Lessons Learned from Austin-based HelpAttack!

By EHREN FOSS
Special Contributor to Silicon Hills News

What’s the whole story?

The purpose of the rest of this post isn’t to tell the whole story of HelpAttack! We hope, however, to pass along the most valuable wisdom we have accrued.
Sarah Vela came up with the idea that became HelpAttack! during Austin’s “Movember” fundraiser of 2009. Austin’s team had a lot of social media people on it, and Sarah’s feed became noisy with fundraising asks. Why can’t we just give each time we Tweet about other stuff?
Sarah knew David and David knew Ehren and we all got together to talk about the idea, at that point called “Change4Change.” In April of 2010 we paid some lawyers and became a Delaware C Corp. We developed an early version late that spring and early summer, and launched our “Beta” on August 23rd.
The core of the idea – giving each time you send a Tweet, no matter what the Tweet is about – soon grew into a broader concept: Micro donations driven by all kinds of online activity: Facebook posts, blog posts, comments, photo and video uploads, petition signatures, and so on.

Individual Supporters

At first, we focused on building an app that individuals could use to support a cause of their choice. Our goal was to become a place where people could express their good natures online, like a Change.org, Care2, or Jumo but focused on social media. We created “coins” which were like Foursquare badges – rewards for making different kinds of pledges.
A cursory look around the internet reveals a graveyard of companies who tried to build their own social networks and own user bases from scratch. At this point we were also seeing signs that while people want to be good and believe they are good, they usually need more of a push to actually do something good. Sharing a photo (think Instagram) doesn’t cost anything. Donating does, and the psychology of people while they are giving is very complex.

Nonprofits

Our next major release, in early February of 2011, included a Facebook integration (for a second pledge type), and a dashboard for nonprofits to log in, access donor data, and monitor their fundraising efforts.
Shortly afterward, American Red Cross and Best Friends Animal Society gave it a go. To date, they were the most successful nonprofits on our platform.

Restructuring

In May of 2011, Sarah and David left the company but stayed on as valuable and active advisers. In August of that year, Vanessa Swesnik joined to kick butt at business development.

Celebrity Ambassadors

Celebrities have large online audiences. The larger the celebrity, the more people after them to post a link or give a shoutout. On the other hand, many celebrities have strong ambassador relationships with nonprofits, and the PR/talent management industry is well versed in the concept.
We learned a few things. One, IMDB Pro, LinkedIn, and a little creative Googling makes it easy to get the right phone number with about 15 minutes of work. Two, these people are professionals.
Remember the Miley Cyrus campaign we blogged about? We called the nonprofit, and learned that the chairman of their board of directors is also the chairman of the Screen Actor’s Guild. Furthermore, while it was now obvious how they were able to get nearly 100 celebrities onboard, they explained that the participating marquee celebrities would not allow the fundraising totals to be shown, as that could be construed as a stand-in for popularity. Celebrities don’t want to appear less popular in any context.
In another case, we reached a PR firm who was interested, but asked that we reconfigure our platform to allow people to give when their client sent out a specific type of Tweet. For example, every time Liza Minelli tweets a photo of herself, her fans would give $1.
We weren’t able to totally win over the staff of any celebrities. We got close a few times.

Cause Marketers

Like celebs, companies have specific goals and hangups when it comes to social media and supporting nonprofits. Retail firms are tough: they want you to buy their stuff, so they are unlikely to push a campaign where the first priority is direct donations to the nonprofit. Other industries have other challenges: regulatory compliance, privacy concerns, and so on.
In the cases where we were able to make a serious pitch for a cause marketing campaign, it was sunk by too many cooks in the kitchen! Having a national nonprofit, and a national brand, and both of their teams of lawyers, together with a PR firm and us… didn’t make much progress.

Nonprofits Again

Ok, so if celebrity ambassadors and cause marketers… back to nonprofits! We spent the rest of our run attempting to convince nonprofits to run social media fundraising campaigns. We used IRS and other data to identify those who would be likely to have a large online community already. We had some success with PETA, Heifer International, World Food Programme, UNICEF USA, and a few others. Several smaller nonprofits surprised us and ran very successful campaigns (for their size).
Still, the amount of effort required to do the convincing, help craft messaging, talk through the results, convince them to continue the campaign, and so on far outweighed the 4% of donations we were getting back. We did a couple custom apps or consulting engagements for organizations to fund a snazzy redesign in the summer of 2012. Success did not follow.
Vanessa, Holly and I were worn out and tired of not having a sustainable business. We talked with David and Sarah and decided to call it quits in early September of this year.

Other Topics

Legally Transacting Tax Deductible Donations

We didn’t know anything about this topic when we started. It took a long time, and a lot of networking and effort, to find a few people who actually knew the rules.
If you are transacting tax deductible donations on behalf of a nonprofit, there are generally two approaches.
One, you can register as a professional solicitor in each state that requires it. This costs around $10,000 in legal fees, more if you have someone do it for you. The professional solicitor structure was created for people who reel in big fish at galas (and get paid for it) and also for some telemarketers who participate – directly or indirectly – in fundraising.
Two, you can set up a donor advised fund. A donor puts money in the fund, and then the fund is required to distribute the money to nonprofits in accordance with the donors wishes. This is most common with trusts or other structures where the donor doesn’t want to deal with as many of the details, but has a lot of money.
Both of those routes were annoying and expensive from a legal perspective, so we looked for a partner who would transact the funds for us and we found Network for Good. At the time, they were the only such entity in the US, and they were also expensive.
We didn’t know it at the time, but it turns out that nobody really knows how the laws apply to third party online fundraisers like HelpAttack! No case has been brought forward far enough in the internet age. Attorneys General are paying attention, and keeping their eye on various parties, but they aren’t aggressively pursuing startups like ours.
So, did we have to pay all the extra money? Probably not. We’re not advocating that anyone skirt the rules. The point is that knowledge is incredibly potent. If we knew we could get the Excel files of every single nonprofit in the US, for free, from an IRS webpage, that would have helped (you can). If FirstGiving had entered the market sooner, that would have helped too. We could have gotten through our first 18 months spending $10k less and generating more revenue than we did.

Our Competitors

There still aren’t very many companies out there doing similar things. Rt2Give (TwitPay) gave up at least a year ago. Snoball continues (thanks to some nice fundraising rounds in lieu of actual growth) and their model is the closest to HelpAttack! Pledge4Good, Rainmaker App, Charity Swear Jar, Pledgie… there are always a spectrum of new companies and new models out there. Kickstarter-style sites, and team fundraising sites, meanwhile, have done very well in the past few years. So…

Does Social Media Fundraising Work?

This is the $100B question. If you’re reading this you probably already know that Americans donate around $300B per year, but that amount has been flat for the last decade. Online giving has been growing hand-over-fist, but still represents only around 10-15% of the total. Meanwhile, direct mail and fundraising from other channels have likely declined by the same margin. If nonprofits are going to grow overall, and gain more resources to fight the world’s ills, online fundraising has to grow faster. Social networks and social media seem like the most obvious place for that to occur.
Some entrepreneurs confide privately that “nonprofits don’t know what they are doing.” In some cases, with regards to online fundraising, that is absolutely true. There are some organizations out there that will be a lot smaller in 10 years for this reason.
But that’s cynical. What’s really going on is that nonprofits don’t seem to have TIME for anything new. Small nonprofits are stretched extremely thin. Even if the executive director “gets” the internet and social media, how much time can they spend? Can they afford any of the tools that help save time? Can they afford ads to help boost their community growth? Medium and large nonprofits suffer from other maladies: The most common is that the communications team may do a fabulous job managing the website, blog, and social media, but the fundraising department is in another silo. The communications team is driven by engagement: likes, comments, stories, interactions, and community growth. We observed that this environment does not make it easy to create, establish, and sustain a recurring fundraising program within an online community. That’s a whole new ball of wax and although large nonprofits have more resources and staff, they still don’t have enough bandwidth.
Another factor is that after a few years of record growth and constant buzz, financial realities have hit Facebook and other networks, and many nonprofits are disillusioned at their inability to efficiently reach the communities they worked so hard to build.
I still believe social media fundraising absolutely can work. For most who try, it doesn’t, because:
The numbers don’t work out: Not enough people see or spread enough posts to generate enough clicks for the conversion rate to favor viral growth. You either need to start with a very large audience or sacrifice the fundraising potency of a message for viral potency. The solution to this problem is to nurture partners with larger communities and to craft a set of messaging that will spread AND get clicked on.
They only try once. Almost never will a single Facebook post bring in a significant amount of money (natural disasters perhaps the notable exception)
Social media and fundraising practices at most nonprofits are not integrated. Sometimes these teams don’t even talk.
Perhaps we would have been successful if we executed our plans better, or perhaps we would have been successful with different plans, or the same plans in a different order. Who knows. A few people said we were more of a feature than a business, and that may have been true.
What do you think? Good luck to all those working to crack this very tough nut!

About Ehren Foss: “Co-Founder and CEO: has a decade of diverse technical experience with web programming, database administration, and many of the open source tools that help make the web an amazing place to work. He is the founder of Prelude Interactive, a web development firm. Before that he worked at Alchemy Systems an Austin, TX company specializing in professional development and training systems. Ehren is a graduate of the Massachusetts Institute of Technology.”

Editor’s note: This post first was first attributed incorrectly to David J. Neff, co-founder of HelpAttack. It appeared on HelpAttack!’s website and is reprinted here with Neff’s permission. The Austin-based startup shut down in October.

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