In September, we had a bet on this blog as to how much money the Causes app would raise in December. My guess was that Causes would raise $825,000 in that month. I based that on a projection of around 3.3 million users in December with an average $0.25 donation. That’s right — I thought Causes could surely raise a quarter per user in December. Joe Green verbally agreed to releasing the pertinent figures for December.
I sent e-mails to Joe Green and Susan Gordon at Project Agape asking for their December numbers. I haven’t received any word from them and it’s been more than a week. I can only conclude I’ve lost the bet. Bill Templeton — wherever you are — please e-mail me at abenamer@nonprofittechblog.org for the official eating of crow etc. I also have a $50 donation to make to the donation of your choice as well as a Google glow-in-the-dark sippy cup to give away.
What’s fascinating is that Causes has failed to push users towards donations and only towards affiliations. Despite an installed base of over ten million users, Causes seems unable to generate the volume that would be commensurate with such a vast installed base. You can see the interest in Causes waning in the chart by Adonomics below.
It’s evident that there was a drop in activity that coincided roughly with the giving season between Thanksgiving and New Year’s Eve. Why? The question here is whether it’s a local problem that’s unique to Causes or something larger that can be blamed on trends that are part of Facebook or the demographic on Facebook?It’s been suggested Causes has numerous problems in its business logic that seems to stem from a lack of understanding of the giving process. For one thing, it’s very difficult for nonprofits who are actually interested in engaging Causes users to engage that group. Causes doesn’t have a specific backend interface for would-be nonprofit administrators to deal with a Causes members list. Also, the inability to mesh Causes data with a CRM such as Blackbaud’s NetCommunity, Kintera Sphere, Convio or even Salesforce.com doesn’t seem to bode well for Causes if it wishes to become an integral player for nonprofits. There are also silly things such as having users being bumped from the Hall of Fame for a particular cause. Generally speaking, it’s not a good idea to tell donors that they’ve LOST recognition from a nonprofit. It certainly suggests that the Project Agape team are not well-versed in traditional philanthropy.Or is it a general problem related to the drop in traffic that Facebook has when students go on winter break and are studying for exams, etc. Or is it another structural problem? That millennials simply don’t have the money to give away. Only time will tell. One thing is for sure: with over ten million users, Causes is going to still be a factor for a long time but by how much we may not know. For now, Project Agape has network effects working for them quite well but they seem unable to convert their users into actual donors.It’s a bit of a puzzle to me why they haven’t hired people more well-versed in traditional giving to work with them and change their existing business logic. They remain an untapped resource and it’s quite frustrating to watch and even more frustrating that Project Agape has seemingly clammed up.
I definitely would like your comments on this issue? What are your theories on why Causes failed to raise not just a quarter per user but worse, EIGHT cents per user from their installed base?
UPDATE (1/29/2008): At the time of close on 12/31/2007, the prediction market for this bet was running at a 40.8% probability that Causes would not make the $825k mark. Score one for prediction markets!
Loading ...
Allan,
I think the real problem is that the vast majority (I would guess > 98%) of the Causes that are listed have raised little or no money.
There is an enormous cost of doing business this way, to collect the fees and have systems in place that aggregate the donations AND send a check out once a month. In many cases, the cost of processing and physically mailing a check may cost 2-3 times more than the fees they receive.
Also, I do agree with you that in order to be successful, Causes will have to align themselves with one of us (or all of us) in the CRM industry to make it easy for our clients to use their application. (We have 6000+ clients, and quite a few are looking at this).
Depending on individual users to be passionate about a cause is not the best way to go to build this business- you’ll be stuck with large numbers of small causes and lose money on every single one.
It is much more effective to build relationships with non-profits who can then mobilize their fanatical donors to setup these social fundraising networks. But, again, there’s a real cost to doing this- you have to hire $$$ account managers to call on non-profits to convince them to use your product- and counting on the transaction fees alone doesn’t work because despite your best effort, most of these non-profits will not be able to execute a successful on-line fundraising plan without lots of help.
Besides this main factor, there’s other Facebook limitations as well. For example, it’s my understanding you can only send out 20 invitations a day. Again, this is fine for small org’s, but doesn’t work for bigger ones. There also seems to be a disconnect that the names of the donors aren’t shared with the non-profit. This is a huge turn-off for larger orgs because they do have CRM systems in place to track this, so why use a fundraising application like Causes that doesn’t?
I really like Causes and think they are on to something that has the potential to be big, and they need to figure it out before they lose their momentum.
-Jon Biedermann
DonorPerfect Fundraising Software
Yeah, Jon, you hit upon one of the “secrets” of working in the nonprofit sector as a fundraising vendor. It’s difficult to accommodate thousands of smaller nonprofits and I think that Causes is just finding that out. I have to say that this issue isn’t unique to Causes though. Many would-be new online fundraising vendors are just finding this out due to their initial ignorance of the difficulties inherent to fundraising.
It IS important to mesh CRM with online fundraising. However, a lot of the newer online fundraising vendors don’t like to share donor data. Even if they did, it’s a lot of data interchange which surprise, surprise, many CRM vendors are really bad at due to their inability to properly implement an open API. Even if socialmarkets or Causes or change.org wanted to do data interchange — very few CRM vendors would be ready for it.
Does DonorPerfect have an API that would allow for such a thing?
Is it possible that they are just busy with the end of the Giving Challenge?
Sure, it’s possible but we’re talking about one number here — did they reach $825k donations in December? If it’s actually difficult for Causes to report that number, one would really have to question their lack of operational alacrity.
Or even better, they could even tell me “we’re busy with the Giving Challenge”. There are numerous ways to settle this issue but by not saying anything I think they’re ceding ground to the thought that they didn’t get the $825k.
However, the preliminary data shows a drop of nearly 50% in user activity from their November highs with much of that drop occurring during December. It’s a bizarre statistic given that time of year and I’d love to see them explain it.
Yes, our SaaS offering, DonorPerfect Online offers an open API- We’ve made it available for over 4 years and have over 100 customers using it. I’ll admit we need to do a better job marketing it outside our current client base (Look for sandbox.donorperfect.com soon).
You’re right about the drop in Causes activity happening in December- that’s indeed bizarre. Our own on-line statistics from our clients showed a 300% increase from the beginning of November through December.
It could be the demographic, but I think there’s something else going on there.
-Jon Biedermann
DonorPerfect Fundraising Software
I donate to Habitat for Humanity on a monthly basis. The other donations on my list are some local museums and the NY Met Museum.
I have never donated money thru a blog. There would have to be something inspiring and compelling about it.
@tina,
I don’t quite understand what you mean with your comment. Can you explain further what you mean? There was no blog that was being commented upon in this article.