Facebook Fundraising: Making Lemonade Out of Lemons

According to Facebook, over 750,000 nonprofits have used Facebook’s fundraising tools since the platform rolled out the feature in 2015. It began as a way for individuals to donate and, in 2016, expanded to allow individuals to allow people to ask their Facebook friends to donate to personal causes. Things really took off in 2017 when Facebook launched birthday fundraisers, which allows people to fundraise for a specific cause or nonprofit organization. Nonprofits are required to apply for fundraising privileges and are then approved by Facebook.

There are three ways that donations are processed through Facebook: through the company’s internal system called Facebook Payments, the Network For Good—which provides donor management software for nonprofits— or through the organization’s own payment processor if the Facebook fundraiser is linked to a campaign on the charity’s website.

If a nonprofit is using Facebook Payments, it typically takes about two weeks for contributions to get deposited in the organization’s bank account from the time an individual donates the funds.

If an organization is using Network For Good, it takes a little longer for the donations to be dispersed. “Donations are usually distributed a month and a half after the last date of the month in which the donations were made,” Facebook explained in a blog post.

And if a nonprofit uses its own processing company, the amount of time it takes for the money to be disbursed to the organization varies depending on that company.

In November 2018, Facebook announced that more than $1 billion had been raised to date for both nonprofits and personal causes. This includes Save the Children, No Kid Hungry and St. Jude, which have raised more than $7.5 million, $5 million and $30 million, respectively.

When Facebook fundraisers began, Facebook took a fairly standard 5 percent fee on every donation. However, in November 2017, it abolished the fee and now 100 percent of contributions made through the platform go directly to the selected nonprofits.

So far, it sounds like Facebook fundraising is a pretty good deal! But as you’ve probably read all the negative press Facebook’s business practices have received in the last year, it’s wise to look at anything that runs through Facebook with a critical eye. Yes, it’s free. But remember the old marketing saying, “If you’re not paying for it, you’re not the customer; you’re the product being sold.” And that’s true with Facebook fundraising as well.

As much as it would be great to think of using its platform to benefit nonprofits as a way that Facebook could “give back” to the public, the sad truth is that supporting nonprofits is just another piece of information that the company collects about its users that can be sold as marketing intel to its for-profit clients. How much is this information worth to Facebook? Apparently more than $50 million, or five percent of $1B—the fee that Facebook did away with.

Also, Facebook is making some money on the “float.” They get the use of the money for two, four, or in some cases, as much as six weeks after the funds are donated. Just sticking it into a simple interest-bearing account adds up to some serious dough.

So therein lies the poison pill in Facebook fundraisers—Facebook owns the donor information, not the nonprofit. All that the nonprofit gets is a check. And we all know how difficult—and important—donor acquisition is. Instead of your nonprofit acquiring a new donor, Facebook gets to obtain personal information that they will sell to the highest bidder.

Consider the following example of how Facebook fundraising can trip you up in the long run—we see this all the time. You’re engaged in a peer-to-peer campaign that recruits fundraisers to set up their own personal fundraising pages. Some of your enthusiastic supporters decide that they want to raise funds on your behalf as well on Facebook. Rather than posting the link to their fundraising page, they set up a Facebook fundraiser (believe us, it’s really easy).

Donors to the Facebook fundraiser won’t usually make two donations, so the Facebook fundraiser cannibalizes your P2P campaign. You might wind up with the same dollars in the short run, but you are deprived of the contact info for those who go through Facebook. How many? Ten percent? Twenty percent? You’ll never have the benefit of developing these folks into future supporters because you don’t know who they are. Their lifetime value to your organization will be whatever they donated through Facebook.

What’s the answer? Taking your nonprofit off the approved list of charities that can benefit from Facebook fundraisers seems like cutting off your nose to spite your face.

Some of our clients like Susan G. Komen, March of Dimes and the Lupus Foundation of America have implemented technology to leverage the connection with fundraisers that Facebook provides and extract the fundraiser information that will lead to future engagement. We believe this path is one of the best ways to acquire new fundraisers, so much so that we partnered with Good United, the first company to release such technology.

Who should care about developing these channels to successfully mine Facebook? Everybody on the development team. For example, major gifts… Very few major gifts are made as the first, second or even the third gift to any nonprofit organization. Four to five years seems to be the time required to have 18 to 24 personalized touch points (as noted in this recent major gift study) to be able to successfully ask for a major gift. Donor info on those who have participated in Facebook fundraisers is a great list for a major gifts officer to have.