Looking to the Future – Trends in Fundraising in Latin America
There is something inherently human about wanting to know the future and how
to anticipate its arrival for one’s benefit. Fundraisers are no different. Along with Boards of Directors and Executive Directors, fundraisers are co-responsible for determining how their organizations will attract the resources needed for their continued existence and fulfillment of their missions. Vexing questions arise, such as:
Which sources of funding will grow over time and which will diminish? What are the fundraising techniques that will obtain the best yields from these
How much should be invested each technique? and What results can reasonably be expected?
Although as individuals we are cautioned against living in the future, keeping an eye
to the future can affect our decisions in the present. Taking the time to reflect on fundraising trends will help answer some of these questions. Applying those answers will enable the region’s emerging profession of fundraisers to better direct and advise their organizations and thereby making the sector more capable of matching their actions with the resources available. A fundraising frame of reference
Life, it would seem, enjoys the concept of duality. A coin has two sides, we are
awake or asleep, and we did or didn’t make our fundraising goal. One can see the emergence of this dualistic perspective of the future of fundraising in Latin America from the differing visions held by expert practitioners and consultants.
A concept that is useful to frame and manage resource development possibilities
comes from John Naisbett’s 1982 book Megatrends. A futurist by definition, Naisbett prophesied about modern information economy among other things. One concept advanced in Megatrends and taken up by others since then is that humans will be shaped by a high-tech versus high-touch paradox. Naisbett stated that the more that humans use technology; the greater would be our search for the counter-balancing effect of nurturing, personal relationships. This concept was recently discussed in a Fast Company article written by Charles Fishman, called The Toll of a New Machine. Fishman looks at the impact of customer service kiosks or, automated, networked computers to replace front line customer service personnel such as ticket agents at airlines. The use of kiosks is expanding and apparently people prefer to do their check-in with limited line-ups rather than waiting to be served by a person. Nonetheless, Fishman asks the question, “Will kiosks leave customers feeling well cared for and more closely linked to the businesses that use them, or frustrated and trapped in a real-world version of voice-mail hell?”
High-Tech vs. High-Touch – Fundraising’s alternate universes?
Depending on their vision of the future, many of the fundraising leaders in Latin
America come down on one side or the other of the fence in relation as to civil society organizations (CSOs) should priorize their fundraising investments.
The “high-tech” camp advocates the potential of reaching more individual donors
through the use of technology while the “high-touch” group believes that development of personal, intimate, caring relationships with donors is a priority. Although apparently opposites, these groups share many beliefs and their visions are more like two separate mountain paths that arrive at the same summit. These two paths propose different fundraising strategies or techniques but ultimately the end result is the same. CSOs that have access to the resource that they need to fulfill their operational plans. Let us look at the two camps and their champions.
High-Tech - more donors through technology
Norma Galafassi is the Co-Director of in2action, an agency based in Buenos
Aires and London. Her more than 15 years of work experience in over 20 countries has assured her of one thing . the donor’s pyramid in a typical Latin American CSO looks more like a diamond teetering on its point, than something from Egypt. A large number of individuals, giving relatively small amounts typically form a broad base of community support for their cause.
The tradition model of funding for a CSO believes that a broad base of economic
support is needed so that these funds, usually secured without specific, designated objectives, can be used for program and overhead as deemed necessary by the organization. CSOs don’t renew the support of their donors annually but the reduction of smaller donors doesn’t have a significant affect on the overall financial health of the organization and hence is unlikely that it will affect its capacity to continue to function A diamond model on the other hand, does not provide the base for those types of flexible funds and if one or two larger sources of existing funding cease or diminish, the organization can fall as can a diamond balanced on its point.
Norma is committed to the idea that “the region’s civil sector needs to increase
the number of smaller donors, not just to diversify its funding but also to involve the society in its work.” Widespread individual support of a cause is an excellent indicator of a CSO’s legitimacy. If its mission and methodology address a real need in the society, it will garner the support of society (assuming a professional management of the fundraising function). We can, for example, imagine broad community support for health and education causes, but not for the preservation and restoration of Rolls Royces.
Foundation Sales, an Argentine organization led by Arturo Prins has had great
success in developing individual donors. Combining mass communication and direct marketing has garnered the Foundation 10,000 new donors.
“There is no doubt that face to face solicitation is the most effective technique but
the time to make personal visits means that you can reach only a small number of potential donor. So the next best to reach donors is via the telephone or “phone to phone”. Prins believes. Phone to phone can include traditional direct marketing print contact with a follow-up call which enables an organization to build a relationship over the phone with a potential donor.
“It is the almost as good as sitting in front of your donor,” Prins believes “and you
can reach many more supporters using a call-center than visiting them”.
But to make this strategy work the most effectively organizations must use mass
media to communicate their need to the masses and then be able to launch a phone to phone direct marketing campaign, before, during and after the your publicity campaign.
This investment in technologies and pursuit of individual donors is not just a
Latin American need, but a global one, according to Geoff Peters, President of Creative Direct Response. Geoff has worked with CSOs to develop global direct response solutions and believes that all civil society organizations need to realize the potential of individual donors.
“Direct response is efficient and will generate sources of funding for
organizations in Latin America just as it has in other parts of the world, and with proper management, it can sustain and allow for growth,” Geoff states. UNICEF’s Private Sector fundraising global results for 2004 was a total amount of $655 million of which 48% of those funds came from individuals or small gifts. The total for of individual giving grows to 73% if you include UNICEF’s monthly pledges.
Donors, once cultivated and converted to monthly direct response, ensure low
administrative costs for an organization. These stable donors also provide opportunities for conversion to other campaigns, planned giving candidates and a source of data for major donor research. In other words a base of individual donor provide stability in the rough ocean of fund-raising which has swamped many causes.
Marcelo Iniarra, Greenpeace’s Regional Fundraising Manager and a global
creative marketing consultant, is practically technology’s poster boy with his emphatic stance.
“The internet and cell phones are the future, and any organization not positioned
to take advantage of their emergence is going to lose out on the harvest,’’ he concludes.
The internet is growing and mutating in ways that are hard to predict, but one
interesting development and potentially beneficial manifestation is the formation of
virtual communities that support, advocate and discuss the cause or even your organization. These self-forming communities of individuals are potential supporters / donors / advocates who can greatly impact the need to prospect and cull lists to find potential donors and supporters.
“Tapping into these groups makes donor prospecting quicker and more cost-
effective and helps identify potential volunteers,” he added.
Ask Marcelo about the future of fundraising if you want to see his eyes gleam. “I
have seen the future, and it is the cell phone.
”A fundraiser in the pocket of each of your donors.”, he explains. The cell phone
and its future manifestations will provide opportunities to reach massive numbers of potential donors in Latin America and around the work. The penetration of the cell phone is staggering. Mobile phones now outnumber land-line telephones, with most adults and many children owning mobile phones, Hong Kong has the highest mobile phone penetration rate in the world, at 125.1% in April 2006 and the United Kingdom has more cell phones than citizens. Increased cell phone coverage, reduced costs and advancements in interactivity make it the technology that every fundraiser needs to consider the opportunities to reach and interact with donors in your community, country and globally.
High-Touch - more results with relationships
The world of technology can be pretty intoxicating. Who hasn’t sat slack jawed in
front of the latest plasma television or nodded in reverence at latest processor speed of your new laptop?
Fernando Frydman, Director of the Social Management Center in Buenos Aires
and a specialist in development campaigns in the Americas and Europe, doesn’t deny the sexiness of technology. He also recognizes that today’s CSOs from Alaska to Patagonia needs to adopt technologies that allow them to effectively manage their affairs.
But technology doesn’t inspire and motivate people to donate. A donation will
occur if there is sufficient confidence in the cause and in the relationship to permit money to pass from the donor to the organization.
“Organizations concerned about their future must invest in processes and people
that will foster loyalty and generosity in their supports,” states Fernando
Loyalty and generosity are the two shining sign posts that Victor Narajano,
Habitat for Humanity International’s Director of Resource Development, Latin America, sees when he looks at fundraising’s future in Latin America.
“The creation of an organizational culture that encourages donor trust is built by
an organization’s internal leadership,” Victor believes. First and foremost is senior leadership, but also from the emerging fundraising profession in Latin America. Fundraisers must keep the ethics of fundraising and the rights of the donors firmly enshrined in their organization’s operations. They must assume the responsibility, given to them by the donors, who have entrusted their funds to them and their causes.
The other leadership role must also arise from local and national leaders
providing the community with inspiring examples of generosity. Victor’s vision is of a culture of generosity modeled by leaders who understand the great benefits accrued to a society when people participate with the gifts (financial, in-kind and volunteer work) that they have at their disposal.
So where and what are the resources available for this culture of generosity to
take root and flourish? Good quality information is difficult to find for Latin America but a 2001 study from Ian Dew-Becker and Robert Gordon of Northwestern University in the USA revealed that over the last 35 years, middle class income grew at 11%, while that of the super rich (0.01% of the USA’s population or about 13,000 people) rose by 617% to a total income of $83B USD.
It is illustrative to note that from 1997 to 2001, the top 1% of the USA
population captured more of the gain in national income than the bottom 50% of the population. What seems to be happening is that the productivity gains and benefits of a globalization are being disproportionately absorbed by a tiny percentage of the population. Considering that Latin America is characterized as a region with an even more unequal distribution of income than the USA, it seems safe to conclude that the wealthy in Latin America have absorbed income at this disproportionate rate or even more so. So it is clear where the large quantities of resources must come from to expand the civil society’s role because as the farmer’s adage says “If you want to get eggs, you go to the chicken coop”.
The quantity of the resources at the disposal of the wealthy can have a huge
impact according to Bernard Ross, Director of the Management Centre (a global consultancy company based in the United Kingdom) and author of numerous publications including the latest Breakthrough Thinking.
“Although most organizations depend on smaller gifts from a large number of
donors, the transformative gifts that organizations and society need are the large ones, the mega donations, that can change our world,” Bernard points out.
The Rockefeller Foundation’s focus on improved wheat varieties and penicillin
ensured that millions of people were fed and protected from infection. It is hoped that the Gates Foundation and Warren Buffet’s multibillion dollar gift will decimate many of the diseases that currently ravage the developing world today. Most of the money needed to reduce suffering and increase justice in the world is in the hands of a very few. The civil society sector needs to focus on how to attract major gifts not only to
enable and transform their organizations’ ability to address the world’s needs, but also to create more equitable relationships amongst ourselves.
The best means of accessing these “top” funds has yet to be documented in
Latin America. However, Annette Candanedo, Development Director of El Colegio de Mexico and member of a team that led a $25M USD capital campaign at the University of Monterrey in Mexico, has a pretty good idea.
“Giving can be increased dramatically when relationships are developed as
alliances, with enlighten self-interests clearly communicated among partners,” she commented. This type of growth will occur in organizations that are open to working collaboratively with their donors. Annette explains that, “Knowing what you have to offer and developing relationships with like-minded partners generates greater and greater benefits”.
This culture of collaboration is growing in Latin America. These relationship are
slowly being mapped, evaluated and there is a growing awareness that relationship between the for profit and the not for profit sector can benefit both parties. A revealing study conducted in Brazil by the Centro de Emprendedorismo Social e Administracao em Terceiro Setor (CEATS) of 1200 organizations in 1999 found that 57 companies “were developing actions and projects aimed at reducing social problems”1 A follow up survey conducted in 2001- 2002 by CEATS delved into these relationships deeper and determined that of the over 2000 companies surveyed, 85% of these companies implemented their social programs in partnership with a civil society organization and the support that flowed from the corporate partners included the donations of non-financial resources 75.4%, 63.1% donations of financial resources, employee participation 64.4%.
However to achieve this kind of equal footing with mayor donors the CSOs must
be able to articulate their petition in a context of a vision of a greater societal change. Large donors need to understand the impact of their gift in this context of the broader implications for the society to write the cheque.
Which path to follow?
High-tech or high-touch, which road will it be? Well, probably neither exclusively.
Life isn’t that simple, is it? Perhaps an appropriate way to imagine the future of fundraising in Latin America is more akin to the Buddhist philosophy of the Middle Way, a path of moderation away from the extremes, but wisely taking the best of both.
Latin American fundraising is taking its first steps and the profession is starting to
emerge. Populations accustomed to depending on the state for all services are discovering that civil society is capable of providing services, finding innovation solutions and/or advocating for those that government doesn’t reach or that the
business sector is unwilling to serve. In causes that range from finding a cure for cancer, providing dignified care for AIDS patients, to protecting the environment, Latinos are showing more willingness to use their time and money to support causes that matter to them.
As a result, organizations and fundraisers must embrace the use of technology to
attract resources, especially from individual donors, for three reasons:
1. Efficiency – no donor wants to support an organization that doesn’t utilize its
money with stewardship to generate the greatest impact possible per peso. Organizations that flourish will combine technology’s benefits and apply them to improve stewardship and creatively communicate their message to attract more resources.
2. Stability – diversifying funding sources protects an organization from a potentially
fatal loss of funding. Turning tippy diamonds into pyramids will create greater organizational stability and societal impact.
3. Legitimacy – large numbers of individual donors are a sign that your organization
has community approval and relevance. This litmus test that doesn’t lie. It is essential for an organization that aspires to achieve its thoughtful mission statement to foster a virtuous cycle of increasing numbers of supporters and greater trust, which will lead to more supporters.
But there are some good reasons not to be seduced by technological investments as
the only tools for success. Fundraisers need to be mindful of and invest in high-touch activities in order to create the following conditions:
1. Trust – the non-profit sector as a whole, individual organizations and the
profession of fundraising must foster widespread societal confidence in their ability (and reliability) to use the resources entrusted to them as they promised. As trust increases, available funds will growand the “pieces of the pie” will be bigger for everyone. Currently, the lack of trust is severely limiting the amounts of money that individuals and corporations are willing to donate.
2. Inspired leadership – Latinos are not giving, not because the society doesn’t
need their support nor because they don’t want to help. They are not giving because we are not asking the right people correctly. When we do it right, Latino leaders will provide the generous gifts needed to significantly impact Latin American society.
3. Transformation by generosity – the people capable of giving must be encouraged
to share their abundance to support worthwhile causes. This is not only to help our own particular cause but also so that donors recognize that theiracts of generosity can have a significant impact for the greater good of their society. Donating breaks down the walls that separate the poor from the rich, the marginalized from the mainstream and fans the flickering flames of hope.
Latin America has many barriers impeding the development of a culture of generosity. Some of these like tax incentives, legal frameworks, and endemic corruption are not
directly impacted by positive, professional fundraising. But fundraising can help model behaviors that will encourage the development of a culture of generosity. Latinos have so much to gain if this spark can be ignited. It is in the interest of all sectors, private, public and civil, to consider how best to encourage the trends that will generate more giving in the region. More informed and responsive donors supported by well-prepared and equipped fundraisers will make the future brighter for a more just and fair Latin America.
1 Estrategias de Empresas no Brasil: Atuacao Social e Voluntariado – Corporate Strategies in Brazil: Social Performance and Volunteeing
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