a mobile application service provider.)

One unresolved issue for many organizations is how mobile giving affects their other donations. Do people who would have sent $100 now feel that theyʼve done their part with a $10 mobile donation? Do you want to try to convert $10 mobile donors into larger-amount donors and if so, how? Or is it more likely to convert them from once-a-year donors to once-a-month donors? (This is one reason why there is so much interest in recurring donations in the mobile world. Currently they are not possible.)

Unfortunately, we have little data on this yet as mobile giving is just starting off. It is likely that several patterns will emerge for different types of nonprofits. Note that MobileActive.org will be releasing the first-ever Mobile Messaging Benchmark study later this month. This study, conducted together with MMR Strategies, provides initial data on mobile advocacy and fundraising metrics. Stay tuned!

6. Donʼt Worry About Breaking Even

Here is one way to get your first mobile giving campaign off the ground without devoting half of your waking hours to spreadsheet what-if games. For one or more of the ASPs you are considering, calculate the fixed cost for the first year (some ASPs will offer a shorter contract). The amount can be as low as $1,188 (Causecast), up to $5,288 (mgive.com) with various added services available beyond those amounts.

Once you have calculated your financial commitment, consider approaching one or more of your existing donors to cover that cost. This means that your break-even point for at least the vendor is $0. As with all other fundraising techniques, you really do not know how it works until you have done it, so removing some risk is a good way to position this as an experiment. After the first year, you can continue the mobile giving process by including its costs and projected revenues in your budget based on the first yearʼs experience.

7. Start Early

For your first mobile giving campaign, work with your board, staff, volunteers, and other supporters to set the scope of the project. (As noted, this is the time to minimize your risk and financial exposure by trying to raise money to cover the first year's cost.) As with any project, the greater the support and commitment from all stakeholders, the greater the likelihood of success.

Because the time to start up your mobile giving project can take at least several weeks, do not think that you can just add it on a week before the start of your annual fund drive. Overnight successes are almost always preceded by a lot of hard work. Get started now, even you do not go all the way to a full-fledged campaign. Finally, keep track of progress and look closely at the data your giving campaign generates. Fortunately, a wealth of data and statistics is generated through your ASP.

Mobile giving is absolutely not a silver bullet to magical fundraising. In fact, we have never seen a silver bullet for any fundraising efforts. However, mobile giving can be a valuable tool in an ever-widening array of methods to raise money and communicate for your organization.

Resources

Precisely because mobile giving is so new, information about it changes quickly. All of the data in this article has been fact checked, but all of it is subject to change - particularly any information regarding policies and costs. Here are some resources that can be helpful (and don't forget the wealth of fundraising information for nonprofits elsewhere on the web).

  • The Mobile Marketing Association is the trade association that promotes and explains mobile marketing, including nonprofit activities. It provides case studies, best practices, and overview of the mobile marketing process.
  • MobileActive.org is a global network of practitioners using mobile phones for social impact. We provide lots of articles and how-tos on how nonprofits can use mobile phones to make the world a better place. 

This article was written by Jesse Feiler and edited by Katrin Verclas. Reprinted with permission from MobileActive.


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