Donor acquisition can be a thorn in the side of marketers. And as the cost to acquire donors continues to rise due to paper shortages and increasing digital ad rates, the cost of acquiring attention has gone up, too.
In this episode, we’re speaking with Soraya Alexander, the Chief Operating Officer of Classy. Classy’s tech is well-known in the world of nonprofit fundraising, and its recent acquisition by crowdfunding platform GoFundMe will enable it to better connect communities with the causes they support.
Soraya says knowing your donors is key to reaching them in meaningful ways. Taking an omnichannel approach is also essential. It’s not either this or that; rather, it’s how it all comes together. Instead of putting a certain channel like direct mail at the center of your outreach campaign, put the donor at the center.
Another tactic Soraya recommends is to segment your donors by commonalities such as age and then talk to each segment differently. Nonprofits must be especially aware of generational giving. Millennials and Gen Z, for instance, are less trusting of institutions. They’re driven by activism and prefer to donate directly to those who need aid.
Nonprofits can take advantage of this activism by giving donors an opportunity to engage through service first. By championing volunteerism, you can build a trusting relationship and show how their dollars are being used. Using this strategy to acquire donors engenders giving and kicks off an ecosystem of involvement.
Listen to the episode here:
Fundraisers like you are working to supply your cause with the resources it needs to make the world a better place, but donor expectations and technology seem to keep changing. At Pursuant, we want to bring you conversations that put leaders like you at the top of your fundraising game. Welcome to the Go Beyond Fundraising podcast.
Leah Davenport Fadling:
Welcome to the Go Beyond Fundraising podcast, Soraya. We're really glad to have you.
Thank you so much for having me. It's great to be here.
Leah Davenport Fadling:
So you and I got to sit down a little bit at the NIO conference and had a million different things we were talking about. I was really thrilled to be able to interview you for our podcast. But before we kind of jump into the sort of meat of the discussion, I would love to know a little bit more about you and what you do at Classy.
Yes, well, it was such a fun conference. And yeah, we had a great conversation. So I'm glad now we get to record it and see if anybody else thinks it's interesting. But I am the Chief Operating Officer at Classy. Classy builds fundraising technology for nonprofits. We work with thousands of nonprofits and all of their digital fundraising needs. Because of that exposure, we get to learn a lot about what's working and what's going on in the world of fundraising.
My background actually was originally started in the nonprofit space doing strategy and digital strategy, specifically PR general strategy for nonprofits and foundations back in DC. I went to a few different nonprofits worked with PBS for a little while, Lincoln Center, and then moved to the corporate side of things where I did customer engagement, loyalty, and e-commerce, and then found Classy, which is kind of the best of both. So it's essentially e-commerce and loyalty and engagement, but for the sector that completely has my heart. So I just love the work.
Leah Davenport Fadling:
So, you and I had a chance to connect at a conference last week that was full of nonprofit marketers and fundraisers and a lot of folks from the kind of nonprofit tech service space. And the topic that you know, I don't know if you heard this on the conference floor, but I was definitely hearing it in different conversations was kind of multifaceted, or a little bit sort of two sides of a coin, which is acquisition is kind of always a perennial sort of thorn in the side of fundraisers and marketers because it just seems like the cost of acquisition is just going up. And by acquisition, we mean the cost to acquire a new donor. But it also seems as though the cost of just acquiring attention has gone up as well.
Some of this is coming from paper shortages, kind of on the direct mail side, which is causing a lot of nonprofits to kind of rethink how they invest in channels like direct mail and how they get smarter about it. But they're also kind of rethinking about “how do we budget and invest in online advertising targeting?” especially when you know, things in Google, like third-party cookies are going away. So it seems like there are just a lot of questions swirling in the nonprofit space about how we invest in acquiring donors and acquiring followers when it seems like the cost of both is just kind of going through the roof.
It's a question that we've been facing for a while for several years, and it feels like it becomes more acute and more challenging every year. So, you're exactly right. Direct mail is really expensive but still yields a ton for development managers, so they want to keep doubling down on that channel. But how do you do it in a cost-efficient way, with evermore kind of visible budgets? Budgets that have to show every penny like how it's being spent, where the return is coming from, from that investment?
For us, we really think about digital channels as being able to scale really efficiently. So if you know your donors really well, direct mail is still incredibly, incredibly productive. There are certain donors who you send a really meaningful piece, and direct mail just hits differently. The response rates are different, the engagement is different, the relationships you can form are really deep — that is absolutely the right channel for those donors.
The question is, can you do that at scale? And any kind of nonprofit really trying to establish itself for the long term needs to figure out this broad base of supporters and investors in their cause. And that's really, really hard to do offline. And so for us, we think about this, you know, marginal cost to serve, like, what is the next eyeball that I can get, what is the next conversion point that I can get — and that is where digital really comes in and plays such a transformative role.
You can see the full track, you know, path of everyone, you can really kind of figure out what helps them engage, where to follow up, and it is very cheap, relatively, to do that for really big numbers of people. And so it's not an either or — it never should be an either or — and this is, you know, we're talking direct mail and online, but you name the channel: the more exposure you can get in a really efficient way, the better. That's our approach, and the most fun we're having right now is actually how to bring the channels together.
So we're working with the Salvation Army and we're working with their Red Kettle program, and we're actually implementing ways to use near-field communication to send them to a digital form because, you know, how much more can you capture? People don't have change in their pockets. Really exciting developments where it's not even either or, or both. It's actually how all of them come together, and that's the future we're seeing.
Leah Davenport Fadling:
And just to build on that, something that a lot of conversations happened at the conference last week was that multichannel attribution, or omnichannel attribution. So, you could send someone a piece of mail, and you maybe have a personalized URL, or a URL that's mentioned in that piece of mail that is trackable. But someone could also just go to your website, without even going through that specific tracking link. Especially when we are trying to make those smart bets on where we invested our budget, it can be really hard when nonprofits are so careful about making sure they're communicating impact, and they're counting every penny to make the case for, “Well, we still need to invest in this channel, even if we're not seeing the response rates we would expect.”
It's right. When I think about kind of focusing on the channels by donors, it's actually less about which piece actually drove that conversion sometimes. And this can get a little bit scary for marketers — I know, I run marketing teams. I know this is really scary, but it's actually about what combination of things does a donor respond to? So, instead of putting the channel at the center, and putting the medium of communication at the center and doing the analysis there, put the donor at the center and say, what are the touch points? What are the cadences? What are the kinds of messages that the donor responded to? And what actually drove that donation?
You know, of course, the channel matters. But I really believe in that kind of ecosystem approach, that surround sound, of like, “I am in support of this organization, what are the different ways I can learn about their impact? How am I learning about how I can get involved?” And that's the combination. And so I think a lot about your cohort donors. You figure out who are the tried and true donors? Who is your base? Who are the one-time big givers that you won't hear from again? And you start talking to them differently. It's not about, “How do I double down on just direct mail as a channel and I'll just pull in some donors,” it's really about “who are the donors I want to engage with right now? What is the message I have for them?” And then you figure out kind of the different combinations of channels to get that message across.
So, absolutely right. And it takes a little bit more work. But it also, I think, frees you from, like, the tyranny of single-touch attribution, which we know none of us fall into that mode of engagement with the brands that we support or the causes we support. But as marketers, it's reassuring, so you kind of default to that.
Leah Davenport Fadling:
Yeah. So, kind of expanding on this a little bit. Another question that I heard a lot coming up, and I've seen this in multiple kinds of different avenues and people are having these discussions, is kind of parallel with the topic of how do we invest smarter in acquisition and what does that donor journey look like? Is the future. So specifically, how do younger generations like millennials and Gen Z? How do they want to engage in philanthropy that is different from previous generations?
And in fact, there was kind of a provocative article published by Vox, the online news company, just yesterday about this idea of philanthropy looking different in different generations. And part of that has to do with this. And I've heard this before, but this idea of an eroding trust in institutions, we both had a chance to read through the article, and I would kind of love your thoughts on this point of it.
I loved the article. And so many of the people cited are, you know, well known in our space, and I’ve spoken with all of them quite a bit around this idea of eroding trust and what it means and what nonprofits can do about it. Basically, the thesis is that people are still very, very charitable. But, the donations to traditional nonprofit organizations, the 501(c)(3)’s that so many of us work for, and work with, are really being supported by a smaller and smaller concentration of super-wealthy. And the broad base of the population is still charitable at the same levels and even not greater levels than prior generations.
But, they're giving in different ways that are not traditionally tracked as kind of codified philanthropic donation — so things like giving time, things like giving money to their networks, you know, as individual contributions, things like GoFundMe campaigns, you know, what does that mean? And if we are defining charity, so narrowly, we are missing all of this mobilization. And it's something actually that at Classy, we've spoken about a lot. What we have seen is that there is this huge mobilization across generations in our society right now.
And so we talk a lot about you know, 2020 actually at the highest voter turnout in the 21st century. So huge engagement in that in civil light. We saw the Black Lives Matter movement, we saw people coming out after the Dobbs decision, we saw just over and over, you know, the millions of donations coming out for Ukraine like over and over, we're seeing actually really, really high levels of engagement. But what it looks like is very different. And so what do nonprofits have to do in response? It's not that you can say like, this is my, this is my banner, this is my org, donate to me, you actually have to say, what is your cause?
It goes back to what we were just talking about, like, you put the donor at the center, you put the individual at the center, what is their cause? Where are they engaging in society? How do you meet them there to actually capture their interest, connect to the cause, and then say, “We can address this at scale?” Like, we still have enormous, enormous faith and the ability of nonprofits to meet these needs, at scale in programatized, systematized, impactful ways. But if institutional trust is waning and people don't think of these nonprofits as ready to meet the moment, how do you actually connect to people where they are? And that is really powerful. And I know we'll get into it a little bit. But it's a lot of the thesis of why we joined forces with GoFundMe and what we're trying to build.
Leah Davenport Fadling:
Yes, absolutely. And it's such a kind of potent idea. A few months ago, our CEO here at Pursuant sat down with Kevin Hagen, the CEO of PAN Foundation, and they had a conversation about Ukraine and the way that it was very similar, I think, to the ALS bucket challenge for a few years ago, where people saw this need. And they saw a unique way to give, which was to book nights on Airbnb for Airbnb’s that were located in Ukraine. That way, they could, in their mind, directly send aid to people that were being affected by the war with Russia. And they felt in their minds, it seems the best route to get support to that area was to bypass traditional nonprofits. And so we see, in younger generations especially, this kind of very passionate, grassroots approach at aid and at charitable engagement that nonprofits kind of have this challenge to address because there's some kind of dopamine hit in the brain that happens when you feel like you directly impacted a person you can put a face to.
I think that's right, I think the dangerous thing that we can, you know, that that we will fall into is feeling like it's a competition, you know, it's either that or this. I'll bring it from e-commerce for a second. We do a lot of analysis in the for-profit space of this concept of “share of wallet.” So we say, you know, if you work in sporting goods, you say, well, the person needs a pair of sneakers. I can't win and have my competitor win in the sale, because they only need one pair of sneakers — I can't sell them two. And I think sometimes, we work over that concept in the nonprofit space where we say, well, they're giving to each individual person which means they're taking away from giving to my cause. But we don't see that in flexibility and giving.
As people get engaged, they build trust in these institutions they build, you know, they build trust in the organizations that build trust in the way that they can have an impact that feels amazing, which then engenders more giving. And so yes, we have a problem with donor retention. But actually, as people give, they feel great about it. And they will keep giving if you engage them in the right ways and they don't say like, well, I kind of completely fulfilled my need. And so I'm done giving if something else comes along that I'm not going to respond to that we don't really see that. So it's hard, it's not that it's, you know, an infinite wallet. But it's, I do think there's more capacity for engagement than sometimes we give ourselves and our donors credit for.
Leah Davenport Fadling:
Well, something else that comes to mind is the fact that I was speaking about this with a colleague the other day. I've seen different kinds of studies and survey information about some younger generations of these donors that are coming up, and we see this with our traditional marketing as well in the commercial space, which is that it seems that more and more young people compared to older generations, they don't necessarily see giving as “the right thing to do” is just that, well, it's my responsibility to be philanthropic. But they're motivated by causes that resonate with something in their identity, that resonates with their core values. And so I love what you shared about nonprofits needing to hone their messaging to the donor and make the donor the center of the story. But it's also tying, making a bridge there, between the donors' values and how their gift is going to be in support of their values.
And I'll say that, you know, when I'm thinking about marketing programs and development programs, the donor and their motivations have to be at the center of that. But of course, in any nonprofit, I don't want that to get, you know, misunderstood. The programs are the center and the, you know, the constituencies are the center, of course, but it's how does the donor feel like they can connect and kind of share a humanity with those constituencies? And the organizations are the conduit to do it in a way to say, yes, we can help you realize those goals of really connecting with your society, with your communities, with the world with their environment in ways that are impactful. And so that's really what I'm thinking about when I talk about this.
And sorry, I totally lost your question, because I was indexing on what you're saying. But yes, 100 times over on that concept of real connection and on the feeling that activism and engagement is becoming kind of the way of self-actualization. Like, that's how you see yourself, I am somebody who believes in these causes. And I have manifested in these ways. And if you are an organization that can say, we recognize you, we see you and yes, we're part of the solution, you know, come alongside us in all of these different ways in terms of talking about our organization, to your networks, in terms of volunteering with us in terms of giving to us, in terms of being a participant as we evolve our thinking, that kind of engagement, broad-based engagement is setting you up for real, authentic, long-term relationships.
Leah Davenport Fadling:
Well, let's go back a little bit to our initial kind of question, which was the one about acquisition. Something that I find really compelling that is going on with GoFundMe and Classy is at the beginning of this year, GoFundMe actually acquired Classy, and you’re, from my understanding, operating in a partnership rather than as a absorb, yeah, exactly, absorbed by GoFundMe, which is kind of really fun and exciting that both parties kind of get to grow independently and also together. But you guys are doing something really exciting with being able to surface causes that a donor who was given to a GoFundMe fund might be interested in. And it's actually launching soon. And I bring it up not to be necessarily an ad — as an advertisement — but because it seems to kind of tie some of these things together that we've been talking about in a really compelling way.
So we joined forces, GoFundMe, not quite a year ago, but the conversations started about a year and a half ago, where we said, GoFundMe serves a really particular, really compelling need, individuals who need help, who are seeking help and communities want to support them. Their communities — extended communities — want to support them in these times of opportunity or need, can rally around and these people can get help. That as a use case has existed for all of time. You can do meal trains for somebody you know when they're having a hard time, you can give to a GoFundMe — you know that there are all these legitimate ways for you to support your communities. And that is an incredible use case. And it drives billions of dollars of good in these networks.
Classy works with nonprofits and these really sophisticated programs to drive impact at scale. But oftentimes, we're working on kind of corollary issues. And so you're exactly right, what we saw are these networks on GoFundMe, that rally around an acute point of time and an acute person, who then suddenly have a connection to a bigger cause. Are they finding the organizations working at scale on those causes? So exactly, we were saying that people self-identify with, with causes, with movements, but not necessarily with organizations. Our theory is they're not identifying with the organization because they haven't seen that link drawn in the same way they haven't been introduced in those times before.
So the example I gave you when we were chatting, and I'll give you now is, you know, somebody's you know, God forbid somebody suffering from leukemia, and they are raising money for their cancer treatment. They will start a GoFundMe, and their friends and family will rally around them so we can help you with medical bills, don't worry about that, and we want to show you our support. After this person heals, that community doesn't actually have to be long-term donors, they're not going to become sustaining donors like they are their cousins and friends like that the community of donors goes away and the community of friends comes, you know, is there. But all of these people have now been touched by leukemia? Well, we work with the Leukemia and Lymphoma Society. Do you think it would be appropriate to introduce those people to say, “Do you want to learn more about an organization doing work for people like your friend at scale, and work to make sure that this disease touches, you know, nobody else in the future that we are curing this disease?” And that kind of introduction and that donor acquisition channel is something that is very personal, very timely, very relevant, and really elevates, for us, our nonprofit clients in very compelling ways.
And so as we look around, and you're talking about, you know, people's expectations of who they shop with ethical underpinning, or who they work for having an ethical underpinning, or, you know, whatever it is that they're engaging with, what is the bigger cause that it's associated with? And what does it say about these individuals? We think that these channels are just being set. And so we're setting some of them from GoFundMe to Classy, but we also really see a future where all of these channels are mechanisms to connect with causes. And often that means connecting with nonprofits. And so we're really excited about that.
You're right, we're launching really, really small tests. Now you won't see it everywhere. But we're certain campaigns that are tied to very specific use cases for us will introduce GoFundMe donors to our nonprofit clients. And, you know, we should talk in six months. And I'll tell you a lot more about how it's going right now. It's early days, but we're so excited about what it means for the sector.
Leah Davenport Fadling:
Yeah, I'm really excited to see how that pilot program plays out and some of the results that come from it. It's so funny to me because it reminds me of companies like Amazon or Netflix, where you finish something that you really enjoyed, whether it was a show or you purchase something, and you get those personalized emails or notifications within the app that say, “Here are some other things you might like, here are some other recommendations.” And I can't think of very many mainstream well-known philanthropy platforms that have that ability.
That goes exactly to the heart of my comment that I don't believe in this, like, static share of wallet for customers and for donors. One of the things we see, I’ll butcher the exact stat, but we look on Giving Tuesday, and all of these new donors, we know that nonprofits are like 10 times new donors on Giving Tuesday, versus other days. It's a ton of new donors, a larger percentage of those new donors on that day, come back and give again, throughout the day, they start getting excited about the momentum and excited about the impact and excited about feeling part of something. And they'll come back and give again, we see a large minority, it's still not a majority of recurring donors, but a large minority of recurring donors will give additional one-time gifts on top of their recurring donations. It's the sense that as people get pulled into a cause, well, then to kind of what feels like a movement, they will keep doubling down on that gift, they won't say, well, I already, you know, I already filled my bucket.
And that's what we believe with this. You're opening your wallet for somebody that you care about for a cause. And then you say, I could actually have more of an impact here, I care about this, now invested in it, and I want to see my investment pay off. And so some of what it means. And we're really excited about what it can do to help the whole sector, including us understanding more about donor psychology because I think we're still kind of at the early stages of really figuring out how to mobilize people in those long-term ways.
Leah Davenport Fadling:
Well, and it plays into this idea because a lot of those donors that we see on Giving Tuesday or giving to GoFundMe campaigns are those, like, smaller or micro donors as a Fundraising Effectiveness Project would classify them. And there was an interesting statistic from their, you know, they do these quarterly studies, and so that the most recent one that's been published is from Q1 of this year 2022. And they found that the…about, let's see, it's hard to exactly parse the summary. But essentially, they found that donors who are giving less than $100, declined by 9%, and donors that we're giving, you know, small donors giving between $100 to $500, so larger gifts at the smaller end of the scale, declined by 6.8%, that these donors comprise a large portion of the donors that give to organizations.
And so essentially, what we've been seeing across the nonprofit space, is that dollars are up, but donors are down. The number of donors is down, which was another thing that the Vox article kind of highlighted. And so what's exciting about this partnership between GoFundMe and Classy and kind of serving up these additional causes, is it seems like it's directly focused at that problem.
It's a good question. I don't know if it's going to be directly focused on that problem, because we actually see, for a long time when we would talk about digital fundraising, we said this is the younger generation donors is kind of a smaller, the smaller donors. The truth is that if you look at our campaigns, across Classy and GoFundMe, you'll see this wide, wide range of donations. We absolutely get the smaller end donors and micro donors. And that goes back to it's really efficient and relatively cheap to engage them. You know, it basically costs nothing. With direct mail, you have to make up the cost of the direct mail with an online page. It's there, as many people as you want can donate, and it's always going to be advantageous for the organization.
So, we'll take happily take the small donors, but we actually see major gifts being made online as well, like, you know, six-figure gifts regularly made to lots more organizations. And so we see the engagement across the board, but the question, I think, for me is, how do you make sure that no matter what you can give, you feel like your donation can have impact? And for me, if you are seeing a shift towards more individual giving, you know, individual-to-individual giving, different forms of philanthropy, ?s it because people don't see their gift as having a lot of meaning? You know, like a $10 gift, will that actually have an impact? And that's for I think, something like a GoFundMe, you know, you feel that immediate impact.
As nonprofit practitioners, we know that the dollars matter. It takes a lot to give to your cause. And if you're always relying on a smaller and smaller pool of big philanthropists, what does it mean for the sector? What does it mean for the ability to work internationally, at a national scale, at a very, very local scale, across all these issues? Like, we need the sector alive and vibrant and thriving. And that comes from broad bases of support.
And so for us, it's less, how do you kind of capture those donors? It's more, how do you make sure you cover the landscape, no matter where individuals — forget donors — when those individuals are — where they are engaging in their public lives via their banking, in their employers, in their consumer habits, in their individual giving? And how do you build really, really easy channels for discovery and giving to the sector? That is something that we are really excited about. That they have their causes, they have their ways they spend money. How do you connect those two things to the nonprofits that we serve?
Leah Davenport Fadling:
One final question, as we wrap up. I'm really excited about hearing again, how this pilot program goes, when you have some results from it. And then another conversation you and I spoke about is the upcoming Why America Gives report that's going to be released in a month, a few weeks, is that are there any insights from that report, as you're kind of pulling those numbers together, that you can tease out and we have that conversation?
I'll have to hold it because we're just getting the results, but we do this huge survey on sentiment around giving at end of year. And it's really just to prepare people for what to expect. But I think you're spot on with how do you think about small donors, big donors, where are they discovering where to give? And how do they think about giving? And a lot of what you have teased from the Vox article and what we're all talking about in our space around, you know, what constitutes giving in people's minds and where can you make connection points as a development of sort of marketing for a nonprofit? It's really the heart of what we are trying to dig into and understand.
And I think what we're finding is, yeah, things are changing, which means that nonprofits have to change with it because nonprofits are no less relevant, no less impactful, but the challenge is to build that trust and credibility connection in their potential donors' minds is definitely changing.
Leah Davenport Fadling:
One other thing that the Vox article highlighted that I found kind of a head-scratcher, and something that was really interesting, was this idea that the ways that we traditionally track charitable activity may be a little bit limited.
We referenced this earlier where sometimes charitable activity may look like making someone a meal, or just giving them a check directly to someone who needs something, or volunteering, or making a donation of clothing, or something like that. There may be a large amount of philanthropic activity that's kind of going unrecorded and untracked, because we don't have a broad enough lens for recognizing what that looks like, and recognizing how engaged someone might be with your cause or your organization. Because you just don't have a way to quantify it. So it's really interesting to me to see what, again, what some of those results are in the Why America Gives report, because I can see a future where we have to think about attribution differently.
I think that's right. I think one of the things we're finding is that, I was having a conversation a few weeks ago, I don't know if you know the folks at a Turnkey, but I was talking to Otis Fulton over there. And he said something that just stuck with me. And he said, “You know, oh, engagement builds trust.” And I said, “You mean trust builds engagement.” And he said, “Well, that too, but engagement builds trust.” And I think there's this self-reinforcing cycle where if you can find people, bring them into your community, get them to engage in whatever way that is to your point, volunteering, you know, just activism, reading your content, getting aware, posting something on social, that actually engenders trust, which then makes them a donor, which then gets them to do all these other things and that ecosystem of involvement, I think, is getting really interesting.
And I know the sector, you know, there's so many smart people and thoughtful people thinking about “how do we engage our constituencies to become our advocates to become our donors to become our board members,” you know, and it should never be you've got this kind of one hat within an organization, you know, that they've attributed to you too. And then it's like, they always have to market you to get the dollars and then we're going to talk to you about whatever, you know, very few organizations do it that literally anymore, but you still hear conversations where they talk about these very distinct constituencies, and I don't think we are seeing that at all anymore. And the fastest. I don't think we've ever seen it, but we talked about it in that way. The faster we can kind of rid ourselves of that framework, the faster we can really start building that really strong engagement and trust.
Leah Davenport Fadling:
Well Soraya, thank you so much for your time today. This has been a really thought-provoking and stimulating discussion, and I look forward to seeing what else is coming from Classy in the future.
Same. It's always much fun to talk to you. It was really fun.
End Message (Leah):
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To learn more about our guest speaker from this episode, connect with Soraya Alexander. If you’re interested in hearing more about the world of fundraising, check out the Go Beyond Fundraising podcast for more episodes.