Non-profits And The Long Tail Theory

If you haven't read the The Long Tail, you should.

Here's the basic idea, according to Chris Anderson, the author:

Traditional retail economics dictate that stores only stock the likely hits, because shelf space is expensive. But online retailers (from Amazon to iTunes) can stock virtually everything, and the number of available niche products outnumber the hits by several orders of magnitude. Those millions of niches are the Long Tail, which had been largely neglected until recently in favor of the Short Head of hits.

When consumers are offered infinite choice, the true shape of demand is revealed. And it turns out to be less hit-centric than we thought. People gravitate towards niches because they satisfy narrow interests better, and in one aspect of our life or another we all have some narrow interest (whether we think of it that way or not).

The Long Tail theory is an economic one, but it has relevance for the non-profit sector as well. I've posted about this idea before, arguing that the new Distributed Funding model made possible by the internet is likely to undermine the major donor bias most organizations currently have.

The idea came up for me again today when I ran across this excellent post by Shabbir Safdar. In the excerpt below, Shabbir does a great job of reiterating why the theory of the Long Tail is so important in the non-profit sector:

What does this mean for public relations, public affairs and non-profits? The expectations of the public are changing. To develop an audience, you are expected to publish and talk about your work constantly... Organizations that don't publish are finding it very difficult to engage their audiences when their opponents and competitors talk to them all the time.

"Does this mean I need a blog?" a nonprofit executive recently asked me. No, it means you, or someone in your organization needs to write something almost every day about the work you do to further your mission. The "blog" is just the vehicle you use to post it. Perhaps tomorrow it's an e-mail list, and the day after it's a posted URL on Facebook. The day after it may be a postcard.

What's changed is the expectation. Today's public expects more out of the organizations they give their attention, loyalty, and money to nowadays, or they withhold it.

The question is, now that your long tail of supporters can easily find and connect with you, how do you keep that group of passionate, committed people engaged with your organization?

You talk to them.

Most of my non-profit clients publish a newsletter, and one or two fund raising letters throughout the year – not enough for a real "conversation" with constituents, and not a good way to reach people that aren't already part of the organization's base of supporters. In this new age of infinite access – via social networking, distributed funding, and non-traditional publicity – organizations are under pressure to keep information flowing at an unprecedented rate.

Organizations that are able to effectively create a platform for an ongoing conversation with anyone in the world who's interested in what they do – one that's able to reach deep into the long tail – are going to significantly better positioned that those who don't.

What is your organization doing to engage donors, volunteers, and supporters in conversation?

Distributed Funding - Keeping Track Of Online Giving

A number of online giving aggregators - sites that either track or bundle online donations - have sprung up recently adding even more momentum to the idea of distributed funding.

[photo credit: jenn_jenn]

A recent post at Xconomy points to three such sites:

• Givvy - providing online tools that give individual donors “more control and more empowerment over why, when, where, and how they give to charities.”
• Jackpot Rewards, a site that will donate half of its after-tax profits to children’s charities
• Good2Gether - (which I've posted about before) a “hyperlocal giving aggregator”—an advertising-supported, keyword-based widget designed to appear alongside news stories on the websites of major regional media organizations, where it displays information about local non-profit fundraising campaigns or volunteer opportunities related to each article...."the non-profits get to make their pitch to a lot of readers, the newspaper website gets some ad revenue, and the advertisers get the glow of being associated with a humanitarian cause."

All three of these sites (and there are many others doing similar things) have a slightly different take on distributed funding, but all three share the idea that small donations can be combined to create meaningful impact.

For non-profits that have been in the habit of focusing on large, institutional donors for the bulk of their fund raising revenue, the model is changing. Not immediately, but sometime soon, the long tail theory will alter the face of traditional fund raising. Organizations that get ahead of this curve will benefit tremendously from it.

Developing Your Distributed Funding Network

There's even more buzz these days about a movement to a distributed funding model for non-profits who are able to get into the game early.


Today's NonProfit Times newsletter offers these tips to turn your most engaged supporters into an online fundraising network:

1. Start with social networking - "Social networking may not be a gold mine of donations, but it is a successful way for organizations to educate the public about its mission and cause."
2. Develop an online communications strategy and plan. "For organizations with limited resources, this can be as simple as a monthly e-newsletter. A more elaborate e-communications plan will include a number of online activities such as social networking, online or virtual events, and video clips in addition to e-newsletters and general Web site maintenance."
3. Employ viral marketing tactics. "Personalize communications. Offer incentives. Make messages clear, easy to understand, and easy to share."

Have other tips? Share them with the rest of us by leaving a comment on this post!

More On Distributed Funding

As I've mentioned before, movement of everyday interactions on to the web (also known as social networking, or Web 2.0) is changing the face of philanthropy by creating a new funding model that I'm calling "Distributed Funding."

PayPal is a natural platform for this type of funding and it's recently launched a promotion designed to encourage non-profits to use it's services to generate online donations rather than the many others out there (like Kintera or JustGive). As part of its promotion, PayPal is offering $50 to organizations that generate $500 in online donations using the PayPal donate button within a certain time window.


Another organization called good2gether appears to go one step further (they have yet to launch, so their service is a little tough to evaluate) by adding search into the mix. (An aside, their tag line is "Transforming Cause Into Effect" - but there's no relationship between Cause+Effect and their company).

All of the entrepreneurial activity in the sector - from both established players and recent entrants - points to continued growth for the "distributed funding" model. Non-profit organizations that establish pathways in this new frontier now will be much better off than those that don't.

Distributed funding - a new model for philanthropy

An article in the Washington Post today underscores one of the key recent trends in philanthropy -- distributed funding.

While foundation-based and major-donor funding are certainly as important as they've ever been, social networking has introduced the idea of generating small dollar amounts from a very large base of supporters as an alternative to more standard practices.

The company featured in the Post article is called Razoo, but there are many others vying for space in this emerging market - including Steve Case's foundation on Facebook (which i talked about in an earlier post), JustGive.org, DonorsChoose.org, Network for Good, SixDegrees, Changing the Present, and many, many others.

Razoo represents an offshoot of the basic concept because it focuses attention on how technology and philanthropy are intersecting with the start-up, for-profit culture of the Internet.

Razoo is a company that has built a Web site to connect people with one another, much like social networking giants MySpace and Facebook, but in support of humanitarian objectives such as preventing homelessness in the United States and helping families who live in a Nicaragua trash dump. Users and causes each have their own pages.

"YouTube is transforming TV. Google has transformed advertising," said Razoo founder J. Sebastian Traeger. "The Web will do the same thing for philanthropy."

The point here is that non-profits have tended to spend a great deal of time cultivating larger donors, and have tended to invest less time cultivating the smaller ones. Given the changing technology landscape, organizations will need to rethink that strategy very, very soon. Tapping in to the deep ocean of donors on the internet is likely to spell financial success for those organizations who reach them sooner, rather than later.