Thinking of Building a Fundraising Platform for Your Nonprofit?
You’ve seen which way the winds are blowing. Online fundraising keeps growing at an aggressive rate and more nonprofits are dipping their toes into the crowdfunding waters to raise larger sums through the Internet. “So,” you think to yourself, “why don’t we build our own fundraising platform, increase our donations, and save some money at the same time?”
On the surface of things it’s a perfectly logical thought. You cut out the middleman and you decrease the fees. It makes so much sense that we’ve seen quite a few people pursue the idea. What we’ve also seen, however, is most of those same people wind up either seriously regretting this initial decision or abandoning it altogether.
Two quick notes before we dive into our analysis of why this tends to happen. First, as a maker of fundraising software for nonprofits we (obviously) have a horse in this race, so feel free to take our advice with whatever sized grain of salt you deem appropriate. Second, the fact that most nonprofits wind up regretting the decision to build fundraising platforms doesn’t mean that it can’t work. Some of our favorite organizations like Movember, DonorsChoose.org, and charity:water have their own platforms.
With those caveats aside though, why is it that most organizations wind up regretting the decision to build a fundraising platform from the ground up?
1. High Upfront Costs
As with most things in life, if you want to create something truly great it will take serious effort. In the case of building a fundraising platform from scratch that means you need time and money.
To get started you either have to hire an outside software development firm or divert existing in-house development resources towards this large project. In the former case, you will easily be looking at a hard cost that will run into the tens of thousands of dollars. In the latter case, you will have to redirect scarce staff resources to this new project (preventing you from pushing forward on whatever else these folks were working on). In either scenario, getting up and off the ground requires a substantial upfront investment of money or manpower. If you are thinking about building your own fundraising platform just keep in mind that it will take people, money, and time just to get something up and running.
2. Technology is ALWAYS Moving Forward
One risk factor that is extremely easy to overlook when considering this decision is the cost of maintenance and upkeep. Technology is probably the perfect example of the maxim that the only constant in life is change. It’s an industry designed to evolve quickly. New technologies emerge all the time and if your fundraising platform doesn’t keep pace, you risk becoming obsolete or being left in the dust by competitors.
Let’s look at one simple example. If you’re reading this now, you’ve got an Internet browser open. There are multiple popular browsers out there (Chrome, Firefox, Internet Explorer, Safari) and they release updates frequently. If you build your own fundraising platform you will have to make sure that your product works correctly in all browsers and in all of the heavily used versions of those browsers. Suffice it to say that it’s not a minor undertaking and the testing never really stops.
Another quick example of this general idea: we recently wrote about the astronomical rise of mobile browsing. As things stand today, about 15-20% of Internet users at any given time will be on a mobile device and this trend is only expected to increase in the coming years. To help our clients on Classy keep pace with this shift, we recently undertook a major development effort to make our pages mobile responsive so that they will automatically be formatted correctly for different devices. Changes like this are the norm in the technology world . If you are building your own platform you need to factor in the development costs associated with keeping up with this constantly shifting landscape.
3. Poor Division of Labor
As a result of the continual maintenance costs associated with maintaining and updating a fundraising platform, you will very likely have collateral consequences on other aspects of your organization. Because upkeep and innovation require a rolling investment of manpower and money, you will wind up allocating resources towards your fundraising platform that would otherwise be allocated towards your core mission. This is a situation that will almost certainly give rise to inefficiencies.
Let’s return for a second to the nonprofits we mentioned above that have successfully built their own platforms. It’s interesting that two out of the three have missions that are inextricably linked to the fundraising platform itself. Both Movember and DonorsChoose.org have technology platforms that are directly related to their core purposes. In Movember’s case that’s raising money for men’s health, and in Donorschoose’s case that’s crowdfunding worthwhile classroom projects. When the mission is so directly tied to the funding platform there is less risk of inefficiency arising from the diversion of resources. In the more routine situation, where the core programs are separate from the fundraising technology, there is a substantial risk of creating inefficiency.
4. You Won’t Benefit From The Crowd
One of the nice things about our vantage point here at Classy is that we get to see how ALL of the nonprofits using our platform are performing. Because we have a wide breadth of user data we can analyze trends platform-wide with an eye towards improving the product for all of our clients.
When you build your own fundraising platform this becomes a lot more difficult. First off, you may not have the volume of data necessary to get a statistically significant view of what is happening. And even if you do, you still need to have the systems and people in place to monitor trends and then push variations back into development to respond to those observations. By using a product that has a community of users and team dedicated to understanding how to improve the platform for those users, you can avoid these costs.
It would certainly be an overgeneralization to say that it’s never the right choice to decide to build a fundraising platform for your nonprofit, but you should take a hard look at the alternatives if you are considering it. There are many costs that are difficult to appreciate and quantify upfront, and you can easily end up losing the money you hoped you’d save. If you’re considering going this route proceed cautiously and make sure you reach out to another organization that has done it before to get feedback!
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