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The psychology behind the decline in giving and what you can do about it

It’s no secret that the number of people in Canada who give has been declining since 1990. This means charities and nonprofits have had to rely on a decreasing pool of donors for their fundraising and operational needs. But, the bigger question is why are fewer people donating than ever before and what can we do about it?

As a former psychology major, I wondered if any social psychology theories could help explain this phenomenon. During my research, I realized that my intuition was right. So, here are three social psychology theories that may point to why Canadians are donating less:

Social loafing

Have you ever been assigned a group project and noticed that some of your group members put in less effort than other group members? This is known as social loafing: the tendency for people to put in less effort because they are aware that there are more people to contribute to the same project or goal.

Now, imagine you send out a generic email asking for a donation. One of your potential donors receives the email and realizes that it was sent to numerous people. Based on the email content, there doesn’t seem to be much urgency to donate. So, your donor decides not to donate because “someone else will” eventually. This is social loafing in action.

What you can do about it

When you request a donation, it’s important to clearly articulate the donation’s impact (that every penny counts) and your financial need. Let your donors know that donations are low. Your donors may be more willing to help if they know how and why their contribution will make a difference.

Cognitive dissonance

Cognitive dissonance is the feeling of discomfort when you realize there’s an inconsistency between your attitudes and/or behaviours. So, you rationalize the attitude or behaviour to make yourself feel better.

For example, say someone donated once because they believe in your cause, but they decide against donating again and become uncomfortable. So, they justify their decision to make themselves feel better through objections like, “I needed the money more” or “my small donation won’t make much of difference.”

What you can do about it

Again, communicating the impact and value of a donation may motivate your donor to take action. But, consider taking it one step further by putting yourself in your donor’s shoes; tell your donor your organization understands not everyone can contribute monetarily. And instead, offer alternatives to cash donations such as volunteering or in-kind donations. Your donor may be more likely to give if they feel understood.

Social exchange theory

Social exchange theory is how we evaluate our relationships based on its costs and benefits, what we think we deserve, and whether there are better alternatives.

For example, if a friend doesn’t return your texts or calls, or cancels plans more frequently, we may wonder whether the friendship is worth our time. And if the costs outweigh what we put into the friendship, we will be more likely to end it. And it’s no different for your donors who will evaluate whether their social exchange (i.e., their donations, volunteer time, etc.) is reciprocated by your organization.

What you can do about it

Do you have a donor retention strategy? If not, now is the time to build one. And if you already have one, think of new or more ways you can thank your donors. For example, share your successful volunteer stories or your mission success stories that tell your donors how they helped to make a difference.

And when you ask for another donation, don’t start with big requests like legacy giving or large sums. Instead, build trust through the foot-in-the-door technique by asking for something small. As a result, your donor will be more likely to consider the big ask later on.

Are you looking for more funding ideas or resources? We can help!

Adrienne Vansevenandt

Volunteer Alberta

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Don’t wait for a crisis to diversify your revenue

For many nonprofits and charities, revenue diversification happens when a crisis strikes such as the loss of a primary funder or investor. But, if nonprofit organizations can be strategic and proactive in their revenue diversification, they can mitigate this risk.

At Volunteer Alberta, our leadership team has been working hard to diversify our funding. So, I sat down with our Executive Director, Karen Link, to discuss revenue diversification and how other nonprofits can get started.

What does revenue diversification mean to you?

Karen: It means financial sustainability – it’s looking at multiple revenue streams to mitigate risk and to reduce dependency on just a few sources of funding.

Why is it important for nonprofits?

Karen: Revenue diversification goes beyond risk mitigation and financial resilience. It’s demonstrating your relevance to more stakeholders. When you diversify your revenue, you have to think about who cares about what you care about. It’s not just the government. It ranges from ministries to corporations, to foundations, to individuals.

There are different sources of revenue such as:

  • Governments (federal, provincial, municipal)
  • Foundations (family, community or corporate)
  • Earned revenue (fee for programs and services)
  • Donations and fundraising (lotteries, casinos, donations)

And there are other emerging trends in revenue diversification including:

  • Saving costs by partnering on service provisions (shared staff, shared infrastructure, and shared programs and services).
  • New business models that are similar to social enterprises. For example, partnering with a private business that wants to do something that affects your clients. So, that’s something you could be a part of but not necessarily initiate.

How do organizations even begin the process of revenue diversification?

Karen: There are nine steps to revenue diversification. Step one is you need to understand the impetus for change. You need to understand the need to establish funding that’s reliable, flexible and varied from different sources. Your board needs to be on board as they have a role to play; they have to understand the vision and work their networks.

Once the need is clear, your organization undertakes other steps including a review of your funding sources within the last 10 years, identifying potential investors, evaluating the internal capacity you’ll need, consulting with others, and managing risk.

Finally, you develop your implementation strategy and put it into action. After that, it’s all about assessment and continuous improvement. Improve, scale slowly, and keep building within your means; you need the capacity and the time to do it.

What are the common barriers nonprofits experience when they seek to diversify their revenue?

Karen: Internal capacity is often the biggest barrier. You’ll have to be able to identify prospective new funding streams or investors and establish and maintain those relationships. You need dedicated people for any type of business development. You need to invest in the right people to generate more revenue.

Most times, people try to focus on business development with existing resources, but they don’t realize it takes additional resources to develop those business models and establish/maintain those relationships. You have to spend money to make money.

What tips/recommendations would you give to nonprofits struggling to find other sources of revenue?

Karen: The number one thing is to consult – talk to others about what they’ve done, talk to other organizations, engage your board, engage your staff, and think outside the box. Think about who cares about what you care about. Look at how people are making money and saving money.

There’s no one size fits all. But, when you talk to other people about how they’re diversifying their revenue and how they’re generating revenue, you can get ideas for your fund development plan.

Another important thing is to have a clear aspirational goal – what is it that you want to see? And then make and test your assumptions. This is your theory of change.

For example, your assumption could be I believe people would pay more for our services. And your theory of change could be if we build a platform where the reporting and resources would be so valuable, people will be inclined to pay. Be bold and put those assumptions out there and test them.

Are you ready to diversify your revenue? Get started with the 9 steps to revenue diversification!

Adrienne Vansevenandt

Volunteer Alberta

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Get to know social innovation and how it can support you in your work

What is social innovation?

Social innovation – we hear this buzzword used a lot by the sector, but what does it really mean?

Social innovation pulls from a variety of sectors and disciplines – social services, anthropology, human ecology, project management, systems thinking, etc. – to address complex, social issues at the root cause.

At Volunteer Alberta, we define social innovation as “refining current ways or exploring new ways of solving problems.” It is the community-based ownership of a solution and it supports Alberta’s nonprofits in solving complex issues.

Why does social innovation matter to the sector?

The nonprofit sector is an ecosystem – we are mission-driven organizations working collaboratively across sectors as part of a larger social system. Nonprofits impact communities through the work we do and the services we provide. Healthy communities start with us!

Nonprofits address complex, social challenges from volunteer recruitment and retention to poverty and food scarcity. Due to turnover and funding challenges, we are often in a state of change. Our programs and services, even our organizations, move from growth to destruction. This chaotic cycle presents unique challenges and opportunities; it’s where social innovation thrives.

Applying social innovation tools in your own work

As nonprofits working in complex systems, we find it easier to talk about and map our programs and services in a fluid state. More often than not, this leads us to explore patterns of conservation and growth. Organizations leave little room for foresight[1] and creative destruction[2].

For an ecosystem to be healthy and resilient, foresight is necessary to navigate your organization through challenging times.

To better understand these phases and build resiliency, we can apply a sense-making tool known as the Adaptive Cycle. The Adaptive Cycle has four distinct phases:

  • Growth (development): An idea or concept is born and organizations are accessing financial and human resources to help the idea grow to maturity.
  • Conservation (maturity): Where processes, programs and services reach full maturity and are at their peak. In this phase, our organizations are often running like an established, well-oiled machine.
  • Collapse/release (creative destruction): Following a disruption to the status quo, organizations or systems let go of resources, energy, and skills from our processes, programs to allow for exploration.
  • Reorganization (exploration & renewal): new opportunities are sought, explored, and implemented. This is a time of new growth and optimism.

If you’re just starting out with social innovation or systems change, this concept can be difficult to understand. To help with sense-making, imagine you decide to become a surfer. Before anyone can surf, they need to understand the ocean (foresight or reorganization) – the ebb and flow of the waves, where they break, and the direction of the wind – otherwise, the water can pull you under. Once you understand the flow of the waves, you paddle out to catch the surf. Along the way, you make course corrections and adjust your paddling to suit the ocean (growth). Then you wait for the perfect wave – the one that will break at the right moment and allow you to ride it into shore (conservation). Once you catch the wave, you need to give yourself over to the rhythm of the ocean and keep yourself and your board balanced to stay ahead of the cresting wave (creative destruction or collapse/release).

Surfing requires several skills: the strength to paddle, positioning, timing, and balance to catch the wave and ride it into shore. And, it requires practice. Lots of practice! For new surfers, it is difficult to catch a wave and you may stay in shallow water, honing your skills by practicing on smaller waves. Once you become more familiar with the ocean and your skills, you move further from the shore.

The Adaptive Cycle is a great reflection of the current state but also leaves the necessary space for innovation to thrive. Using the cycle to make sense of a problem, experience, or program, can support new thinking or help us get “unstuck” when challenges arise. It can also support us in creating strategies or approaches to addressing key phases of transition.

The Adaptive Cycle allows us to see programs, problems, or ideas from a bird’s eye view. Where did we start? How far have we come? Where do we need to go?

Like surfing, if you start to feel discouraged with innovation and systems change, it’s important to remember that these tools are meant to encourage idea generation. They won’t solve the problem nor will they always get it right, but they will support you on the journey. Let the creativity flow!

Learn more about social innovation and access Volunteer Alberta’s Social Innovation Toolkit for easy to use templates and examples to apply in your own work.

[1] Foresight: the ability to anticipate or the action of anticipating what will happen or be needed in the future.

[2] Creative Destruction: the undoing of long-standing processes and/or programs to make way for innovation or to use resources in new ways.

Daniela Seiferling

Volunteer Alberta

 

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What does the Alberta Government think about the nonprofit sector? Tips for government relations

Have you ever wondered what the Provincial Government’s take is on the nonprofit sector? Well, you’re in luck! Last fall, the Government of Alberta (GoA) released a discussion paper called Profiling the Nonprofit/Voluntary Sector (NPVS) in Alberta.

In this paper the Government of Alberta states, “The primary contribution of the NPVS is improving the quality of life in every community in the province. The sector drives community cohesion; it builds a sense of belonging and brings people together.” At Volunteer Alberta, we couldn’t agree more.

Reading the paper, we quickly realized that it is a great tool to use when talking to stakeholders about the sector, or as a starting point for nonprofit-Provincial Government relations. So, we decided to break down some key points in this blog in case you don’t have time to read the entire paper.

Definition and structure of the sector

The first section of the paper acknowledges that the NPVS is diverse and that, “[we] are the backbone supporting vibrant, welcoming and engaging communities and Albertans… [Our sector] touches every Albertan’s life in some way.”

There are more than 26,200 nonprofit organizations that make up 15 sub-sectors of nonprofit organizations. Notably, this paper recognizes a range of nonprofit structures; from informal to structured legal forms – and many in between.

The GoA then goes on to define nonprofits using the Alberta Nonprofit/Voluntary Sector Initiative’s (ANVSI) definition. They define nonprofits as:

“Self-governing organizations that exist to service the public benefit, generate social capital but not distribute profit to members, depend to a meaningful degree on volunteers, involve participation on a voluntary basis, and are independent or institutionally distinct from the formal structures of Government and the profit sector.”

Financial and social impact

Their paper also details the nonprofit’s contributions to Alberta’s economy and communities. This includes several different calculations on the economic and social value our sector holds in delivering complex services to communities, for example:

  • “$8.3 billion in volunteer labour is donated to the sector every year.”
  • “The number of nonprofit organizations in Alberta grew by 35 per cent between 2003 and 2018, from 19,356 to 26,212.”
  • “1.4 million Albertans volunteer across sub-sectors each year.”

Regarding impact, the report endorses the NPVS as “stewards of the collective wellbeing and common good” within Alberta. It recognizes that the NPVS faces “complex issues with efficiency, empathy and innovation” with an ability to take risks and find success which would not be possible in other sectors.

Nonprofit’s relationship with Government

Overall, the GoA believes that the nonprofit sector and Government have ‘interconnected mandates to provide services to Albertans.’ And when it comes to our participation in policy work, the nonprofit sector is seen as a “bridge to everyday Albertans.”

We, therefore, are responsible for holding each other accountable. For example, the Government holds us accountable via “regulatory and monitoring powers that ensure appropriate use of funds”, while we hold them accountable through “government relations efforts, writing position papers, and occasionally through judicial review.”

Building a positive relationship with Government

The paper ends with “the Building Blocks of a Positive Relationship” borrowed from Carter and Speevak’s Deliberate Relationships Between Government and the Nonprofit Sector. These are building blocks that support a positive Government-nonprofit relationship including seven points about communication, advocacy, and policy.

Finally, the appendices contain a glossary of terms, and “The Theory and History of Government/Nonprofit Sector Relationships in Canada.” This is beneficial as a brief overview for beginners. For more information, you can check out this blog from The Philanthropist.

 

Are you interested in reading the discussion paper? Profiling the Nonprofit/Voluntary Sector in Alberta is a great foundational document we recommend anyone involved in the nonprofit sector, advocacy, or their community read. This document can be leveraged as a starting place to build your organization’s government relations strategy.

 

Victoria Hinderks

Volunteer Alberta

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Member Spotlight: CCVO (Calgary Chamber of Voluntary Organizations) prepares nonprofits for the Alberta election

Government relations for many nonprofits can be a challenge. Where do you start? And, how do you amplify your voice, especially during pivotal moments, like Alberta’s upcoming election on April 16th?

This is where nonprofits like CCVO (Calgary Chamber of Voluntary Organizations) step in. CCVO helps Alberta nonprofits make a difference in our sector by teaching and sharing their knowledge in policy and advocacy work.

Creating the Nonprofit Election Toolkit

This year, as part of their support for nonprofits, CCVO developed an election toolkit to help guide nonprofits in their preparation for the upcoming Alberta election.

“To generate interest in the election early on, we identified the major sections we wanted to have in the toolkit and compiled themed blog posts that went live a couple of times a month,” says Alexa Briggs, Manager, Policy & Research at CCVO. “Each blog post briefly foreshadowed the toolkit. We then rolled them up into one final document as an entire resource: The Alberta Nonprofit Election Toolkit.”

The toolkit highlights an election engagement strategy meant to help nonprofits engage with confidence in the election cycle. Part of this strategy involves a #nonprofitsvote campaign:

“One of the major political parties will form the provincial government and will have direct decision-making power over issues that impact all of us. If we use our collective voice to encourage #nonprofitsvote, we can make a difference” Alexa says.

Encouraging nonprofits to vote

In addition to the Election Advocacy Toolkit, CCVO developed and released a Vote Kit, specifically designed to provide tools to support #nonprofitsvote efforts. With this Vote Kit, organizations will be able to:

  1. Make a #nonprofitsvote plan with handy templates to help communicate in a nonpartisan way with staff, boards, volunteers, and clients.
  2. Get easy access to information on how and where to vote.
  3. Find information on issues important to the sector.
  4. Join the #nonprofitsvote campaign to show the strength, breadth, and importance of the sector by publicly committing to vote.

By providing these supports to fellow organizations, CCVO encourages all nonprofits in Alberta to engage their staff, volunteers, board members, and people they serve to participate in the 2019 Alberta provincial election.

“If we stay silent during an election campaign, we let other sectors drive the agenda, which can mean that we won’t see meaningful commitments from political parties on issues that matter to the nonprofit sector” says Alexa.

Use CCVO’s election and vote kits to stay informed about the platforms and positions of all major parties, and how they impact the nonprofit sector so that on April 16th your vote will be, as CCVO likes to say, “armed with knowledge”!

CCVO promotes and strengthens the nonprofit sector by developing and sharing resources and knowledge, building connections, leading collaborative work, and giving voice to critical issues affecting the sector.

 

Niabi Kapoor

Volunteer Alberta SCiP Intern

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