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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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Volunteer Screening: Finding the Right Fit Makes All the Difference

This blog was first published on the Community and Adult Learning Program website on November 28, 2017.


Volunteer screening is key to your organization’s success – it provides better volunteer matches, improves safety and quality of programs, and reduces risks and liabilities. Screening is about making informed, reasonable judgements about people based on information gathered from a variety of sources. It begins before onboarding a volunteer and continues throughout their involvement with your organization.

The Volunteer Screening Program (VSP) supports non-profits to implement effective volunteer screening practices. The program has two primary components:

  1. Education & Training
  2. Financial Support

EDUCATION & TRAINING

Data gathered from our workshops and presentations showed us that the biggest challenge faced by organizations is access to resources and best practices related to volunteer screening. Organizations want to maximize their volunteer engagement strategies and support a deeper understanding of participation, privacy, and protection at all levels – volunteer managers, leadership, and board.

Organizations also shared they want to hear from their peers. It’s important to have a space to share organizational best practices, discuss challenges faced by the community, and learn from the experts (e.g. police services or insurance agencies). Exploring organizational mindsets around volunteer screening and employing best practices from peers and experts can lead to new solutions and possibilities!

For these reasons, VSP offers lots of free online resources including templates, tools, and workbooks, as well as interactive learning opportunities such as webinars and in-person learning forums.

Access these education and training opportunities and support volunteer screening best practices at your non-profit.


FINANCIAL SUPPORT

VSP provides funding to eligible organizations to support development in the areas of volunteer screening as well as funding for eligible organizations to support costs associated with Vulnerable Sector Checks (VSCs).

The Volunteer Screening Development Grant is designed to help support organizations in developing effective screening practices and processes. The grant provides $2,000 to support non-profits facing resource and capacity challenges in the area of volunteer screening.

The Vulnerable Sector Check Fee Waiver alleviates costs associated with VSCs. The waiver is available for organizations operating in participating communities. Eligible organizations must work with vulnerable populations and engage volunteers in approved positions of trust and authority in order to access the fee waiver.

Find more information on financial assistance.

Daniela Seiferling
Volunteer Alberta

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From the Vault: 15 Tips to Get Sponsored

This blog was originally posted October 28, 2015.


static1.squarespace.comI recently attended the Western Sponsorship Congress two day event in Calgary. I met a variety of people, sat in on some amazing sessions, and heard great tidbits from the group chats in the main ballroom.

Reflecting on all I heard, I went through my notes and found 15 insightful tips, trends, and insights to keep in mind when considering sponsorship.

CONSIDERATIONS FROM THE KEYNOTE:
Brent Barootes from Partnership Group presented some very relevant information about sponsorship in today’s world.

1. Declines in traditional marketing channels (newspaper ads, TV commercials, etc.) has freed up more money in corporate sponsorship budgets.

2. Sponsorship budgets (on average) rose from 5% in 2007, to 25% in 2014 out of the marketing budgets of corporations.

3. Sponsors want to be fully integrated into the marketing strategy of your event, cause, or organization.

4. Corporations prefer product placement or brand placement (ex. at your event) to advertisements.

5. Many corporations are looking to engage their employees in new and innovative ways to showcase their company and deliver an increased return on investment (ROI).

BREAKOUT SESSIONS HIGHLIGHTS

6. Find a sponsorship partnership that excites you – this is just as important (maybe even more important) as the amount of money that exchanges hands.

7. Building a good relationship is a fundamental part of sponsorship – the discovery part of the relationship (the first few meetings) can help both parties understand the roles, outcomes, and responsibilities of the partnership.

8. Share your cause with potential sponsors. Sponsors are looking to align with causes that will help them make their world (community/market) a better place.

9. Consider video as a way to add extra value to your communications (campaigns, emails, website, or as a stand-alone awareness piece). Video is a great way to showcase sponsors and may attract a specific video sponsorship.

10. Think creatively and offer potential themes for you and your sponsorship partner to build the sponsorship around. (Instead of offering different sponsorship levels – see tip #11) Pick something that you and your sponsor can grow together, so their sponsorship can continue year-round and not end with a specific event.

Staff meetingPANEL DISCUSSION HIGHLIGHTS
In my opinion this was the MOST interesting and educational session of the whole event! The panel discussion, ‘One Size Doesn’t Fit All’ featured four representatives from different businesses (Telus, Cenovus, Remax Real Estate, and North Peace Savings & Credit Union) who shared what they look for when considering potential sponsorship opportunities.

11. Don’t spend time creating the ‘typical sponsor packages’ (Gold, Silver, Bronze) – they do not work because they are outdated and not tailored for mutual benefit.

12. Pick-up the phone when approaching smaller businesses (like Remax and Credit Union). Chatting about the problem, issue, or opportunity will help both parties see possible solutions. They may offer advice or steer you to the right “pile of money” and aide you in the application process – and help build the relationship.

13. Do your homework! Be well aware of a sponsors market, product, what they do, why they do it, and the reasons why they donate. (This is especially important for larger corporations. Most large corporations have online forms – tailor your online application with the information you discover in your research.)

Bonus Tip: If you know someone within the company, follow-up with an email or phone call to make them aware of your application.

14. Know your own stuff! Know your stats, your mission, your audience, and what your objectives are. Be well prepared for meetings – you will come across as genuine and credible. Show the company how they can help drive your mission and how it aligns with their own mission and business objectives.

15. Fair Warning: It will take anywhere from 22 – 24 months for a successful sponsorship deal to close from the initial meeting to money changing hands.

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These 15 tips, along with many others, made for an extremely informative conference and I hope some of you find value in the tidbits I’m sharing. I will be applying these tips in my work going forward. Please share in the comments what tips resonate with you and share if you are applying any of them in your work.

Jennifer Esler
Volunteer Alberta

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Guest Post: Ten things nonprofits want funders to know

This article originally appeared on the Ontario Nonprofit Network (ONN) blog October 17, 2016.


onnONN has heard a lot about what works and what doesn’t when it comes to funding. Through our policy work, and our outreach and engagement of our network and working groups of nonprofit leaders, we’ve heard from organizations of all sizes over the years from a variety of sectors and parts of Ontario. These ten things keep bubbling up.

So, we’re sharing them here to open a discussion about funding: how it flows, how it can be used, how it’s evaluated, and how data and information is shared. Whether it’s from government or non-government funders, what can be done to improve investment in the sector? Here’s what the nonprofit sector wants funders to know:

1. Budget flexibility: Rather than restrictions, help us innovate and invest in the essentials that we need to deliver on our missions.

2. Measuring success: Together, let’s find great ways to measure success. Focusing on overhead ratio is not an adequate way to measure our work or missions.

3. A resilient workforce: Your funding practices determine whether we can offer decent work and avoid losing our best and brightest to other sectors with better salaries, more secure employment, and benefits.

4. Meaningful evaluation: We want you to work with us to develop appropriate evaluation strategies that can help us to do our work better, while also leading to learnings for both of us.

5. Budget size: To foster healthy growth in the sector, let’s find alternatives to funding rules based on current budget size (aka Budget Testing– limiting funding based on an organization’s current budget size.) This can perpetuate existing inequities and hamstring growing nonprofits. How can an organization grow if it’s always pegged as “small”?

6. Applications: Help reduce costs to apply for funding- use a streamlined, fast-tracked application process and letters of intent.

7. Admin burden proportionate to funding: Adopt application processes, reporting requirements, and expected outcomes proportional to the level of funding provided (and vice versa).

8. Share what’s happening: Talk about the other projects or programs you fund. If you give us information and share data, we can build more effective partnerships.

9. Work with other funders: To streamline funding administration, create common granting guidelines, application forms, and reporting processes.

10. Matching funds: Do away with requiring matching funding as a condition of being approved for a grant; many rural, small, and newer organizations will especially benefit, including those serving marginalized populations.

Liz Sutherland
ONN

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