While many speculate about the exact amount that is donated to charities each year, it is far more important to assess whether the majority of nonprofits are achieving their fundraising aspirations. According to the Nonprofit Research Collaborative, 2011 was the first year since the recession in which the majority of nonprofits recorded an increase in the level of donations that they received, while seven out of 10 expect this figure to increase further during 2012. So who exactly are among the most generative nonprofits currently raising funds for their cause, and how do they empower their donors in the process?

With social media now used extensively by nonprofits as both a marketing and a fundraising tool, it would be fair to presume that charities with a strong networking presence would also generate the most income. However, analysis conducted by Craigconnects has revealed that a nonprofit's social media standing has very little relation to its annual income levels or success in raising funds, with the highest earning organizations often boasting minimal numbers of fans and followers across resources such as Facebook, Twitter and YouTube.

The YMCA of the United States of America provides a case in point, as despite reporting a net income of more than $5.8 billion for 2010 it had just 24,500 Facebook fans and 200 Twitter followers by the end of September 2011. In the course of achieving this it has implemented traditional offline methods to engage its contributors, and seeks to empower them by investing both their money and effort into local community projects. This enables both donors and grass root volunteers to appreciate the impact that their contribution has made first hand, and share in the YMCA's mission of effecting social change from within individual communities.

Goodwill Industries International
One generative nonprofit adopting a different approach is Goodwill Industries International, which, according to the Craigconnects report, stands as one of the world's highest-earning charitable organizations. With a reported net income of more than $3.6 billion at the close of 2010, Goodwill Industries have embraced the concept of selfish-giving to reward donors directly for their contributions. Donors are encouraged to purchase collectibles through the organization's Internet auction site, from which revenue is collated and distributed among an array of educational, training and job placement programs.

While the act of encouraging donations through purchasing and the offer of a tangible reward has been derided by some, it has been key in driving cause marketing efforts in recent times. As reported by the Cone Cause Evolution Study of 2010, about 80% of U.S. citizens would be likely to switch brands to support a worthwhile charitable cause, while more than 40% make product selections based on their relevance to a nonprofit venture. Goodwill's e-commerce model taps into this consumer trend, and displays an acute of understanding of why individuals are moved to spend their hard earned cash in 2012.

Save the Children
It is also possible to reward donors through an interactive experience, whereby they gain personal enjoyment in addition to making a charitable contribution. Social gaming has played a significant role in facilitating this and connecting nonprofits with a vast target audience, with 27% of all U.S. Internet users now participating in at least one social game on a monthly basis. As an industry, social gaming is also set to generate more than $1.3 billion in revenue this year, largely through advertising and the sale of virtual goods and produce.

Save the Children is one nonprofit that has sought to capitalize on social gaming as a way of driving charitable donations. In partnership with social gaming platform Sojo Studios, it has overseen the development of Facebook application WeTopia, where gamers build their own virtual city using an in-game currency referred to as "joy." However, these real-time virtual transactions translate into physical donations and fund global projects on behalf of Save the Children. WeTopia is also able to replicate some of the real world challenges that Save the Children face across the globe, so that gamers can feel genuinely involved in a cause and experience a deeper integration with its purpose.

The Bottom Line
With such a wide range of traditional and contemporary methods available to empower donors, nonprofits operating today have the opportunity to greatly improve their level of net income and effect even greater social change. While the way in which they seek to encourage donations and engage volunteers is worth consideration, it is more important that nonprofits understand their audience and connect with them through meaningful interaction. Whether fulfilling a donor's social conscience or affording them a genuinely enjoyable experience, the key is to reward their participation with something tangible and relevant to them.

Related Articles
  1. Professionals

    Charity or Retirement Saving: Which to Prioritize?

    Financial planners need to help clients with their financial goals but also support them in their philanthropic endeavours.
  2. Investing

    Baby Boomer Philanthropy Shifts Wealth Adviser Focus

    Wealth advisers who integrate philanthropy and finance planning can stand out with baby boomer clients.
  3. Professionals

    How Advisors Can Carve Out a Social Media Niche

    Social media is a great way for financial advisors to build a brand and potentially generate leads if it’s properly used. Here are some tips.
  4. Stock Analysis

    Social Media Networks That Are Cashing in on the 2016 Presidential Election

    Learn how social media continues to shape the way political campaigns are run. Through social networks, candidates can reach voters directly like never before.
  5. Investing News

    Thursday Intel: Will Q4 Offer a Fresh Start?

    Investor hopes for a fresh start to the world economy in this quarter may be misplaced.
  6. Entrepreneurship

    5 Ways to Make Money on Twitter

    Find out how people are making money online on Twitter, and get some ideas that can turn Twitter into a source of revenue for you or for your small business.
  7. Investing

    Hybrid Business: Rise of Nonprofits in Private Sector

    Businesses are embracing a mutually beneficial partnership wherein the ideals of the nonprofit sector are coupled with profit motive and capacity to scale.
  8. Investing

    Family Philanthropy: Developing a Cohesive Strategy

    Devising a cohesive family philanthropy strategy requires proper goal alignment, planning, management, procedural rules and constant evaluation.
  9. Taxes

    6 Reasons to Donate Your Car to Charity

    It's no longer a free ride, but there are still tax benefits to doing so.
  10. Retirement

    Choosing The Best Charitable Gift Annuity

    Want to support a cause you care about, but still earn income from that donation in your retirement years? This vehicle offers both.
  1. How does revenue recognition differ between profit and non-profit companies?

    Under the generally accepted accounting principles, or GAAP, for-profit companies recognize revenue as it is earned through ... Read Full Answer >>
  2. What kind of philanthropy did Nathan Rothschild do?

    Nathan Rothschild contributed to many areas of philanthropy in the Jewish community. His family later expanded these charitable ... Read Full Answer >>
  3. What's the largest charitable donation Warren Buffett ever made?

    The most significant charitable donation Warren Buffett ever made is the $37 billion pledge to the Bill and Melinda Gates ... Read Full Answer >>
  4. Who are Facebook's (FB) main competitors?

    Among the hundreds of online social media sites on the Internet, sites that compete directly with Facebook (FB) include Instagram, ... Read Full Answer >>
  5. How does Twitter (TWTR) make money?

    Twitter (TWTR) earns 85% or more of its revenue from advertising. In the second quarter of 2014, Twitter posted an advertising ... Read Full Answer >>
  6. Can I donate stock to charity?

    Giving stock, instead of cash, as a donation can greatly benefit both parties. You will find that most charities, hospitals, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Purchasing Power

    The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing ...
  2. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  3. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  4. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  5. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  6. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!