Tag Archives: Donor

Given Diminishing Foreign Funding Are South African NGOs Effectively Using Social Media to Leverage the Potential Resource Pool Offered by Individual Donors? – A Cursory Literature Review

Introduction

The promise of the new democracy and the international response to HIV/AIDS in the mid-1990’s led to a sea change in the way South African NGOs could source and access funding. Whilst the available resources were larger the fundraising became increasingly project focuses (as opposed to programmatic) and donor driven (Krige, 2012). Since 1994 KZN in particular has received the second largest commitments from donor funding (Ewing and Guliwe, 2008).

This has led to many NGOs becoming captive to certain large foreign funders (Ewing and Guliwe, pp. 271; Wescott, 2009, pp.35). Like any industry captive suppliers are extremely vulnerable to any shift in their main client’s strategy.

“The World around NPOs is a fast changing one… and the conditions globally at the end of the first decade of the 21st century are far from favourable for agencies working in the development sector” (Trilogue, 2011, pp.89 & 91).

What is required is a new discourse in fundraising strategy and the identification of new income streams which allow NGOs to deliver on their visions and missions in an innovative, programmatic and unrestricted manner.  This environmental shift is taking place concurrently to the appearance of new technological and media opportunities for NGOs to strategically engage their communities through “dialogic and community building practices” (Lovejoy and Saxton, 2012) that were not available with traditional websites and communication strategies. This literature review will examine the changing funding landscape, appraise the state (and/or potential) of individual giving in South Africa, and finally examine the issues that arise when and where social media meets this need.

Shifting Sources of Funding

The International Stage

The South African NGO sector now finds itself in a straits brought about the confluence of the international financial climate and the country’s emergence as a leading democratic and economic force on the continent (Ewing and Guliwe, pp.275). Donor’s are shifting focus to other countries as South Africa “graduates from being a donor-funded recipient” (Ewing and Guliwe, 275, Trialogue, pp.88), and even those that remain in South Africa were not immune to the global economic recession (Ewing and Guliwe, pp.275).

While the argument for the retraction of donor-funding to South Africa asserts that South Africa is able to mitigate this withdrawal through macro-economic repositioning this is unlikely to happen given the ideological, political and socio-economic landscape (Ewing and Guliwe, pp.276). It is an imperative that local resources be mobilised (Ewing and Guliwe, pp.271).

Sources of South African NPO Funding

Local Corporate and Trusts,  and Foreign Donors lead the funding source log in 2003 and 2011 (first and second place, respectively), however, both Corporate and Foreign Donor sources show a significant drop between the two periods (there is no 2003 data for Trusts) (Trialogue, pp.33). Government comes in as the fourth leading source of funding across the two periods, also showing a marked drop (Trialogue, pp.33). Coming in at the lowest contributions are Self-Generated and Private Individual funding sources. Interestingly enough these two are the only two which show an improvement over the period (Trialogue, pp.33). Over the 2010 2011 period 16% of NGOs reported that self-generated income contributed the most to increased income. For the 10% that experienced decreased income for the period this was due to diminished trust, corporate and foreign donors.

Salaries are the 2nd biggest expense for NGOs representing an average of 33% of the budget; this is often an expense least likely to be funded by corporate. Further, 30% of the corporate participating in this study do not fund NPO operating costs as a matter of policy (Trialogue, pp.40).

The State of Individual Giving in South Africa

In national research conducted across 3000 randomly sampled respondents controlled against national demographic norms Everatt and Solanki (2003, pp.51) discovered a sample mean for money given to a charity/cause/organisation of R27 in the month preceding the study. This was accompanied by a sample mean for money given directly to the poor of R6.60, and a sample mean for time given to a charity/cause/organisation of 1.9hrs. While as fragmented a group as this nationally drawn random sample represents this reveals an astonishing total investment of R100800 and 5700 man hours in the month preceeding the study. While this study is not exhaustive it gives a sense of the potential individual donor resource that could be harnessed in a more strategic way by NGOs.

Pros and Cons of Private Giving for the Development Sector

The debates around this point can be distilled into a recognition of a need for coordination of private funding to the non-profit sector that protects it from fragmentation of effort and resources, but that also doesn’t result in paralysing government regulations (Ewing and Guliwe, pp.272, Wescott, pp.36).

To unpack this the benefits of pursuing individual donors can be seen in that as opposed to corporate of foreign donors, individuals are less concerned with “earmarking” their specific donations (Trilogue, pp.89). So while “designation” as mentioned above may be a draw card it is not as rigorously audited per specific individual amount as it would be in the case of a corporate or foreign donor. This means that funds generated here can be used to cover core operating costs, or as unrestricted funding which places the organisation in a position to “experiment”. In the face of decades worth of “traditional” methods still not having succeeded in eradicating social ills and injustice the need for innovation and risk-taking is significant (Wescott, pp.21). Being able to leverage unrestricted funds through a successful Individual Giving strategy will not only contribute towards and NGO’s sustainability and autonomy of mission and vision, but will also give it the much needed freedom to strategise outside of the box, and to potentially make mistakes towards developing increased efficiencies whilst not risking its financial sustainability through earning the ire of a disgruntled project-specific foreign donor.

Determinants of Personal Donations

In determining the factors and characteristics of an NGO that influence individual giving Nunnenkamp and Ohler (2011) identified the following characteristics as having positive corollaries with individuals’ decisions to donate: a large fundraising expenditure,; being in receipt of significant funding from donor foundations; and being able to generate significant self-generated funds; and when donations could be designated towards a specific activity. The latter point might explain the surprising finding that an NGO’s increased level of specialisation, either in sector or geographical focus did not have a positive correlation to the amount of donations received. The authors make the assumption that the belief that the individual can designate funds doesn’t require them to fund an organisation that deals solely or explicitly with the specific issue of greatest import to the individual donor. Whilst the following correlations did not meet statistical significance they are still interesting: the availability of an online donation option was negatively associated to the amount of donations received, whilst the option of being able to donate periodically was positively associated with donations received. Another interesting mention in this study revolves around competing NGOs (whether that competition is explicit in a corporate sense, or merely referring to the efforts to secure resources from a common and finite basket is immaterial), that is, that diversion of funds away from an organisation due to another NGO’s fundraising efforts are typically cancelled out by the “awaking” of awareness this activity performs in society. This research is severely limited in that it was conducted with US subjects and organisations. While there is no evidence to suggest a similarity or difference between this and the South African context it provides an interesting point of departure for this thesis.

 

What Strategies are Used to Leverage Individual Giving

The Internet

In the last 15 years the internet as become a new channel through which NGOs have sought to communicate their messaged and leverage funds (Treiblmaier and Pollach, 2006, pp.808). Despite this NGOs typically have limited skill in maintain online content, or justifying expenditures in this regard and despite the potential offered by this channel its current efficacy is questioned as many standing donors of an organisation may never actually visit its website (Treiblmaier and Pollach, pp.809).

What does become clear (Treiblmaier and Pollach, Shier and Handy (2012), Hou, Du and Tian (2009)) is that simply having a web presence is not enough and that consideration has to be given to concepts that belong in the realm of classical marketing and cognisance must be given to brand equity and individual self-concept.

Building Trust in a Virtual Space

Research into the efficacy of “Donation” buttons on NGO websites revealed that trust plays an important role in determining action once the base levels of marketing communication have played their part (Gibbons, 2010; Lassila, 2010, pp.30). What this study discovered was the strongest levels of trust were induced when the donate-button design incorporated photographic evidence of both the need that was targeted and the response delivered by the organisation, and that this medium was well suited to conveying relevant information and promoting certainty amongst potential givers (Gibbons, 2010).

Social Media – Leveraging an Ubiquitous Presence

The most well known social media platforms are Twitter and Facebook, and like the myriad applications which have become household names in recent years these virtual communities are built to be integrated across the user’s life and digital experience (Lassila, pp.18). The fine line here is to engage in these community members as a community member and not be perceived as a disconnected externally intruding marketer (Lassila, pp.18). If this is successfully navigated then salience, the base level of many classical marketing frameworks including Keller’s Customer Based Brand Equity Pyramid model (2000), can be achieved. The weakness for most NGOs lies in the fact , mentioned above by Treiblmaier and Pollach; that if NGOs don’t have the ability to maintain websites, which are far more static than social media applications, they will struggle to remain relevant on these platforms unless they make a concerted and strategic effort. This need to be more engaging may negate the benefits of social media for NGOs that Lovejoy and Saxton (2012) identify, namely: they are more intuitive and purpose designed for interaction than traditional webhosting. Part of this effort, as mentioned above, is to understand the individual’s self-image concept, and to appreciate that social media platforms are used by individuals to “enhance their self-presentation” (Lassila, pp.28), and that through allowing the individual’s donation behaviour to become a part of their repertoire of self-presentation enhancers NGOs can further leverage and induce individual giving.

From Traditional to Networked NGOs – the Challenges.

Immersing itself into the realms of social media can be difficult for traditional organisations which emphasise controlling communication in order to protect the organisation from harm (Kantner and Fine, 2010, pp.49). The fears that paralyse a traditional organisation from leaping into this interactive social media  realm include: social media norms appear unprofessional; the transparency it nurtures can expose organisational weaknesses/vulnerability, it could provide a platform for public criticism, it could damage the brand, or its use presents the risk of a staff member inadvertently writing something damaging about the organisation or stakeholders (Kantner and Fine, pp.50).

Conclusion

 

The research drawn on above clearly depicts the changing funding climate that South African NGOs are experiencing, as well as where and how NGOs changing sustainability needs are converging with social media strategies on a general and global level. What is clear is that less resources are going to be available for South African NGOs from foreign donors, and that a potential strategy to mitigate this is the deployment of social media strategies. Conspicuous by its absence in this literature review is a detailed examination of to what extent, and with what level of success, South African NGOs are using social media to leverage individual giving; which, as shown above, is not and has not been a traditional primary fundraising focus.

References

Everatt, D. And Solanki, G. (2008) A nation of givers? Results from a national survey of social giving. In Habib, A. and Maharaj, B. (Eds.) Giving and Solidarity: Resource Flows for Poverty Alleviation and Development in South Africa. Cape Town, HSRC Press.

Ewing, D. And Guliwe, G. (2008) Foreign Donor Funding Since 1994. In Habib, A. and Maharaj, B. (Eds.) Giving and Solidarity: Resource Flows for Poverty Alleviation and Development in South Africa. Cape Town, HSRC Press.

Gibbons, S. (2010) The Effects of Non-Profit Agency Website Donation Button Design on Aid Agency Trust and Donation Compliance. Department of Applied Psychology, University of Canterbury. (Masters Thesis)

Kantner, B. and Fine, A. (2010) Creating a Social Culture. In: Kantner, B. and Fine, A. The Networked Nonprofit: Connecting with Social Media to Drive Change. San Francisco, Jossey-Bass. pp. 41-58.

Keller, K., (2000) The Brand Report Card. Harvard Business Review, February, p.2000. Cited in: Kuhn, K., and Alpert, F. (?) Applying Keller’s Brand Equity Model in a B2B Context: Limitations and an Empirical Test.Griffith University. Publication details unknown. [available online] http://www98.griffith.edu.au/dspace/bitstream/10072/2338/1/26187_1.pdf

Krige, K. (2011) Individual Giving: The Holy Grail of Fundraising.

Available at: http://www.ngopulse.org/article/individual-giving-holy-grail-fundraising

Hou, J., Du, L. and Tian, Z. (2009) The effects of nonprofit brand equity on individual giving intention: mediating by the self-concept of individual donor. International Journal of Nonprofit Volunteer Sector Marketing, (14), pp.215–229 (Abstract Available Only).

Lassila, H. (2010) Humanitarian Non-Profit Organizations Marketing Effects on Donor Behavior in Social Media. Department of Marketing and Management, Alto University. (Masters Thesis)

Lovejoy, K. and Saxton, G. (2012) Information, Community, and Action: How

Nonprofit Organizations Use Social Media. Journal of Computer-Mediated Communication, (17), pp.337-353.

Nunnekamp, P. And Ohler, H. (2011) Donations to US based NGOs in International Development Cooperation: How (Un-) Informed Are Private Donors? Discussion Paper Number 117 – February 2011. Center for European Governance and Economic Development Research.

Shier, M. L. and Handy, F. (2012) Understanding online donor behavior: the role of donor characteristics, perceptions of the internet, website and program, and influence from social networks. International Journal of Nonprofit Volunteer Sector Marketing, (17), pp.219–230. (Abstract Available Only).

Treiblmaier, H. And Pollach, I. (2006) A Framework for Measuring People’s Intentions to Donate Online. Proceedings of the 2006 Tenth Pacific Asia Conference on Information Systems.

Trialogue, 2011. The CSI Handbook (14th ed.) Cape Town, Trialogue

Wescott, H. (2009) Individual Philanthropy in Post-Apartheid South Africa – A Study of Attitudes and Approaches. Department of Sustainable Development, Planning and Management, University of Stellenbosch. (Masters Thesis)

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