New Epolitics.com contributor! Isaac Shalev is president of Sage70, Inc., a boutique consultancy providing guidance on digital strategy to nonprofit and public advocacy organizations.
Recent reports from industry news sites, corroborated by personal reporting from professional colleagues, suggest that nonprofits are seeing significant declines in revenue from Facebook fundraising since April of this year. This development follows 18 months of strong growth in revenue from the platform’s fundraising tools. Facebook dropped its fees for nonprofit fundraising on the platform at the end of 2017, driving substantial uptake in the use of fundraising campaigns, which can be started by nonprofits or by individual supporters. So-called “Birthday Fundraisers” have been especially popular, as have in-memoriam and other special-event fundraisers.
Since charities raised over $1 billion on Facebook in total as of the end of 2018, reports of a drop of as much as 25% of monthly revenue in April, May and June of this year are raising eyebrows. Why the decline? And is it a cause for serious concern?
Our take at Sage70, Inc. is that most of the drop can be attributed to a combination of Facebook’s new algorithm and the volatility inherent in new social fundraising channels. Facebook announced a change to its algorithm in April of this year, which deprecates posts by 3rd-parties, commercial brands posts and ads in favor of content from friends and family. This change diminishes the effectiveness of both organic posting by charities and of paid ads driving users to dedicated fundraising pages.
Overall, regarding personal fundraisers, we’re seeing downward trends too, but our guidance to clients for now is that we believe that this is natural volatility and not necessarily a long-term drop. Some causes include:
- Declining growth rates in personal fundraisers, because there’s a gap between early adopters and more widespread use. Charities active on Facebook may have tapped-out users most likely to start a personal campaign on Facebook already, but these fundraisers haven’t yet become popular among Facebook users more generally. New people aren’t taking up the slack.
- Stickiness is an issue. A donor might do a fundraiser for one charity this year but choose a different charity for their birthday the following year. This practice will cause ongoing volatility in year-over-year numbers from this revenue source. This consideration is especially true for in-memorium giving, for obvious reasons — you only get to do it once.
- While friction of donating on Facebook is very low, as more people use fundraisers, the overall fatigue will mount. Facebook users will tire of being solicited for donations by their friends and may choose not to engage with those posts at all. This won’t be evenly distributed: the audiences that are early adopters will see more fundraisers and get fatigued more quickly. This again will show up as volatility for individual organizations, as early adopters become early abandoners at a rate that may exceed uptake by mainstream users.
Regardless of these trends, Facebook’s entry into the fundraising space is still only gathering momentum. For now, with the platform subsidizing the costs of donations fully, we believe that there’s still tremendous growth potential in Facebook’s fundraising tools.