The Netflix Approach to Fundraising
The nonprofit sector’s tendency to confuse modes of exchange
During my flight home last week, I enjoyed a conversation with a gentleman who had apparently been contemplating his charitable giving. After learning about the work our team does, he asked about the curious phenomenon of nonprofit organizations soliciting $19 per month from prospective donors like himself. He chuckled as he wondered why anyone would take such an approach seriously. His question prompted a deeper discussion, offering me an opportunity to share what we at Responsive see as a major flaw in contemporary fundraising practices; what we might refer to as The Netflix Approach to Fundraising.
Now, enjoying the early years of retirement after two successful careers, this gentleman is at a stage where his children have left the nest, and life has granted him more margin in terms of both time and money. His decision to relocate from Southern California to a modest suburban home near Wilmington, Delaware, reflected a desire to be closer to his extended family and an opportunity to contemplate how he could begin giving back with greater intention. He is well aware that he can contribute more than $19 a month to a cause that matters to him.
As our conversation continued, I emphasized that my issue wasn't the dollar amount being requested but rather the context in which the request was being made. I explained that, from our perspective, regardless of the sum involved, such requests should not be directed at strangers and are by no means the appropriate starting point for a successful gift relationship. I suggested that, in many cases, the organizations using this approach were haphazardly attempting to exploit the logic of the marketplace, assuming that what works for the likes of Netflix should work just as well for them.
Netflix can get away with this approach, selling to strangers, because the nature of the relationship is fundamentally different. In a marketplace transaction, the commodity stands in for the human-to-human relationship that is essential when we are setting out to get a gift relationship right.
The allure of this approach to fundraising is relatively straightforward: recurring revenue models are seen as providing more predictable income compared to relying on traditional one-off transactions. Proponents argue that this approach not only serves donors better but also creates a more meaningful experience. However, as experience often demonstrates, such aspirations do not always deliver on their promises.
I explained to my travel companion that the fundamental issue lay in how these charities were making their requests. Rather than approaching strangers, I suggested that they needed to find creative ways to engage with their prospective donors before making such a request. These kind of conversations afford a prospective donor the opportunity to understand the complexities of what the organization aims to achieve and lay the foundation for higher expectations. My belief is that, primarily in the interest of efficiency, they are setting the bar too low.
Curious about what I referred to as 'belief work,' I shared that our work with clients often begins with questions that are otherwise never asked and things that are often taken for granted. I explained that nonprofit leaders routinely confuse modes of exchange and the contexts in which financial transactions occur – that of buying and selling commodities in a competitive marketplace versus exchanging gifts among those in a community. These leaders are often guilty of attempting to exploit both, eventually realizing that in order to enjoy the benefits of one, they inevitably betray the other. This betrayal lies at the heart of the challenges they face in their fundraising endeavors.
In a world where the logic of the marketplace tends to prevail, it’s understandable that these organizations would assume that an appeal for $19 a month should work for charities as well as it does for Netflix. However, the nonprofit sector operates in a different domain that is governed by a different set of norms. The decision to give to a charitable cause often involves a complex interplay of emotions, values, and personal relationships. Unlike the self-interested relationship that exists between ourselves and our favorite streaming service, the gift exchange is fundamentally different. When donors contribute to a nonprofit, they are not purchasing a product or service; they are expressing solidarity, commitment to a common aspiration, driven by a desire to make a positive impact in the lives of others.
Our prior discussions have highlighted how easily we confuse the nature of relationships in our sector. At Responsive, we have come to appreciate the differentiation that historian Natalie Zemon Davis makes between sales mode and gift mode. The distinction between these modes transcends what is exchanged; it centers on the essence of the relationship and the value that those participating in the relationship place on the other.1
Davis explains that “gift mode” has endured throughout human history while carrying with it a unique set of behaviors, rules, language, etiquette, and gestures. Regrettably, I see so many of my colleagues unable to enjoy what “gift mode” has to offer. This mode should ideally govern our interactions in the sector, but for a myriad of reasons, we've collectively embraced "sales mode” for more than a century. Davis's modes align with the "patterns of integration" described by mid-century economist Karl Polanyi in "The Great Transformation," challenging the prevailing belief that markets necessarily dictate economic organization. Fundraising, like many other fields, often assumes the supremacy of market logic. Davis posits that removing our "market blinders" unveils a wholly new understanding of our economic interactions with others.2
The confusion arises when nonprofits blur the lines between these two modes of exchange. They mistakenly adopt a marketplace mindset, treating donors as consumers and assuming that everything is playing out in a competitive marketplace. This mindset leads to the inadvertent commodification of their mission and the identities and experiences of those they serve.
Consequently, nonprofits set themselves and their donors up for disappointment. Donors who expect meaningful connections and shared values eventually find themselves disillusioned when they realize that other than the reminder on the bank statement, there isn’t much else there.
The more donors an organization loses, the more evident it becomes why they need to be able to differentiate their donors' experience from that of the marketplace. They must emphasize the cultivation of relationships, the nurturing of shared values, and the acknowledgment of donors as integral partners in a mission, rather than merely consumers buying a commodity. This clarification of the nature of the relationship needs to occur before nonprofit organizations can make requests for recurring donations.
The nonprofit sector's confusion between sales mode and gift mode lies at the heart of many of its fundraising challenges. To forge meaningful, lasting relationships with donors, nonprofits must differentiate between these modes, embracing the differences between a marketplace transaction and a genuine gift exchange. By doing so, they can transition from treating donors as consumers to valuing them as partners in a shared mission, which is the essence of meaningful and sustainable fundraising.
If your organization wants to understand how to raise extraordinary levels of support by way of meaningful relationships and higher expectations, our team at Responsive would welcome the opportunity to help you do that. If you’re interested in learning more, email me and/or our managing partner, Michael Dixon. We will be happy to volunteer an hour to get to know you and to explore with you what a partnership with our team might look like.
Want to host the Responsive Fundraising Roadshow?
We would welcome the opportunity to host the Responsive Fundraising Roadshow in your community. Since 2014, our team has been organizing high-quality, one-day roadshows in partnership with nonprofit leaders who want to showcase their space and champion thought-provoking and highly-interactive fundraising training for their nonprofit community.
Our hosts have included the Children’s Defense Fund in DC, the Henry Ford Health Center in Detroit, Cause Leadership in Toronto, Mission Capital in Austin, North Texas Food Bank in Dallas and The Gateway School in New York City. Most recently, in partnership with the Nonprofit Association of the Midlands, we hosted our most successful roadshow to date in Omaha. If you’d like to explore the idea of hosting the Responsive Fundraising Roadshow, email us today.
Davis, N. Z. (2000). The Gift in Sixteenth-century France. United Kingdom: Oxford University Press.
Polanyi, K. (2001). The Great Transformation: The Political and Economic Origins of Our Time. United Kingdom: Beacon Press.
Hi Jason, this is great. You make a good point as in that most nonprofits be wise to focus their monthly gifts on smaller donors and especially those donors who are already on their list. Having said this, especially now with shrinking donor bases, bringing in new donors is essential and a low entry point is the way to go. If you can get a donor to start with $19 a month, instead of not starting at all, that's terrific. This is why face-to-face fundraising works and it's why digital ads work. Nobody is going to give a $500 gift or $100 a month if they don't know you, at least that's extremely rare.
I would be curious if you asked this gentleman what would have motivated him to make a gift to this charity he didn't have a relationship with yet. When you start dating somebody, don't you typically try to start with a cup of coffee rather than an expensive fancy dinner?