SMARTPHONES CAUSED U.S. NONPROFITS TO LOSE $6.5 BILLION IN 2015 IN LOST DONATIONS.
A CALL FOR NON-PROFIT TECHNOLOGY TO CATCH UP TO THE MOBILE REVOLUTION.
by Jonathan Ben-Dor, CEO of PocketCause Ltd.
Every year, countries compete for the title of world’s second most generous country. One year it’s the UK, donating 0.6% of GDP, another it’s Canada, donating 0.5% of their GDP. Competition is tight for this prestigious title, because everyone has given up on the gold. And that’s because for over 50 years, the United States has not just led the field – they’ve lapped it 4 times over.
While we may not provide health-care to all of our citizens like the Europeans do, or fund our public education system like our neighbor to the north does, the US is, by far, the world’s most generous country. While Europeans, Canadians, and Australians scratch to break the half percent of GDP marker, Americans since 1971 have donated over 2% of our GDP, four times more than any other country in the world.
To explain this phenomenon, most have pointed to the differences in our economic systems: Because Europeans pay higher taxes, they have less disposable income with which to give charity. Their high tax rates also bring about an expectation that government will use those funds to solve social problems. Contrast that to the US, where a national ethos of self-reliance and skepticism of government interference has brought about a culture in which we think that solutions to social problems are best solved by the people. Thanks to our low personal tax rates, we have more money to invest in those solutions.
But this doesn’t explain one stubborn fact: As Americans have gradually come to pay less and less in taxes, their giving has not grown proportionally. In fact, though personal income tax rates have dropped as much as 77% since 1971 , charitable giving as a proportion of GDP hasn’t grown at all: for almost 50 years it’s been stuck at 2%.
So what would make Americans give more? We already have a generous tax-deduction on charitable donations, legal vehicles like donor-advised funds and family foundations to allow wealth made today to be donated in later years. We have telethons and marathons. We teach our kids to give even before they have their own money. We have major corporations who give over 5% of their profits to charity (try to find a European company that even reaches the 1% mark). We have 141 American billionaires who have signed the Giving Pledge, committing to give at least 50% of their wealth to charity before they die.
And yet we’re stuck at 2%.
The savior has come, and his name is Steve?
There was a time that many thought that technology would change the dynamic and help the U.S. leap off of the 2% pad. Websites and the internet would allow nonprofits to expose their activities to an audience size previously undreamed of. Email would enable non-profits to get their messages directly to masses of Americans. Credit cards and online giving would make it easier than ever for Americans to give. Crowdfunding and crowdfundraising would open up philanthropy to masses of new and younger donors.
And it is true, over $26 billion was donated online in 2015 , more than ever before; And for the past 10 years, online giving has consistently outpaced overall philanthropy.
And yet, despite all of these shiny new tools, technology hasn’t succeeded in creating more giving, but rather has largely migrated the donations we used to make with a check book to a credit card; Instead of sponsoring a friend with cash, we make an online donation. We’ve made giving easier, but we’re not doing more of it.
This does seem counter-intuitive. The main reason that Americans give is a product of communication: we give because we’re asked to give. And technologies like email, social media, and websites offer nonprofits more and cheaper ways than ever to ask people to give. The problem is that you get what you pay for.
According to the M&R Benchmark Study, a leading survey of nonprofit organizations, the chances that an email sent by a nonprofit organization to its supporter will be read is 14%. This may reflect the fact that nonprofits (as benefits a healthy email marketing strategy) add email addresses to their mailing list often before they know if the person is interested in their activities. But it’s not difficult to unsubscribe, and the fact that open rates in past years have not risen can only lead to two difficult conclusions: most of the people who do not unsubscribe from your emailing list do wish to hear from you, but only one in seven are getting your message. If email was going to be our savior, then Junk and Spam filters, Promotions tabs, and the general mass of email received every day are together our antichrist.
Social media, and particularly Facebook, was once seen as our savior reborn. But though we spend time and treasure in the pursuit of Likes, the truth is very much that the emperor is naked. Not only can we not send direct messages to our Page fans, but when nonprofits post content to their pages, the chance that the post will even appear on a fan’s feed is as low as 8.6% . And that’s before our content competes with posts from friends and other Pages, not to mention promoted content from advertisers.
The crowdfunding phenomenon is just as much of a mixed bag. Yes, nonprofits receive easy-to-use platforms to create online fundraising campaign. But if the concept and method of raising small sums from large numbers of people used to be exclusive to nonprofits, now we’re forced to compete with any person, company, or even animal who wants to collect donations online.
Perhaps we were naïve to think that technology would really revolutionize philanthropy. After all, the technologies were not created with nonprofits in mind, so why would our interests necessarily coincide? Apple is a good example. Apple’s corporate culture towards nonprofits has changed in the last few years under Tim Cook, but it was largely defined by Steve Jobs, who in returning to Apple in 1997 actually closed the company’s philanthropic programs . The founder of the Stanford Social Innovation Review has called Apple “one of America’s least philanthropic companies ”.
It was perhaps then no surprise that in launching the iPhone, the most revolutionary communications technology of the past decade, Apple seemed to take a direct swipe at nonprofits. In listing what types of apps can be developed for the iPhone, Apple drew the line at violence, pornography, gambling and….donations. It’s not quite the neighborhood that nonprofits expected to be grouped in with, but the result is potent as much as it is saddening: you cannot donate to charity on an iPhone app.
So if current technology and communication platforms are not built to meet the needs of nonprofit organizations or of people who want to connect to them, then what’s the solution? Certainly it’s not to go back to licking stamps. We think that the solution is technological, but technology that is specifically built with our needs and goals in mind. Technology whose distinct goal is to increase American philanthropy.
Step aside, Steve
How can technology be used to get Americans to give more? The first way is in facilitating communication: to get more of our messages successfully into the hands of our supporters; If more people hear our request to give, more will.
But donors don’t want to be treated as walking ATMs: they expect that your communications with them will not only be about your need for funding, but about the impact of your activities. And they expect also to know their personal impact: what good was done with their donation.
Nonprofits are outstandingly poor at maintaining relations with their current donors. Our sector has among the lowest retention rates of any industry in America: only 41% of donors make a repeat donation, compared to 94% in the for-profit sector. Among donors who’ve donated for the first time, 81% will not donate again .
Think about this, because it matters. 81% of people who cared about an organization and a cause, stopped supporting it. Why? Did they suddenly stop caring about animal rights, or about the environment? No, our donor didn’t stop supporting the cause – they stopped supporting our organization. And they did this for the same reason that Amazon has become a behemoth: customer service. Like with the for-profit sector, donors have expectations of the product that they buy. The fact that our product is largely for the benefit of others doesn’t mean that our donor is any less of a consumer.
What exactly is the product that our donor buys from us? Among others, it’s the feeling of having done good. The problem is that nonprofits too often see this product as single use, the donation as a hit. The donation gives our donor an instant high, and like a dealer, we offer to dish up another (this metaphor is scientifically accurate – scientists have demonstrated that altruistic behavior releases endorphins in the brain, causing a “helper’s high” ).
The problem is that most donors don’t think that they bought a one-time high: they think that they bought a comfy couch, a big-screen TV, something that they’re going to get long-time pleasure out of. And part of that pleasure comes from knowing that your donation is making an impact (we get as much of a rush when seeing the growth of the young child we adopted as when we made that original donation). 63% of donors report wanting to know how their donation will be used . Even more importantly, 53% of donors report that they didn’t repeat their donation because of a charity’s lack of communication, because the organization didn’t fulfill the “terms of the warranty” .
This isn’t just bad for the charity: it’s much easier (and cheaper) to get a donor to repeat their donation than it is to acquire a new donor (it costs an average of $70 to acquire a new donor ). But it’s also bad for philanthropy in general. By leaving donors skeptical about our ability to deliver, we turn them off of giving in general. Only 16% of all American donors give more from one year to the next . That’s a lot of disappointed donors.
So it’s clear that we need to improve our communication with our donors. And this means, of course, ensuring that our messages reach our donors successfully. But as any couples-therapist will tell you, the key to a successful relationship is not just talking, but listening: we need to enable our donors to communicate with us, to tell us about their needs and requirements. To do this, we need a platform that will not send our messages to spam or junk, that will ensure that 100% of the messages we send, and 100% of the messages we’re meant to receive, are received.
And this needs to be a mobile platform, for the simple reason that smartphones are now the principal devices through whom the public connects to others and communicates. Over 50% of non-profit emails are now being read on a mobile device , while 64% of Facebook users access the social network through their phones (47% exclusively) .
Make it easy to give on the go
If we’re communicating successful with our mobile-based donors (the majority of our donors), and if we plan to ask them to give, we need to give them an easy way to donate through their mobile phones. The problem is that most nonprofits are not, and as a result, American nonprofits are losing as much as $6.5 billion dollars every year in lost donations.
As we know, most online donations are made in response to an appeal: a donor receives a request from a nonprofit asking for a donation, and then either immediately responds, or doesn’t respond at all (the chances that someone will read a donation request on their smartphone and then make a donation through their PC is about 2%). 
So if donors are reading the request on their phones, it needs to be easy to give instantly through that device. The problem is that today it’s overwhelmingly difficult and inconvenient to make a mobile donation. 84% of nonprofit donation pages are not optimized for mobile , and even those that are require you to fill out a long form of detailed personal information, something that isn’t convenient to do on a mobile device. Add to that the security concerns that have stunted mobile commerce in general (who’s watching above my shoulder?), and it’s easier to understand why with 50% of emails are being read on a mobile device, only 13.8% of donations are being made that way , and why the mobile e-commerce conversion rate in the US is only 1/3 of what it is from a PC .
What is the cost of our failure to convert our mobile based donors? In 2015, Americans donated over $26 billion online to charity . Approximately 13.8% of this giving, or $3.6 billion, was done through mobile devices . This was the result of the mobile conversion rate being only 36% of the PC conversion rate. Had mobile conversion rates been as high as PC – if mobile giving was as convenient as PC giving – 2.81 times as much would have been given through smartphones – approximately $10.1 billion. Meaning that because we haven’t provided donors with a satisfactory mobile giving experience, American nonprofits lost $6.5 billion in 2015.
How to Increase American philanthropy beyond the 2% marker
If we could make the mobile giving experience at least as good as it is on a PC, we would raise an extra $6.5 billion a year. But beyond that – if we improved and optimized the way that we communicated with our donors, we could dramatically increase the donor retention rate, and drive American donors not only to give more to our organization, but to charity in general.
To achieve this goal, we need a technology that will allow us to get more messages into the hands of our donors, and will enable us to strengthen our relationship with them through better two-way communication and responsiveness. And, of course, we need the mobile giving experience to be as easy as the desktop giving experience: convenient, quick, and secure.
To this effect, America Gives has partnered with a Tel Aviv-based startup and with national foundations in Canada, the UK, and Israel, to develop a technology that meets all of these needs. Called PocketCause, it’s the world’s first mobile platform for connecting to social causes. The new app, available now on the AppStore and Google Play, makes it easy for people around the world to connect to the social causes they care about, to see and support the causes their friends engage with, and to donate in one-click to any non-profit organization in the world.
PocketCause provides a streaming feed of updates from all of the social causes that you’ve chosen to follow or have Liked on Facebook. Users can receive direct messages from the organizations that they’re donated to or have Favorited, and can send requests directly to the organization, right through the app. The mobile platform also utilizes gamification and rewards, to incentivize users to support and promote the causes they care about. By sharing a charity’s posts with their friends, users can earn CauseCash, an app currency that can be redeemed or gifted as a donation to any non-profit organization in the world. Users also can track how many donations they caused others to make, and see their ranking among all PocketCause users. Users also receive 1% in CauseCash every time they donate to their TopCause, their favorite organization of all.
PocketCause users can securely store multiple payment methods through the app, including credit card, debit card, PayPal account credentials, and bank account information, and can then donate to any organization with a single click. By allowing (and incentivizing) users to upload multiple payment methods, recurring monthly or yearly donations will never expire.
All personal and payment information is stored not on the app but on a PCI-compliant server, encrypted and protected against hacking and credit-card fraud. And thanks to its international partnerships, users donating through the app to over 2 million American, Canadian, British, and Israeli nonprofits organizations, will receive a full and instant tax-deductible receipt for their donation.
PocketCause also provides a web-based platform that nonprofits can use to send and reply to messages received from app users, post updates to the CauseFeed, and track their donors and donations. Through the PocketCause Plugin, PocketCause also enables nonprofit organizations to connect their current donation form to the PocketCause system, in order to direct app users to the organization’s designated donation form on the app, while routing other users back to the organization’s own donation form. As for mobile users who haven’t yet installed the app, they are directed to the PocketPay mobile-optimized form, in which donors can make donations without the need for entering any personal information. As most users are deterred from giving through mobile devices because of the need to fill out a long form, PockeyPay allows donors to complete their personal information after making their donation – either by installing the app, or by filling out a form from a PC, at any time in the future.
PocketCause also allows organizations to connect the app to their own merchant accounts, so that all donations made through the platform flow directly into the organization’s own bank account, and receipts can automatically be issued in the name of the organization.
We believe that PocketCause can redefine the way that nonprofits connect to their supporters, and how people from around the world can stay connected with their causes. We also believe that it offers a unique and simple way for nonprofits to fundraise from their mobile-based donors, without risking the donation experiences of their PC-based donors. Our goal is to change the way people give – to change American philanthropy. It’s time we broke down that 2% barrier.
About the Author
Jonathan Ben-Dor is the CEO of PocketCause Ltd. and the founder of IsraelGives.org, the main website for giving in Israel. Born in Canada, Jonathan started working in the non-profit field at age 14. In 2004 he became the first online fundraiser in Israel, and helped to make Leket Israel the leading online fundraising organization in the country. In 2009 Jonathan founded IsraelGives Ltd., which now powers the online fundraising of 1,600 organizations throughout the world. Jonathan sits on the board of directors of non-profit organizations in the US, Canada, UK and Israel, and is a leading authority in online and mobile giving trends and technology.
 Boomerang (https://bloomerang.co/blog/infographic-2015-fundraising-effectiveness-project-survey-report) reports first-year attrition rates of 81%, while BlackBaud (https://www.blackbaud.com/files/resources/downloads/ReactivatingLapsedDonors.Whitepaper.pdf) reports a 73% first-year attrition rate.
 *Moll J et al. "Human Fronto-Mesolimbic Networks Guide Decisions About Charitable Donation." Proceedings of the National Academy of Sciences, October 17, 2006, Vol. 103(42), pp. 15623-15628.
 BlackBaud 2014 Charitable Giving Report
 Movable Ink - "US Consumer Device Preference Report Q3-2015"; Litmus – "Email Analytics" (June 2015).
 Knotice “Mobile email opens report 2nd half 2013”.
 BlackBaud 2014 Charitable Giving Report
 http://www.monetate.com/resources/research/#ufh-i-34269668-ecommerce-quarterly-q3-2015. US PC ecommernce conversion rate is 3.71%, while mobile conversion rate is 1.32%
 BlackBaud reported that online giving at the end of 2014 made up 6.7% of overall American giving ($358 billion), or $24 billion. They now report that in 2015 online giving grew by 8.89%, making total online giving in 2015 approximately $26.1 billion (http://luminatebenchmarkreport.com/LuminateBenchmarkReport2015-R.pdf)