How to Fund a Movement for Sortition

Exactly what is the best way to obtain funding for sortition advocacy? I examine some of the literature on charitable funding and how it could be applied to the sortition movement, as well as with the nonprofit Democracy Without Elections.

How are most nonprofits funded?

Foster and Fine [1] analyzed 144 “high growth” nonprofits with greater than $50 million in revenue. The dominant sources of funding are:

• Government: 40% of high growth nonprofits relied on the local, state, or federal funding. Examples include medical research, foreign affairs, human services, educational services, etc.

• Service Fees: 33% of high growth nonprofits relied on service fees.

• Corporate: 19% of high growth nonprofits relied on corporate charitable giving. The vast majority of corporate donations is in-kind donations, not cash (for example food for food banks).

• Individuals: 6% of high growth nonprofits rely on individual funding. Major gifts require great personal involvement. Issues that touch middle-class Americans, such as environment and health, tend to secure broad individual support. Individual donation drives tend to use a clear, basic message.

• Foundations: 2% of high growth nonprofits rely on foundations for funding.

In another perspective, Denison, Yan, and Butler analyze data from the National Center for Charitable Statistics (NCCS) and find the following statistics about revenue in Table 1.

Table 1: Categorized Average Contributions as a Percentage of Total Revenue

A breakdown of the average revenue for a variety of environmental advocacy organizations is shown below in Figure 1, prepared by Foster, Dixon, and Hochstetler [2]. The data is sorted by each organization’s annual budget.

Small organizations with less than $1 million revenue receive about 50% of revenue from foundations. These small organizations receive about 30% of revenue from individual. Larger organizations rely more on individual donations, with foundation support less than 10% of their revenues.

Figure 1: Average Revenue Mix for sampled environmental nonprofits, found from Foster, Dixon, Hochstetler [2]

Are there dominant funding sources?

For smaller environmental organizations with less than $1 million in revenue, funding sources are varied, though about 50% of small organizations have funding dominated by foundations (See Figure 2). About 25% of small organizations have funding dominated by individuals. About 25% of small organizations have no dominant source of funding. So although foundation funding is the most likely for small environmental organizations, it seems that a healthy market does exist for mixed or individual contributions.

Figure 2: Dominant funding sources from Foster, Dixon, Hochstetler [2]

Funding Models

From the data survey, Foster, Kim, and Christiansen develop what they believe are Ten most viable models for funding [3]. These models are:

1. Heartfelt Connector

These nonprofits focus on causes that resonate with existing concerns of large numbers of people at all income levels. Prime cause areas include environmental, medical research, and international areas. Examples include the Susan G. Komen Foundation, Race for the Cure, or the Make a Wish Foundation.

This model is appropriate if:

• You already have a large cross section of people already shown that they will fund causes in this domain.

• You can communicate in a simple and concise way.

• You can attract large numbers of volunteers.

The tactical tools for this kind of charity include: special events, direct mail, and corporate sponsorship.

With sortition, I think it is possible to create a slogan with mass appeal, though I don’t know what that slogan is yet. “Smarter democracy”? “Better democracy”? “Defending Democracy”? However these slogans are not necessarily tied to mass sentiment. Everyone hates cancer and wants to cure it. Not everybody understands what “Smart democracy” is. Though for example with the environmental movement, they somehow eventually created that narrative in the public mind, that “helping the environment”, whatever that meant, was a good thing.

3. Member Motivator

The Member Motivator model relies on individual donations. Individuals donate money because the issue is integral to their everyday life, and they somehow draw collective benefit. This is often involved with religion, environment, the arts, culture, and humanities. Examples include the Saddleback Church, the National Wild Turkey Federation (protects turkey habitat, promotes turkey hunting), and National Public Radio (NPR).

This model should be considered if:

• The mission creates an individual benefit that is also perceived as an important social good.

• Individuals develop a deep loyalty to the organization in the course of receiving an individual benefit.

• Infrastructure exists to scalably reach out to beneficiaries.

Its tactical tools are membership, fees, special events, major gifts, and direct mail.

With respect to sortition, we have no public benefit to provide. Yet membership driven political organizations do exist, for example the Democratic Socialists of America (fiscal year 2021 revenue $6.8 million at peak 2021 membership of 95,000).

I personally am biased in favor of this “Member Motivator” model. The Member Motivator model happens to be most compatible with the notion of a democratic organization and is best aligned with the values of Democracy without Elections. Support by any large value donors or foundations will erode the democratic character of a self-professed democracy. Donors will be keen to exert influence, good or bad, to influence the organization towards their personal agenda. As more influence is exerted, supporters of mass movement, small-D democratic politics might become disillusioned by the organization and abandon it. It should be noted that the vast, vast majority of nonprofits are not organized as democracies like Democracy Without Elections. Part of any democratic organization I have been a part of has some kind of dues as a core part of its funding mechanism, whether we talk about unions, worker and housing cooperatives, or even your friendly-neighborhood HOA.

Are people sufficiently committed to democratic power to turn to democratically generated mass funding as the core source of power? The idealism in me wants to say yes. Perhaps the reality is No.

However, in order to implement a member model, we should think of a kind of benefit we can offer members. Perhaps some yearly vacation get-together?

4. Big Bettor

Some nonprofits rely on major grants from a few individuals or foundations. Examples include the Stanley Medical Research Institute or Conservation International. Big Bettors often launch with already significant revenue already secured.

Consider if:

• We can create a tangible and lasting solution to a major problem.

• We can clearly articulate how we will use large-scale funding to achieve our goals.

• We can attract extremely wealthy individuals or foundations interested in our issue.

Its tactical tools are major gifts.

6. Policy Innovator

The Policy Innovator model relies on government money to address social issues that are not clearly compatible with existing government funding programs. These nonprofits convince governments to support alternative methods, usually by presenting their solutions as more effective and less expensive than existing programs.

Consider if:

• We can provide an innovative approach that surpasses the status quo in impact and cost, compelling enough to attract government funders.

• We can provide government funders with evidence that our program works.

• We can cultivate strong relationships with government decision makers.

• There are sufficient pressures on government to overturn the status quo.

Its tactical tools are legislative appropriation or earmark, executive earmark, and government pilot projects.

Other Models

Foster, Kim, and Christiansen list several more models that in my opinion are not applicable to sortition.

• Beneficial Builder - These nonprofits are reimbursed for services that they provide. Examples include the Cleveland Clinic, hospitals and universities.

  The total fees that beneficiaries pay typically does not cover all costs; the nonprofit typically develops long-term relationships with the benefited to provide support. Universities for example receive about 30% of funds from donations.

• Public Provider - Works with government agencies to provide social services.

• The Beneficiary Broker competes with other brokers to provide government funded services to beneficiaries.

• The Resource Recycler collects in-kind donations, then distributes these goods (for example a food bank).

• The Market Maker provides services to facilitate transactions between donors and payors, for example organ donation (where there is a demand for organs but illegal to sell them).

• The Local Nationalizer focuses on local issues, with funding raised locally, to focus on issues important to local communities. Examples include Teach for America, or Big Brothers Big Sisters of America.

Applications to Sortition and Democracy without Elections

Policy Innovator

Several sortition-affiliated nonprofits such as the Sortition Foundation and Healthy Democracy are pursuing the Policy Innovator strategy.

Big Bettor

Of-by-For might be pursuing the Big Bettor strategy.

For Democracy without Elections, there remain two key problems. Can we clearly articulate how we will use funds to solve the problem (presumably, the incompetence or undemocratic character of status quo governance)? Can we attract the wealthy to this cause?

It should be noted that only 2% of “high growth” charities rely on the “Big Bettor” strategy.

Also, are we going to be competing against other pro-sortition organizations for the same small pot of foundation money? That is a poor use of our resources. What is Of by For doing in this space?

Heartfelt Connector and Member Motivator

Ironically, there do not seem to be any pro-sortition organizations pursuing mass movement funding through individual donation or membership. Yet there is more money in it; there is three times more money given as individuals than as foundations.

This is a core question we need to ask sortition advocates. Should we strive to become a mass movement? Can a mass movement survive without funding from the masses?

Are Foundations an Ally or Enemy?

From my naive-Marxist approach, it can be argued that charitable foundations are used by the wealthy elite to pursue their personal and often selfish interests. Because it is in the interests of the wealthy to preserve status-quo power structures, they will not offer support to any political reforms that could rock that boat.

For example, Francis [5] examines a theory of “elite capture” in the case of the NAACP and argues that funders “engaged in a process of movement capture whereby they used their financial leverage to redirect the NAACP’s agenda away from the issue of racial violence to a focus on education at a critical juncture in the civil rights movement.” Francis argues that the Garland Fund (created by benefactor Charles Garland) was the principal cause in shifting the NAACP agenda away from racial violence (lynching, mob violence) towards education (ie, the campaign to end segregated education after 1930). Francis also looks at some examples where funders co-opt litigation strategy and attempt to de-radical militant black and Latino organizations. Francis argues that the unintended consequence of this focus on education was a permanent focus on education (desegregation litigation) for the rest of the 20th century. Today, I no longer see the NAACP as a leader in black rights (interesting aside, the NAACP is led by a huge 64 member board!).

I see ways that sortition can ally itself to elite interests. Many elites consider themselves rationalists and intellectuals. A “democracy of informed opinion” therefore could be attractive to them and sooth their egos. “I am an intellectual of informed opinion. If we created a democracy of informed opinion, surely the informed people would be more likely to see things my way.” An informed and deliberative democracy could be advantageous to some elites against other elites.

How could the sortition movement be captured? Many advocates are suspicious of “democratic laundering” where elite decisions are laundered through a Citizens’ Assembly (CA) to generate legitimacy. I myself haven’t thought deeply enough about capture to make any recommendations.

Donations vs Volunteering

What is the relationship between donating money vs volunteering time? Would emphasizing donations reduce volunteering? From Yao [6], “standard economic theory assumes that donating and volunteering are substitutes, as those with time will volunteer and those with money will donates.” Some researchers looked into the data and concluded that “unpaid volunteer time and paid labor time funded by donations area considered perfect substitutes”. However other researchers see more mixed conclusions. Yao sees a complementary effect.

For donations, Yao finds:

• Older people are more likely to donate

• High family income increases frequency of donation

• Marital status has an extremely significant influence on donation frequency. Married coupes donate more than singles.

• Families with more children donate less.

• Religious individuals are more likely to donate (47% higher).

• Rac, residential area size (urban vs rural), education, politial party affiliation, and employment were insignificant factors.

For volunteering, Yao finds:

• Income is also the most significant indicator of volunteering. High income families volunteer more than lower income families.

• However, people of all ages tend to volunteer, unlike giving money.

• People with high education are more likely to volunteer.

• Retirees are not significantly more likely to volunteer.

• Employed individuals were more likely than the unemployed to volunteer.

• Democrats were more likely to volunteer, and Democrats volunteer more often than Republicans (35.7% higher).

• Race, religion, residential area size, number of children, and self-rank were not significant contributing factors.

Yao finds that charitable giving and volunteering are strongly correlated. Those that give time are also highly likely to give money, not just one or the other.

Therefore, it seems to me that it is appropriate to ask Democracy Without Election members for both their time and money, and not just focus on volunteer time.

Effective Fundraising

Kim, Gupta, and Lee [7] have suggestions for effective fundraising. Kim et al looked at an environmental and research nonprofit who chose to remain anonymous. This nonprofit was funded by a combination of pure donors (232), pure members (720), and member donors (1219). Summary statistics for donations is shown in Table 2 below (also marked Table I) by the source. For this particular organization, Member-Donors are the highest contributors to revenue. Both pure members or pure donars contribute roughly the same revenue.

Table 2: Donation characteristics between Groups of Individuals in Anonymous Nonprofit. Kim, Gupta, Lee [7].

Kim, Gupta, and Lee find that:

• Individuals are more likely to give with lifetime. Individuals tend to add donations to their giving portfolio or donate repeatedly over their lifetime, even in the presence of a membership option that provides tangible benefits. “Prosocial behaviors can become habitual over time”.

• The propensity to participate in membership is cyclical, peaking every 12 months.

• Membership induces a sense of belonging and identity that increases the likelihood of repeat giving.

• Pure donors are motivated by greater intrinsic motivation.

• Membership appeals have a consistent positive effect on membership renewal, especially effective in the first three years and less so later.

• Multiple pathways should be given (both membership and pure donation).

• Emphasize participation, not amount. Givers exhibit greater responsiveness with respect to participation.

• Lapsed donors should be treated as new prospects.

• Don’t give up on lapsed members too soon.

• The timing of appeals should be optimized.

Conclusions

Do I have any conclusions about how movements are funded? The current status of my research put into this essay is mediocre. The scholarship I’ve looked at mostly focuses on 501c3 nonprofits. I don’t really get into the history of how various social movements have been funded. I devote no time towards any radical or revolutionary movements (Where did the Bolsheviks get their money? How did Simon Bolivar fund the revolution? How does revolutionary politics fit into all of this? How about the Worker rights movement?).

For 501c3 nonprofits, funding comes either from:

• Individual donations

• Foundation

• Corporate in-kind donations (food, supplies)

• Government

There doesn’t seem like a one-size-fits-all solution. For example, different environmental advocacy nonprofits pursue different funding strategies. Some are member based. Some focus on mass individual giving. Others focus only on foundation giving. Then finally many have mixed portfolios.

Environmental nonprofits that can achieve the highest level of revenues tend to transition to mass individual giving.

I suspect the following pattern: A core group of volunteers and wealthy patrons kick-start a movement to set up a ground game for mass funding. If the movement can grow, funding transitions away from foundation money and towards individual donations.

My bottom line is, the pro-sortition movement needs money, and it shouldn’t limit itself on how we get that money at this point in time. All viable strategies need to be explored experimentally, by trying out both individual, membership, and foundation strategies. The sortition movement is too weak at this time (2024) to worry about foundation capture.

References

1. Foster and Fine. How Nonprofits Get Really Big. Stanford Social Innovation Review. 2007.

2. Foster, Dixon, Hochstetler. Funding: Patterns and Guideposts in the Nonprofit Sector. 2003

3. Foster, Kim, Christiansen. Ten Nonprofit Funding Models. Journal of Public and Nonprofit Affairs, Vol 5, No 1, 2009.

4. Denison D, Yan W, Butler JS. Managing Risk and Growth of Nonprofit Revenue. Journal of Public and Nonprofit Affairs, 5(1) 56-73, 2019.

5. Francis M. The Price of Civil Rights: Black Lives, White Funding, and Movement Capture. Law and Society Review, Vol 53, No 1, 285-309, 2019.

6. Yao K. Who Gives? The Determinants of Charitable Giving, Volunteering, and their Relationship. Wharton Research Scholars, 126, 2015.

7. Kim S, Gupta S, Lee C. Managing Members, Donors, andd Member-Donors for Effective Nonprofit Fundraising. Journal of Marketing, Vol 85(3) 220-239, 2021.