Is Your Nonprofit Getting Zuckerpunched?
The tech world has repeatedly witnessed Facebook executing bold daylight robberies of ideas, features and technologies from a variety of competitors. The Snapchat team can painfully attest to the brazen heist of their innovative “Story” feature. Facebook added this into their Instagram product and then mercilessly leveraged their massive reach to propel that product forward and ahead of their only true competitor. In fact, many say its founder, Mark Zuckerberg, lifted the entire idea for Facebook from the Winklevoss brothers. Subsequently it was reported that Zuckerberg and Facebook happily settled that suit for, by Zuckerberg standards, a paltry $65 million. If you know only a fraction of their history as a ruthless, win-at-all-costs corporation, I’m sure that what I’m about to put forward regarding their marauding behavior in the nonprofit sector won’t surprise anyone reading this post.
In 2016, Facebook launched a new service for users to start fundraisers for nonprofit organizations. By 2018, Mark Zuckerberg announced that more than $300 million had been raised for charitable causes on Facebook. Despite their dominance by owning four of world’s largest social subscriber networks, Facebook, Whatsapp, Instagram and Facebook Messenger, that number hardly moved the needle for them. So in early 2018, they announced they would offer free fundraising tools for those trying to raise money for charities. Many nonprofits who were searching for growth looked for ways to incorporate this into their fundraising strategy. And many are just now beginning to realize the dark reality of what turning donor data over to Facebook really means for nonprofits and their supporters.
In this post, I’ll share my experience and concerns about their tactics in hopes that you can find the right fit for your nonprofit and your donors.
Facebook Fundraising is Designed to Capture & Use Your Donor Data to Grow its Advertisers
Facebook realized the real profit to be made from the nonprofit sector was not on small donation processing fees, but the data it was acquiring from your donors. Donor data that they will never share with you, including critical detailed donor contact information. So, in an effort to accelerate use from nonprofits, Facebook dropped its fees for nonprofit fundraising at the end of 2017.
But the question nonprofit administrators and development professionals should be asking themselves is… why? It costs a lot of money to run these platforms, securely process gifts and disburse funds. What’s their reason for getting rid of their fees? Given their notorious and extensive history of what is often described as nefarious behavior, why do they want to do good now?
The answer is pretty simple. They want to own and control as much data on your donors and supporters as they possibly can. They want to use this data to target these donors and monetize them in ways that pay off far, far, far beyond the nominal fees generally collected by fundraising platform providers. They take your donor data, use their unsurpassed data science and pair that with extensive information they have collected on all of us to target your donors with more and more solicitations. They are building a predictable social, behavioral and financial profile on your donors. Then, they offer that profile to their thousands of advertisers. And they use it themselves to engage your audience to solicit services, and present other causes of their choosing to your donors.
It’s worked like magic in other areas for Facebook, so why not try to dominate in the nonprofit world while creating the optics of “doing good”?
Facebook for Good? Please!
Unfortunately, it appears Facebook is not offering nonprofit fundraising out of the goodness of their hearts.
I’m sure they have plenty of good employees who want to help nonprofits. However, their corporate strategy for this venture is ruled by the financial growth overlords that Mr. Zuckerberg and his board of directors have put in place. They simply realized they could make a lot more money off of the backs of nonprofits and their supporters by offering “free” fundraising, and acquiring donors’ private information so they can repackage, mine and triangulate this data for use by their many, many paid advertisers.
In effect, they turn your donors into their product. They use the nonprofit community to feed this data to them which makes your organization complicit in collection and reuse of your donors private data. In exchange, you get a one-time donation that is “free” of the normal nominal fee. Facebook gets lifetime control of a set of invaluable data on your supporters that they then monetize via their advertising sales, over and over, again and again. They don’t even pass the detailed donor data back to your organization so that you may more effectively nurture and engage your own donor over time. In fact, it’s highly likely that your donor data is being offered up in ways that others will want to use to win that donor’s loyalty for their own enterprise. Tactics that seem to be straight out of the pages of a pirate’s playbook!
Does this seem overly cynical? I wish it were. When NBC News combed through 4,000 pages of documents spanning from 2011 to 2015, it found that Mark Zuckerberg, his board, and his management team was using user data as a bargaining chip to an even greater extent than anyone outside of the company knew. Facebook rewarded companies who spent money on advertising with user data, and withheld it from rival companies and apps to punish them. And the company did this while publicly “committing” to take user data and privacy seriously.
To Facebook, its users are nothing more than pawns. And if you don’t think that applies to your nonprofit organization and your donors, well, we’ve got more bad news for you.
Information Highway Robbery: How They Do it.
This is how Facebook makes money from its users, including all of your donors. Facebook and Google technologies have a virtual duopoly on advertising that now encompasses approximately 80% of all digital ad spend. It’s a big business, and despite bad press, security breaches and questionable testifying before Congress, Facebook continues to grow and make billions of dollars. Given that it costs nothing to sign up for an account and to use Facebook, how are they so profitable? The answer is in their advertising.
While it may seem obvious to some that this is how Facebook makes money while providing a “free” service to users, most actual users are unaware of how Facebook utilizes and monetizes their data. A recent study from Pew Research Center shows just how little the average Facebook user knows: 74% had no idea they could manage their ad preferences (which allow them to opt out of Facebook using their employers, marital status, pets, and more to target ads to them), and upon seeing how Facebook categorized them to advertisers, 51% percent were uncomfortable with Facebook compiling that information. When 88% of users surveyed found that Facebook had a profile and generated ads for them based on that profile, that’s a mighty disturbing picture. Users are so confused by how Facebook collects and utilizes data, and what terms they agreed to when signing up for an account, that their confusion and fear has turned into a popular meme.
Every behavior users take on Facebook is fair game to use to help companies target their ads, and so is donating on the Facebook platform. And when you ask your supporters to donate through Facebook, you’re just giving Facebook more information it sell to advertisers to target them more effectively. The data Facebook sells to advertisers includes political leanings, relationship status, even something called “multicultural affinity” — meaning race. Facebook then uses the information and newly acquired data resulting from the paid campaigns of their advertisers to further build, refine, expand and then resell the data to the next advertiser. This cycle of acquiring, refining and selling your donor data goes on, and on, and on in an insidious never-ending cycle. This is so Facebook can monetize your donor data and sell it over and over again to as many advertisers as it can find.
Facebook also tries to make additional money from nonprofits off of the handling of payments and through having your donors store their credit cards on Facebook. Once a user’s card is stored on Facebook, it removes friction for future sales through their platform where they monetize through Facebook payments platform.
How Facebook Payments Works to Slow Down Disbursements and Capture Even More Data
Nonprofit organizations are strong-armed into signing up for Facebook Payments to receive the money they raise. When you do that, Facebook is then using your data to further monetize your info and help sell advertising to those who wish to target you. If you don’t sign up for Facebook Payments, your nonprofit receives a payout from their partner after your donations are held making a little more off the “float”, or the interest collected on holding your money donated to your cause. The disbursement to you from their partner is so slow it can actually take 75 days for payment. But here’s the best part. In their partner’s own words: “At this time, there currently is no reporting through Network for Good regarding donor and contribution reporting using Facebook’s platform to fundraise for non-profits.” So, if you were hoping to follow up with these donors to express your gratitude, nurture them, help them learn more about your nonprofit, or even just balance your books, then you’re likely going to struggle. No real donor data for you!
Why is this? Well, Facebook keeps all donor details mostly anonymous to you. Facebook knows who your donors are in great detail, but you are not allowed to have all that info.
If you want any meaningful information at all about your donors, your only option is signing up for Facebook Payments. So that Facebook can then learn more about your organization while it’s learning more about your donors’ interests and behavior. And if you want to customize the information collected from donors, like requiring an address or a phone number so you can follow up and start the stewarding process, well, too bad! You aren’t allowed to do that. You get the donor’s name and their email address, and nothing of value more.
It’s a dirty game. Facebook holds all the cards, and nonprofits hold none. Facebook has made itself omnipresent but they are using their power like a bully. Instead of making it easier for nonprofits to connect, engage and nurture donors, their fundraising tools ultimately drive a wedge between donors and causes. It makes it more difficult to connect, build lasting support to advance your cause. And, they then have the ability to expose your donor to other organizations similar to your cause… and do so repeatedly.
So, on the surface Facebook offering fee-free fundraising seems like a great deal for nonprofits looking to save on processing donations, but it actually comes at a very high cost: your donor’s privacy and data. The average donor making a contribution to your nonprofit on Facebook likely doesn’t understand the cost to them. As a nonprofit, when you sign up for Facebook fundraising, that is what you sacrifice to have fees waived.
Expectations in a Relationship
As CEO of Mightycause, we know how challenging it can be to serve the small but mighty nonprofit that is resource constrained yet trying to meet the challenge of their own meaningful mission. It’s hard for a technology partner to build a relationship with a nonprofit. You must listen to your customers, they will steer you on the best ways to serve them. We learned to ask, What’s the customers top concern? What’s most important to them? And what I’ve learned from our customers is that while cost is always a chief concern for most nonprofits who run lean, so is protection of their donor data. They have trust that you will not use information gathered through the process of serving them in any way that would adversely impact them. That trust along with aligning mutual objectives and meeting expectations must remain intact for the relationship to survive. Isn’t the same concept true for a relationship between the nonprofit and its donors?
The ability to engage supporters, nurture them, and retain them over time is what creates lasting value for the nonprofit. The art of nurturing a donor relies on your ability to build that relationship. It’s critical to know your donors, demonstrate appreciation, build trust and show that their support is impactful. Only by demonstrating that respect for your donors can you build the bond which leads to the long term relationships which make or break your nonprofit. A donor to your cause would never anticipate that you would break the trust agreement and package their data to sell it off to as many others as you possibly could. That would be a redline for any donor/nonprofit relationship, right? So why is it okay for Facebook to do this?
A Few of the Ways Facebook Targets Your Donors
Since Facebook claims control of your donors’ data, that allows them to target your donor in their newsfeeds, send them notifications, and subtly “suggest” that they use their fundraising tools to help your nonprofit. Birthdays are primetime for Facebook’s targeting.
In the weeks before their birthdays, Facebook users will get notifications urging them to start a fundraiser for their birthday. Now, don’t get me wrong, birthday fundraisers are great and we’ve hosted tons of them on Mightycause. They are started by generous people with the best of intentions, and birthday fundraisers can be a powerful way to bring in new supporters.
Of course, in order for your birthday fundraiser to help you bring in new donors, you’d need their information, right? So you’ve got to sign up for Facebook Payments and start using their tools to get that information when someone creates a Facebook fundraiser for their birthday. And if the person raises less than $100? Well, you won’t get that money, until you raise $100. So it sits with Facebook, until you raise more on Facebook. It locks your nonprofit into using Facebook more and more, just to get your money.
Do the people who start Facebook fundraisers or friends who chip in $5 know that you might not get your money? Nope. Did your nonprofit consent to Facebook asking your donors to use Facebook fundraising for a birthday fundraiser? Nope. Did you even know they were targeting your donors in this way? Many nonprofits don’t. And birthdays aren’t the only time they target your donors.
Posting Your Campaign on Facebook
If you’re a Facebook user, you’ve probably seen this: you make a post with words like “nonprofit” or “donate” or “fundraise” in it, or link to your website or fundraising platform of choice. And then you realize that Facebook uses a highly targeted way to recruit you or your fundraisers to use their platform.They add a little box asking you (and your audience) if you want to add a donate button or create a fundraiser. We know this because Facebook does this to us and our nonprofits, continually. See?
This is yet another way Facebook targets your donors (or even people just talking about your nonprofit), sucking you into the endless cycle of using Facebook for fundraising, even if you’ve vetted and chosen and in some cases paid for another platform that’s better suited to your needs. Facebook’s goal isn’t to add more options; it’s to take them away, until Facebook is the only option left standing.
And it doesn’t stop there. We’ve heard from nonprofits who’ve added the donate button to their post link to their Mightycause fundraiser, not realizing that adding that button would funnel donations through Facebook and not the fundraiser they created. We’ve also seen Facebook target donors linking to their fundraising competitors, nudging them to add the donate button and use Facebook instead. Donors have even contacted us, thinking they made their donation on Mightycause (as they intended) only to find out they actually accidentally donated through Facebook. It’s insidious, it’s unethical, and it’s hurting small nonprofits.
Facebook’s End Game
One of the biggest questions most of us have is why Facebook is so aggressive about pushing their fundraising tools. I mean, despite some major stumbles in 2018, the company is still one of the richest tech companies in the world. So, why not just rest on their laurels and do what they do best?
As I mentioned, it all seems to be part of Facebook’s plan to be the centerpiece of our digital lives. If you’re doing something online, whether it’s reading the news or playing a game, Zuckerberg and Co. want you doing it on Facebook. Their actions appear to be intended to monopolize your screen time. And the more things you do on Facebook, the more data Facebook has about you, and the better it can target and monetize your data with more and more of their advertisers.
Facebook is making products out of us all.
The Value of Facebook Fundraising
While some nonprofits end up using Facebook fundraising because they were strong-armed into it, there are some nonprofits that choose to fundraise on Facebook. And the reason they most commonly cite is cost — while Facebook Payments used to charge a 5% platform fee, they don’t currently charge any fees.
Keeping costs down is important; for a nonprofit that’s small and trying to grow, fundraising costs are an obvious area to consider wisely. It may seem like it’s worth sacrificing donor data and privacy if it helps your nonprofit do more with what you’ve got. The reality is, that’s the worst thing a growing nonprofit can do, prioritize the short-term over the long-term. And Facebook fundraising simply isn’t going to give you what you need to grow. Does Facebook care about your growth as an organization if they actively stifle it by refusing to give you your detailed donor data?
In economics, “value” is defined in several different ways. Some economists say that value is the price a good or service would command in an open and competitive market. According to that metric, Facebook fundraising has very little value — in order to make it an appealing option for nonprofits, they had to drop their platform fee, meaning that the price it commands in an open and competitive market is $0. Facebook also seeks to make the market closed and less competitive by snuffing out competitors; if there is no market, there is also no economic value. Facebook fundraising offers “free” fundraising, with hidden costs, and little value.
At Mightycause, we have more than just a tool that lets you accept donations. You have a full platform, with detailed reporting, the ability to collect the data you need from donors, full and unfettered access to that data, powerful customization options, and a commitment to continue providing the best tools we can to serve your nonprofit. We also don’t sell your donors or their data to anyone. We don’t make you pay in donor data. Our fees are transparent, with no strings attached. We also provide unsurpassed customer support, which you nor your donor will receive from Facebook. As a customer of Mightycause, we listen to you and look to your experience and insights to inform our product. We’ve dedicated ourselves to adding the features and tools our customers want, at a fair price. We aim to provide not only cost-effective fundraising and engagement tools, but real value for your nonprofit. We do care if your nonprofit grows, and we want to help you grow.
We’d encourage you to carefully consider the consequences of fundraising on Facebook and to figure out a way to help supporters who wish to fundraise on your behalf. Do your best to examine the cost/benefit of how to best develop long term relationships between your organization and your donors. We know it’s not easy running a small nonprofit that is resource constrained and in a constant cycle of finding new supporters. When you do find those supporters, nurturing them and building lifelong relationships is key. You do have other options that will help you control access to your donor’s data and avoid violations of their all-important trust. The stakes are too high to allow another company to leverage your donor’s private data while you may potentially be complicit in handing over their critical information to someone who may just work against your goal of building that bond.