Monday, March 14, 2011

BIG’s Blog: What Part of Free Don’t You Understand? – Part One

Over the course of the next month, I am going to try to drive home the point that there is a very big “leveling of the playing field” for fund raisers going on through new technology. By-the-way, this is good news for small fund raisers and not-so-good news for larger fund raisers.

In case you haven’t noticed, the prices of computers and services through the Internet have gone down over the past twenty years. Somebody said that if the price of a new car followed the price of computing power in your PC or laptop computer, that a new car would cost 50 cents. Remember long distance bills twenty years ago? Now we get unlimited calls for $20 and some calling services over the Internet are free.

Free...what’s with that? How do they stay in business?

Why is this bad news for large fund raisers; especially those that have large direct mail fund raising programs? Mail is about economies of scale. If you are a small organization and you mail 10,000 pieces of mail, you are going to pay a much higher cost per piece than someone who mails 100,000 or one million pieces. Scale works for the large direct mail fund raising organization.

But now let’s talk email. A small organization can send out 10,000 emails to their supporters for virtually the same price as the large organization sending out one million. The larger organization will still reap more donations, assuming both have similar response rates, but, the larger organization has lost its economies of scale advantage.

What are the implications? We’ll talk more about those in the next blog.


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