As part of our Georgetown University class “Social Media for Social Good,” we will be publishing each session’s discussion in advance of Tuesday night’s on the Buzz Bin. We will also use a hashtag on Twitter and related materials: #gtownsm4sg. We hope our efforts will not only benefit our students, but also the general marketplace.

Class One (January 13) – Philanthropy’s Long Tail, the Economic Crisis and Social Media

Social media seems to be a magic elixir that might resolve pain and woes for many organizations, but it’s elusiveness makes it seem like Fool’s Gold at times (image by smccard). Nonprofits, in particular the 501c3 charity or social cause, are no different, wondering how to make conversational media deliver tangible results.

In general, the embattled market segment has seen traditional fundraising mechanisms plateau and its donor base continue to age. With the economic impact of ravaged stock portfolios, social causes are forced to turn to younger donors and the digitally rich. Yet how to engage them remains a prescient significant topic for many in the business. And often the puzzle of social media becomes a topic of discussion.

But is it fair to really look at social communications without first understanding the larger dynamics impacting the industry? Really, any communication should foster dialogue or understanding between an organization and its stakeholders. Whether that communication is for education, awareness, fundraising, customer service or any other aspect of day-to-day business matters little if the organization is out of touch with its stakeholders. The same goes for the type of communication. Social media’s primary difference is dynamic, uncontrolled conversation about mutual interests between parties.

What does matter is a true understanding of the market, and what its expectations and needs are. By garnering this knowledge, nonprofits can better engage the market in positive dialogue via social media (or other means), and build stronger relationships that can lead to fundraising, education, political action, and widespread discussion (word of mouth).

How the The Long Tail and Economic Crisis Impact Philanthropy

Philanthropic organizations are different than traditional businesses in that they usually don’t fulfill a conventional market need. The issues they address are more cultural, helping society develop or alleviating some sort of misfortune (economic, health, ecological, etc.). Sometimes they raise funds through traditional business means (for example, Goodwill stores), but they have cause-based missions which often means that making money is not their primary reason d’etre. That creates its own issues.

According to the Bridgespan Group, only 144 of the more than 200,000 nonprofits established since 1970 had grown to $50 million or more in revenue by 2003. Consider that when it comes to communicating their mission, many 501c3s never reach the size where they can command regional or national awareness.

There’s a significant social cause market that serves niche audiences, who could serve larger groups of people, but probably cannot afford to reach them. In essence, there’s a significant Long Tail of social causes that serve the market just waiting to be discovered.

Add in the economic crisis, and you have a double whammy. Not only are dollars hard to come by, but now national and global economic performance is impacting giving. With 401ks and stock portfolios ravaged, big donors — often above the age of 50 — have ratcheted back giving. Smaller donations from families under $50,000 in income have basically subsided. Now some 501c3s are fighting for their very existence.

Finally, many social causes are faced by the same sweeping media changes every other organization in America. The old ways of marketing are simply not working as well. As Pew Research Center for the People and the Press reported late last year, the Internet has surpassed newspapers as a primary news vehicle. For young people under 30, the Internet even rivals TV as a news source.

Sector specific research from Future Matters verifies that nonprofits have a split audience of under 40-somethings who are Internet savvy, and older (and often higher dollar donors fall in this category) folks who prefer traditional media. While there is increasingly cross-pollination between media, the writing is on the wall. 501c3s must adapt or they will watch their long-term sustenance fall the way of newspapers. The economy is only adding pressure to find these new sources of awareness and revenue.

What the Market Cares About

The conflux of size, economic pressure and media change is forcing 501(c)(3)s across the country to start examining social media as a means of reaching new groups of stakeholders; including millenials, digitally savvy Gen Xers, and the younger high-dollar donor who will not respond to phone calls, conventional mail or email (image by nalilo). In some ways, social media’s promise should encourage smaller nonprofits who are in the Long Tail. It’s the great equalizer, giving smaller voices the opportunity to be heard just as well as powerhouses like The Salvation Army or American Cancer Society (see Beth Kanter’s blog for ongoing case studies).

At the same time, social media fails when organizations talk at the market and the people that comprise the community. The inherent error – a mistake caused by mass communications training and habit – demonstrates an organization still controlling the message and not engaged in real conversations about the community’s needs.

While conversations do not equate to return on investment, they are mandatory precursors to achieve any kind of result on the social web. It’s only when stakeholders are engaged in a worthwhile, meaningful dialogue about their interests that they will seek a deeper relationship, whether that’s transactional, volunteering, or simply spreading the word.

Some things have become clear over the recent past that impact philanthropic social media:

In addition, social media has yet to be tapped for its full benefits as an idea market generator in the social cause segment:

These six marketplace conversations are only some of the issues that matter. Our class conversation will revolve around the marketplace’s concerns and how social media could help. What would you add to the list?