Nonprofit 2.0, Strategy

The Long Tail and Nonprofit 2.0

The Long TailI think it can be safely said that every non-profit out there is having issues with fundraising these days. Basically, revenue growth is flat for many organizations out there or worse, they’re shrinking despite any actual dip in total revenues for the sector. This is despite the myth of donor fatigue.

From, Divine Tabios and Will Schneider writes:

There are well over 1.5 million non-profit organizations in operation today, which includes as many as 500,000 created in just the past 10 years. However, with respect to GDP, giving has hardly changed at all.

Yet, in the face of all this, there are still the major non-profits out there that are still receiving year-in and year-out the same percentage of giving out there. Because of the way their reputations were branded in the era of pre-Internet TV and newspapers, the Red Cross, the United Way, etc. have always been able to attract the philanthropic dollar. Well, all this is about to change according to a new book from Chris Anderson entitled The Long Tail : Why the Future of Business Is Selling Less of More.

I invite you all to read about the long tail. Basically, the long tail is a statistical phenomenon that says that the niche players in any Internet-driven market, become, in aggregate, a larger market force than the “brand names” of that market. For us non-profit types, that means all those little mom-and-pop non-profits are actually a bigger force in toto than the Red Crosses, United Ways and Salvation Armies of this world. In a sense, your average donor is now going to be confronted with a Netflix-like selection of charities he or she can donate to. Sure, they might want to donate to the Red Cross but then there’s the indie non-profit just trying to help out literally in the neighborhood of that donor.

Perhaps in the wild-eyed dreams of this Nonprofit 2.0 advocate, this could mean that your “standard” Nonprofit 2.0 may just be a gal and her website working a “niche” social problem in her own way with little or no government funding. The long tail graph also implicitly describes limits on future growth for these niche non-profits because of their position to the right of the head of the long tail. In fact, your average Nonprofit 2.0 will have to be dominated by volunteers because of that financial growth cap. At the same time, it means that a Nonprofit 2.0, with effective and persistent use of the Internet, can carve out donor niches that nobody ever foresaw. The Internet, in this case, both giveth and taketh away. It places a cap on your growth but at the same time will allow you to establish a baseline of funding because of your Internet presence.

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1 Comment

  • On 07.28.06 Non-Profit Tech Blog » The Red Queen effect: corollary to the Long Tail said:

    [...] Jon Lebowsky was kind enough to comment on his blog about my previous post about the Long Tail. I could tell from his comments that I didn’t quite fully flesh out the implicit point about the long tail. Jon Lebowsky clearly delineated how Internet leveling will affect nonprofits. There’s a name though to what he pointed out. It’s called the red queen effect. This isn’t an example from statistics, but from a field more prone to describing the network effects of single players, biology. It’s called the Red Queen effect because the Red Queen blurts out the quote at the beginning of this post during a race that Alice participates in during her second trip to Wonderland. I think people who think their particular non-profit will never have a growth cap placed on them are in for a shock once they learn about the long tail of the NPO world. The fact that there is a niche that they have no choice but to belong to should give a lot of people pause. Jon Lebowsky alludes to this when he says: All will find it harder to attract donations, but large nonprofits with established large overheads will be especially vulnerable. This will also affect large companies that provide relatively expensive support services to nonprofits (e.g. Convio, Kintera). [...]

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