Wouldn’t you want to show your friends how generous and caring you are? Maybe not. Last week, the nonprofit fundraising application Causes announced that it will stop supporting Myspace and focus on Facebook exclusively for online social networking fundraising. The online networking fundraising market helps non-profits and other individuals and organizations raise funds to (typically) worthy causes from feeding the poor to funding surgeries. Causes is the largest player in this space, with over $10M of donation raised in 2 years. This move brings up several questions: Why would Causes not support both platforms? What is the overall size of this market, and where it is going?
Dan Morrill suggests that the answer for the first question is demographics and profitability: Facebook users are more affluent than Myspace’s to a point that supporting Myspace was becoming non-profitable. This is interesting, because it means that Myspace with its 261M+ users, were not able to generate a significant annual income for Causes (probably less than 0.1c per user.) This brings us to the second question: what’s the overall size of this market? While organizations report that online giving grows by high double digits, Georgia Levenson Keohane reports that “Internet giving still constitutes a tiny portion of total dollars raised—typically between 1 percent and 5 percent of an organization’s overall contributions” (“The Facebook Philanthropos“.) The Washington Post reports that To Nonprofits Seeking Cash, Facebook App Isn’t So Green: “Only a tiny fraction of the 179,000 nonprofits that have turned to Causes as an inexpensive and green way to seek donations have brought in even $1,000, according to data available on the Causes developers’ site”. The site reveals that only 2 causes surpassed the $100K fundraising: Nature Conservancy and Students for Free Tibet.192,000 unique donors contributed $10,000,000 through 400,000 donations of $25 on average. Does $25 sound low as an average donation? a 2008 American Express sponsored survey found that the average online gift is about same amount as offline gift, however, the numbers there are way greater than Causes’ which suggest wealthier donors.
Despite the disappointing financials, Causes claims to have over 35 million active users on Facebook, which places it among the most used applications. This certainly creates a huge opportunity for non-profits and other organization to promote themselves and their goals to this audience. This means that large organizations with recognized brand names may be reluctant to invest in social networking at this point – the funds are not there and they already have the brand. Smaller organizations, with limited marketing budgets, small operations and low public exposure may yet continue and run campaigns on Causes and other platforms.
What’s next then? Some believe that we need change. “People have to first change their patterns of online behavior” says Debra Askanase, “Two years from now, I predict that online behavior will again have shifted and that social network users will become accustomed to donating through social networks”
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