The basic idea: reporters propose story ideas or “tips” in the hope that there will be enough “citizens” interested in making a pledge of support.
Here’s how the Spot.us site describes what this means:
“Pledges give reporters a sense of community interest in a news “tip.” It does not represent real money. Nothing is committed – although we ask you pledge only what you’d be willing to eventually donate if a reporter builds a full “pitch” inspired by this tip. Donations to pitches are tax-deductable and are a transaction. If the pitch is unsuccesful, you will receive money back in the form of Spot.Us credits. No matter what your money will go to support journalism.”
Originally, I think Dave saw Spot.us as a broker between reporter and audience, but it’s actually turned out to be more complex than this, and one of the most interesting developments was his decision to hire a community organizer to help bring communities of interest (both networks of people and institutional nodes) into connection with stories and reporters).
But the basic fundraising model is this: the donor supports not the organization, but the project sponsored by the organization. Right now, Spot.us as an organization lives by virtue of the Knight Foundation grant (and as a test case, that’s IMO an appropriate use of foundation money).
I agree with Ruth Anne: with the Knight grant as a backstop, Dave’s done an amazing job, not just in thinking through some of the technology needed to make crowdfunding work. Spot.us respects the work that real journalism requires, and it opens out what can be a professionally hermetic world by putting reporters in direct contact with the audience, by making the source code openly available, by encouraging others to try it, too. Now it’s true that Spot.us is carrying a heavy load of expectations (which Dave has so far done a really good job of managing), but the project has already made its mark.
But the question, I think, is whether and how folks will shift their loyalty from the project to the organization (there’s a second question, too, which is whether this deeper level of donor loyalty matters for Spot.us-like organizations – maybe I’ll have to go have a conversation with Dave about this, huh?)
Here’s the conventional fundraising wisdom: if a donor makes a donation in response to a premium (for instance, a calendar) or as the price of admission of attending an event, the “conversion” rate for these donors – that is, the proportion of donors who make a second gift – is usually way lower (or the same thing: much more expensive) than the cost of getting a second gift from a donor who comes in through, say, direct mail that makes the case for why someone should part with their hard-earned cash without getting anything in return (except huge psychic or political or cultural rewards).
Non profit fundraisers spend a huge amount of time and effort trying to figure out how best to shape a relationship with donors that builds the strongest possible basis for long-term loyalty – and almost without exception, if an organization can make the case that its core mission – and not just a particular program or project – is worth supporting, its “conversation” with its donors is that much more advanced. That can translate into serious dollars and cents.
At Mother Jones, we have our own version of this headache: nearly all of our donors come to us as subscribers to the magazine for the “crazy price” of $10. It’s a transactional relationship: you plunk down your ten bucks, you get the magazine. A simple exchange. But it costs way more than that to actually do the reporting, and that’s why we push hard to encourage folks to become donors, too. That conversation is all about our mission – independent investigative journalism+progressive social change. Not just about a magazine sub, but about making a difference in the world. We put a ton of time and $ into making the case that our subscribers really oughta become donors too. About 12 percent of our subscribers become donors as a result.
So what I’m wondering is how to encourage Spot.us donors – enough of them with large enough gifts – to make the jump (and it could be a big one) to buy into Spot.us’ mission as a whole. Not just the particular story they want to see published.