Building a Network of Support

Tuesday, February 5, at noon, U.S. Eastern time

Matt Flannery, co-founder of Kiva -- a group that connects donors and entrepreneurs in developing countries -- will be available to answer your questions on this topic and to share his experiences with creating his charity's popular social network.

A transcript of the chat follows.

Sam Kean (Moderator):
    Hello. I'd like to welcome everyone to today's discussion about using Web 2.0 tools to connect with donors, volunteers, and supporters. We have with us today Matt Flannery, co-founder of Kiva—a group that uses the Web to connect donors with entrepreneurs in developing countries. He has a lot of experience building social networks and using other Web tools, so please ask away. We have already received some excellent questions, but we have plenty of time for more. To submit your query, please click on the "ask a question" link above.

Question from Stacey, Sierra Club North Star Chapter:
    What kind of time commitment do you think social networking & online fundraising requires to be done right?

Matt Flannery:
    I think it requires a lot of commitment and you have to love the process, not just the result. There is a common perception that you can take any website, sprinkle social networking on it, and it will magically become viral. That's just not true anymore. You have to appeal to peoples' base-level desires, which is a tricky thing to do when you are trying to do good in the world.

Question from Marilyn Borchardt, Food First/Institute for Food and Development Policy:
    I need suggestions for how to participate effectively, but efficiently in Web 2.0 with just one part-time development person and one part-time volunteer.

Matt Flannery:
    I believe that making a great product is not about manpower. That's the amazing thing about the Internet, it's a place where one person, with a great idea, can compete with major corporations and governments on a level playing field. Look what youtube did to google, or what craigslist did to ebay. It's inspiring. I suggest adopting a crazy level of focus and doing only one thing well.

Question from Edith Asibey, Asibey Consulting | Communication and Advocacy Strategies:
    The NYT magazine recently ran a story on your supply challenge. When you think about how to best address this challenge, who is your primary client? The micro-entrepreneurs in the Global South or the lenders in the North?

Matt Flannery:
    I would say that Kiva operates a marketplace that serves three primary constituents: lenders, borrowers and microfinance institutions. To make this thing work, all three parties have to get a fair deal. In the future, hopefully we can help do away with the distinction between global north and south. We've had Malaysians lend to Iraqis and Mexicans lend to Mexicans. Lines are being blurred and that's what excites me everyday.

Question from Chris Flippo, Goodwill/Easter Seals Minnesota:
    As a marketer, I fear jumping on the bandwagon without measurables in place creates more work without knowing what does and doesn't work. We could all use guidance on a place to start that might actually grow our supporter lists and generate actions and even donations in the long run. With a plethora of social networking sites, where do we start? How do we start?

Matt Flannery:
    Social networking is a vague idea. Kiva, to be honest, really doesn't do true social networking yet. However, we did one thing really well -- get people to upload pictures of themselves and tell a short story. If you can focus on anything first, get people to put their pictures on the site!

Question from Kate Cosgrove, Volunteer Center:
    We are a very small nonprofit and the middle man placing volunteers at other nonprofit agencies. We do not work directly with the causes. How can we get donors to contribute and people to work on our board? It seems in today's world, it is much more popular to work for disease or poverty orientated nonprofits directly or the large organizations that have money for marketing and PR. It is very frustrating. The volunteers seem to understand our work. I look forward to your response.

Matt Flannery:
    I really really sympathize with this problem. Small foundations and individuals want to directly fund the recipients of aid. Large foundations are extremely risk averse and would never fund a new or small non-profit. What to do? This was the problem we were facing when Kiva started. We just decided to keep our day jobs and use those jobs as our primary source of funds. It's not sustainable to do this over the long term, but it allowed us to get enough traction so that, by the time we quit our jobs, we had real results to present to the risk averse organizations of the world.

Question from Autumn Walden, Center for High Impact Philanthropy:
    As we are a new research center housed in the University of Pennsylvania, can we take advantage of online social networks such as Facebook or Second Life and still be taken seriously in the academic and philanthropic community?

Matt Flannery:
    I imagine so, but I've been out of academia for a long time so I forget exactly what it takes to get taken seriously. Most of all, I wouldn't worry about being taken seriously.

Question from Molly Mayfield Barbee, Peace X Peace:
    Peace X Peace (http://www.peacexpeace.org) has embraced many Web 2.0 ideas, such as dropping in with comments on blogs relevant to our issues, interacting on social networks like Facebook and other smaller issues-based networks, online videos on YouTube, etc. We find that we're able to touch more and more people through these tools, but we're challenged by how to actually get these new contacts to make the jump back over to our site from the social networks or other interactive sites where we find them. What is your advice for increasing our "stickiness" to these potential members so that they get more involved in our online programs and/or what are your thoughts about tracking our membership through multiple networks/third party networks?

Thank you for your consideration,
Molly

Matt Flannery:
    Stickiness? We actually have a problem with our site not being sticky enough, so I sympathize. Here are some ideas we are pursuing:

-- Making sure the site changes with nearly every page load and that there is loads of new content every day.

-- Iterating on new features every two weeks (we are bad at this one)

-- Giving people lots of feedback in the form of statistics and stories.

-- Letting people compare themselves in a quasi competitive environment.

I'm not exactly sure about your last question. I think third party social networking software is better for orgs not really focused on technology as a core strategy. If you consider the Internet as core to your business, you shouldn't outsource it to a third party in my humble opinion.

Question from Pam Masters, Community Opportunities Inc.:
    My non profit it busy playing catch up because prior to two years ago (when they hired me) we did not do anything other than exist on the amount of funds that were received from contracts for client care. My question is...how can we bridge the funding gap in the most efficient and effective way in the least amount of time?

Matt Flannery:
    I'm a big fan of demonstrating that you can make revenue early on. Even small revenue streams demonstrate that you are looking to be sustainable. Foundations get really excited about sustainable models and will be more willing to help you bridge the gap to long term breakeven.

Sam Kean (Moderator):
    We're approaching the halfway point. We have a lot of great questions to come, but we invite you to ask more by clicking on the "ask a question" link.

Question from Cheryl, Disabilities Organization:
    My small non-profit provides affordable, accessible housing for people with severe physical disabilities. We're just starting a fundraising program and would like to include an online presence in the mix. We only serve a small group of people (85+) in one metro market. How can we connect online in a very localized way to increase our community visibility as well as build a funding base? Is this really a good use of time for this type of organization?

Matt Flannery:
    It sounds like you are primarily focused on housing and looking to incorporate web fundraising on the side. I would suggest using third party software if technology is not going to be core to your business. Some things to check out: Ning, Onesite, blogger, plone, etc. You will need someone part time to manage the software no matter what. Find that person first!

Question from Elisa Lurkis, The Institute on Global Conflict and Cooperation:
    Our organization has just started using an online giving button for prospective donors. But we know that getting people to give involves more than just creating the button and then just going on as usual. What we don't know, is what we should be doing differently in order to persuade people to give online. Our institute supports research and policy on international security, so it is more abstract then say Nothing but Nets, and we cannot say definitively that $100 will support x. Do we need to be able to make this case in order to receive online donations?

Matt Flannery:
    I see two major types of successful online fundraising in the short history of the web:

1) News driven fundraising (like the tsunami or howard dean)

2) Person to person fundraising (like Kiva or Donorschoose).

Most other online fundraising tactics haven't been very successful in terms of dollar amounts. So, if possible, I would try to get the pictures of the actual people and products you are supporting onto your site.

Question from Carol Freshley:
    Is there a good resource to determine the amount of funding and for what cause is raised through social networking sites? I ask this because it seems there is a tremendous opportunity, as seen by Kiva - but is it unique to Kiva. Thank you.

Matt Flannery:
    Unfortunately, there is not a great source. It would be nice to have a standard place to understand what is going on in our space. In my limited knowledge, I would check out donorschoose, kiva, changingthepresent, and Heifer International for examples of sites that are raising substantial amounts online.

Question from M. Cummings, Latin American Youth Center:
    When starting an online campaign how would you advise moving forward if all organizational online efforts are not yet coordinated, if plans for sustaining existing projects are not yet clear, if there is an interest in exploring and testing the waters? In other words, what elements must be in place before jumping into the waters of online fundraising and communication?

Matt Flannery:
    I would start by allowing users to see clearly see where their money is going and making sure they get feedback about impact.

Question from Margie C. Sweeney, Helping Hands Healing Ministries, Inc.:
    What legal issues does one need to be aware of with social networking? Are there any specific policies that you recommend?

Matt Flannery:
    I wouldn't worry about any legal issues associated with social networking, unless there are children involved. If kids are part of your mission, I would keep them off the web. Most legal issues arise in terms of accepting donor funds and making sure these funds are used responsibly.

Question from Liz, small nonprofit:
    Can you walk us through the steps? How does an organization start the process of building a social network using LinkedIn or Facebook?

Matt Flannery:
    I would use Facebook! Create an account, start a network, get all of your friends to join the network, provide news and updates through the network. I'm no expert, we never did that at Kiva.

Question from Angela Waters Austin, One Love Global:
    Greetings. Does social networking have the potential to be an effective means to convene international policy and advisory groups? Travel and meetings are huge cost centers.

Matt Flannery:
    I think a wiki is a great way to facilitate a structured discussion online. We use a wiki to enable communication between our Kiva fellows which are spread out between 20+ countries at any given point in time.

Question from Julia, small nonprofit:
    What is the best way to get started with social networking and web 2.0? Can you give me three ideas about how I can begin?

Matt Flannery:
    -- Have a clear product vision

-- Hire the best software engineer you can find

-- Iterate/adapt constantly

Sam Kean (Moderator):
    Our expert has time for a few more questions -- so please get your query in now. Click on the "ask a question" link to post your question.

Question from Tera Wozniak, Johnson Center for Philanthropy:
    Is it more optimal for organizations to use existing social networks for advertising and networking? Or is it better to create your own social network?

Matt Flannery:
    Unless you are a technology company primarily, just use Facebook, ning, blogger, etc...

Question from Deborah Chay:
    Can you talk about issues involved in launching and sustaining a business model that incorporates both microfinance and a more traditional fund raising practice? Can you speak to the role of fund raising and contributed income at Kiva?

Matt Flannery:
    In the year 2007, we spent about $1.7M in overhead and our lenders sent about $18M to the poor through our site. We also raised about $1.4M in optional donations on the site. People spent little amounts on top of their loans voluntarily to help kiva pay the bills. To make up the difference, I raised money from foundations as growth capital.

It's difficult to scale a business this way, because it is unlikely we will raise a large injection to help us really grow fast. A for-profit startup of our magnitude would raise a $20M round from VCs (venture capitalists). Unfortunately, we can't do that as a non-profit. So, we will need to raise smaller amounts in grants and possibly loans, and grow organically as our business grows.

Question from Nancy Ryan, Pathfinder International:
    Our organization has started to engage in social-networking on Facebook and have tried our hand at some of the "viral effect" by using videos and petitions. Are there any other specific ideas (outside of traditional press) that can trigger viral marketing and increase our visibility? Thanks!

Matt Flannery:
    I really like the idea of giving people statistical feedback on their impact, and allowing them to compete. Also, contact blaster, email address book uploaders work well. These are tools that allow users to upload their entire address book and blast out an invitation to all of their friends at once. They can be dangerous if not used carefully. At Kiva, we get 100+ new users a day from users blasting out invites to their friends through our site.

Question from Chris Flippo:
    When you say post pictures and their stories, do you mean on your own site or on a social networking site? Also, how do you go about choosing which social networking site to focus on? Is there target audience demographics available somewhere?

Matt Flannery:
    Making your own site is best if you are truly committed to the Internet as a strategy -- sorry to be a broken record on this chat. If not, just use Facebook!!

Question from J. Norfleet, Latin American Yout Center:
    How long did it take for potential donors to participate in Kiva.org? Did you start with one on one networking or what?

Matt Flannery:
    In spring 2005, Jessica and I spammed our wedding list to get them involved in Kiva. For most of 2005 and 2006, we were signing on 25 or so users per day. In late 2006, we were on Frontline PBS. We started signing up 250 users per day. In late 2007, we were on Oprah and now sign up about 900 users per day. Hope that helps.

Question from Sonja Ostendorf, The Westcott House Foundation:
    Can you share some examples of non-profits that successfully connected through social networking sites? What subjects or messages were established?

Matt Flannery:
    I'm sorry, I'm not sure I have any examples of this. Ironically, I'm not a big social networker myself. Maybe it's because I'm married?

Question from Sarah, nonprofit theater:
    I work for a theater with a well-established fundraising program. We're looking for ways to engage younger people as donors. Any thoughts on how your strategies might translate to an arts organization and/or thoughts on using online networking as a way to connect with young adults?

Matt Flannery:
    I would start with setting up a Facebook group and getting your existing members to join. You can then share news through Facebook and get new people to join.

Question from Sean Stannard-Stockton, Tactical Philanthropy Blog:
    As I think you know, I've been blogging about the implications of your "excess" supply of lenders at Kiva. You have chosen to tell would be lenders that you there are no current funding opportunities. I'm intrigued by the notion that another way to balance supply and demand would be to reduce the lending terms (for instance lenders only get 90% payback of their loan back with the other portion being a gift to Kiva or to someone else in your financial chain). I'm not suggesting you take this action because I do not know your business well enough. But I do believe that you are facing an issue that many other social capital "exchanges" will be facing in the future and that your actions on this issue will set a precedent. I'd love to hear your thoughts.

Matt Flannery:
    Thanks for your suggestion. Currently, here is our strategy in times of excess lenders:

-- Softly cap individual donations at $25, and ask users to reduce individual spending so that others can participate.

-- When the site runs out completely, ask for donations to Kiva so that we can hire more people, sign up more partners and get more entrepreneurs posted on the site.

Your idea of only sending 90% of lender money to entrepreneurs would save us 10%, which wouldn't get us that far. Our supply/demand disequilibrium is much greater than that. Secondly, it breaks the purity of our p2p (peer-to-peer) intentions. It's really powerful to say "100% of your loan goes to the entrepreneur" and that's something we are not going to back away from as long as I'm here.

Sam Kean (Moderator):
    Thank you, everyone, for joining us today. I hope you found the discussion useful. Thank you, also, to our guest, Matt Flannery, for his insight. We'll see you again next week for a discussion about philanthropy and the 2008 elections, with our chat guest Kay Guinane of OMB Watch in Washington, D.C.