Grassroots Revolution: Building Resilient Nonprofits with Strategies from Political Fundraising
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Grassroots donors – those contributing $200 or less – have emerged as a formidable force in American politics. These small donors gave $4 billion to candidates in the 2020 election cycle, an amount totaling 22% of all campaign contributions and a 15% increase above similar-sized contributions in the preceding 2016 election. Forecasts suggest that grassroots giving is poised to reach even greater heights in the upcoming 2024 cycle.
In 2006, ActBlue began the transformation of digital and grassroots Democratic political fundraising when it processed its first online donation. By 2020, ActBlue had powered over $5 billion in donations, five times what it did in 2016. WinRed, the Republican counterpart, founded in 2019, processed $2 billion in donations for the 2020 election cycle.
The explosion of grassroots political fundraising can be attributed to an interplay of factors, including political polarization and effective campaigning. However, at the heart of this surge lies a pivotal catalyst: technological advancements.
Nonprofits have failed, so far, to fully capitalize on these new technologies. Although some large, national nonprofits successfully raise meaningful support from grassroots contributors using digital tools, most nonprofits remain unable to cultivate a broad, online base of support. In fact, in 2021, only 12% of all nonprofit funds were raised online despite the fact that 63% of nonprofit donors prefer to give online. Nevertheless, new technologies are now offering nonprofits the opportunity to overcome the obstacles that have previously hindered them.
Why Grassroots Support is Vital
Establishing a broad grassroots support community is more than a short-term strategic imperative for resource-constrained nonprofits; it’s a safeguard against vulnerabilities that could jeopardize the long-term sustainability and effectiveness of their missions. By building a grassroots donor audience, nonprofits can achieve the following three benefits:
Financial Diversification
A grassroots fundraising base allows organizations to diversify their financial risk. While some nonprofits, including hospitals and universities, generate revenue through government contracts and commercial ventures, many still heavily rely on major philanthropic support, in the form of grants and large donations, to fuel their missions. These funding sources will always be integral to the sector, but nonprofits can be left with a substantial fiscal hole when a grant or support from a large donor ends.
Grassroots fundraising does not have the same concentrated risk because there is no single point of failure. Implementing a grassroots fundraising program, in addition to the traditional fundraising methods, spreads risk across hundreds or thousands of donors, thereby helping organizations offset potential shifts in philanthropic priorities and provide a better sense of financial security.
Community Engagement
Grassroots fundraising goes beyond financial contributions; it involves cultivating a broader and deeper audience of supporters who share an organization's values. When donors come from the same community or demographic as the organization's beneficiaries, it fosters a deeper sense of engagement. This enhanced understanding of a nonprofit’s mission by supporters also increases the likelihood of receiving financial support, encouraging volunteer involvement, and fostering participation in advocacy campaigns.
Next Generation Donors
The average age of a donor in 2021 was 65, up from 62 just 5 years prior. As existing donors mature, it is critical for nonprofits to find tomorrow’s donors before it’s too late. By establishing a grassroots fundraising program, nonprofits can build a wide funnel of Gen Z and Millennial donors who strongly prefer online giving, make small donations, and have growing giving potential. Nonprofits can then cultivate loyalty in these grassroots relationships in order to lay the foundation for longer-term, deeper relationships once that donor has entered their prime earning and giving years.
What is Needed to Build a Grassroots Program?
Political fundraising technologies offer a blueprint of effective solutions for nonprofits. All successful grassroot fundraising programs – political or nonprofit – have three main components: 1) they use data to target potential donors, 2) they effectively manage donor communications to cultivate relationships, and 3) they maximize conversions at the point of donation.
Using Data to Identify Promising Donors
Identifying the right pool of potential donors poses a threshold challenge for any nonprofit seeking new supporters. Prior to the development of digital technologies, nonprofits discovered new donors through word-of-mouth and untargeted communication methods such as public events, press releases, and general social media posts. Instead of targeting a specific donor group with a known affinity for its mission, nonprofits attempting to reach a broad pool of potential supporters would broadcast information, hoping a new potential donor would see it, feel a connection, and then find the organization’s address or donation page to make a gift. This approach emphasizes the message over the audience and places a significant burden on the donor.
Conversely, effective grassroots political fundraising involves actively identifying the likely donor audience. Once a campaign knows the target audience, it can craft a more effective message. By targeting a robust pool of potential donors, campaigns have successfully built large communities of grassroots supporters.
The primary challenge in transferring this success to the nonprofit sector is the cost. As practiced by political campaigns, grassroots fundraising requires both significant upfront expenditures for data and investment in a staff of skilled digital fundraisers. Lists of targeted prospective donors can cost up to $8 per email. In addition, organizations must know how to onboard and initiate contact with those potential donors at scale. Only then does the road to conversion start.
To overcome some of these obstacles, innovative strategies have emerged to share the cost of donor acquisition across institutions. One example is data co-op arrangements, like the Alliant DigitalHub, where nonprofits pool their donor data to create a shared database, thereby reducing acquisition costs.
Another example is shared success automated donor acquisition arrangements, where nonprofits partner with technology companies that maintain extensive donor databases in exchange for low upfront costs, but higher donation processing fees. These technology companies, like DonorSpring, provide access to targeted pools of donors from within their proprietary databases. Working through these platforms, nonprofits access the tools to communicate with and process donations from a new set of donors. These technology companies charge minimal upfront fees, instead charging a fee when an organization receives a donation from the company’s database.
Cultivating Donor Candidates and Managing Donor Data
Identifying a target audience of likely donors is only a first step. Once that group has been pinpointed, the nonprofit must regularly engage with its audience to convert interest into donations. The systematic cultivation of a broad grassroots donor base requires expertise and a meaningful time commitment, resources that many nonprofits lack. For a nonprofit that historically has only stewarded dozens, or even hundreds of major donors, engaging with tens of thousands of small donors requires a completely different skill set.
Grassroots political fundraisers manage this burden by first organizing donor information within customer relationship management (CRM) software. CRMs make it easy to both house and sort data on individual donors into distinct, targeted segments. Once organized, the fundraisers can send mass communication campaigns to these segments either through their CRM or by using a marketing platform.
While nonprofits have a long history of using CRMs, with major providers like Blackbaud servicing nonprofits for over 40 years, they generally have not adopted the mass communication strategies used by political fundraisers. These strategies allow an organization to scale outreach to an even larger audience without increasing the burden on staff. Some CRMs include mass communication tools, such as Blackbaud’s Luminate, while others integrate with for-profit marketing tools like MailChimp. These tools are limited, however, in their ability to help fundraisers understand how to run a grassroots communication campaign, meaning organizations need to invest in staff training or hire costly outside consultants to manage their communications. Newer tech options, including DonorSpring, integrate grassroots communication training and recommendations into their offering simplifying the transition to mass communication.
Maximizing Donor Contributions
In the past, a grassroots donor would decide on their donation amount and method in isolation, often encountering friction from cumbersome donation processes that deterred potential donors. Today, new technology solutions tailored to the nonprofit environment have streamlined the giving experience, making it as effortless as an Amazon purchase.
These solutions, offered by companies like FundraiseUp, prompt donors to consider both recurring donations and larger amounts that are personalized based on a donor’s giving history, payment method, and location. They simplify the process by offering various payment methods and eliminating obstacles that may have hindered prospective donors. With many potential grassroots donors landing on donation pages, nonprofits need a solution that automatically tailors the giving experience to that donor to increase conversions and maximize donation amounts.
Conclusion
A nonprofit that ignores the grassroots donor opportunity is like a presidential political campaign stuck in the year 2000. Over time, it will waste brand value by relying on a concentrated donor base and inefficient outreach efforts. Today, all campaigns, from presidential down to local school boards, utilize digital technology to increase visibility and garner grassroots support.
In an era where technology has supercharged political campaign funding, nonprofits should avail themselves of the same opportunities. The new wave of nonprofit tech companies is paving the way for the digital transformation of nonprofit fundraising. These technologies are incorporating the best learnings of existing digital tools and adapting them for nonprofit needs. It is now up to nonprofit leaders to harness this energy and introduce their organizations to a new generation of donors.
About the Authors:
Henry Carroll is the Co-Founder and CEO of DonorSpring. He was previously a fundraising consultant for both political campaigns and nonprofit organizations.
Taylor Greenthal (HBS MBA ‘23) is the Chief Marketing Officer of DonorSpring. She was previously in marketing and operations at various startups, spanning digital media, entertainment, and consumer products. Her work weaves together brand storytelling, data, and new media platforms.