Why Funders Care About Capacity-Building
The world runs on data. And the reason companies like Amazon, Netflix, Google and Facebook are so massive is because they have infinite amounts of data (courtesy of all of us).
In turn, powerful technology that finds relationships, trends and correlations that no human could ever do parses that data. As that happens, the information then triggers the customization, based on predictive analytics, that allows us to see what we want on Netflix, for instance.
What does all of it have to do with donor interest in capacity-building? Well, the answer is a lot. Remember, it's easy to count what you raised but hard to count what got left on the table, and perhaps that is the true measure of success.
The Changed Equation
People distrust governments, religious institutions, and, yes, nonprofits. Specific to charitable organizations, donors are tired of endless appeals with what they see as not much evolving — until now.
Data, predictive analytics and technology have changed the equation. Currently, billionaires race to create opportunities for space tourism, and, for the first time in human history, vaccines were developed in record time (i.e., months instead of years) to address a global pandemic. In other words, donors see in their lives what's possible. From their personal experiences at home and work, they know that almost anything one could dream of is possible because of technology.
Donors Want More
As donors see how data and technology are changing their lives, it's only reasonable for them to expect more from nonprofits. For instance, donors realize they could support those in need through tools such as Venmo, Cash App, Zelle and GoFundMe. They don’t need nonprofits to help a good cause. They also see the value in nonprofits, such as charity: water, leaning into innovative technology to scale globally.
Donors also understand that data, predictive analytics and technology drive massive conversions with nonprofit tech companies. For example, nonprofits, like SOS Children's Village USA, create custom donor journeys individually tailored because of data analytics and predictive modeling. As a result, donors respond because they get cultivated and solicited — as they want, based on the data — and because they see some nonprofits as the tip of the spear in finally upending the space.
Why Donors Care
Why do donors care about capacity-building? The answer is simple. They understand that data and technology are game-changers. So, if donors care about a mission, such as the eradication of cancer, ending poverty or high-quality education, they realize the source of fundamental change occurs with the partnership between technology and humans.
In other words, we're quickly diving into a world where humans and technology co-exist in every aspect of life. Nonprofits now have the opportunity to gain insights and understand what data analytics offer to make much more informed decisions — not based on human experience that could be biased — but on data delivered in concrete numbers, rankings and scores. There's no debate with data.
In the more than 4,000 major gift solicitations I made through my years in the nonprofit sector, nothing has disrupted the space more during the past five years than the rise of data and information. Donors live in the same world as executive directors and fundraisers, realizing that information and technology are powerful. Moreover, as tech companies offer low-price-point packages, even small nonprofits can benefit from the revolutionary power of data and analytics.
What Nonprofits Should Do
Suppose I served as a nonprofit executive director and wanted to compete to become the singularly best and leading local organization doing the nonprofit's mission. In the information age, there's no way around data and technology. So, even if I don't understand all of it, I know it's essential to embrace it fully in every aspect of the nonprofit.
Therefore, I would reach out to nonprofit tech companies, and look at their functionality and costs. Once I had all of the information gathered, I would ask a major donor for a contribution so that our nonprofit could grow to scale and be much more informed and strategic due to data and analytics. I would also inform donors that their gift for capacity-building is going to pay dividends.
- It will allow our nonprofit to become a leader because of data and analytics.
- The data output will allow our organization to make better-informed decisions around programs and fundraising with better information.
- Concerning fundraising, by investing in the excellent platforms in the sector, our nonprofit will ultimately increase revenue and be able to demonstrate it.
- The increased fundraising revenue will allow our nonprofit to do more and help accomplish the mission better.
- More fundraising revenue allows us to scale and become sustainable (e.g., going beyond the most loyal donors who ultimately tire)
We're not going back to a world without massive data parsed by powerful technology. Donors want to see an impact, and today's donors — including low-dollar donors — are sophisticated and understand the world we inhabit. Therefore, the more nonprofit organizations lean into tech, the more scalable and sustainable they'll become. So, buckle up and dive right into data, predictive analytics and technology — it'll bring more donors and dollars your way.
Paul D’Alessandro, J.D., CFRE, is the author of "The Future of Fundraising: How Philanthropy’s Future is Here with Donors Dictating the Terms." He’s the founder and chairman of High Impact Nonprofit Advisors (HNA), and also D'Alessandro Inc. (DAI), which is a fundraising and strategic management consulting company with more than 30 years of experience in the philanthropic sector.
He has worked with hundreds of nonprofits to raise over a billion dollars for his clients in the U.S. and abroad. In addition, as a nonprofit and business expert — who is also a practicing attorney — Paul has worked with high-level global philanthropists, vetting and negotiating their strategic gifts to charitable causes. Paul understands that today's environment requires innovation and fresh thinking, which is why he launched HNA to train and coach leaders who want to make a difference in the world.