Internet Fundraising

Internet fundraising continues to grow as a channel for individuals to donate to charity. This early article on Internet fundraising, while somewhat dated, still contains important tips for nonprofit fundraisers. Contact us to learn how to apply the latest strategies of Internet fundraising to your organization.

Raising Money on the Internet

Part 2: Fundraising on the Internet

by Nick Allen

U.S. nonprofits raise an estimated $150 billion a year, 80 percent of it from individuals. In response to mail, phone, and personal requests, individuals give perhaps $30 billion in small donations to non-church charities. In the next decade, e-mail and Web fundraising could account for 10, 20, even 40 percent of these donations - perhaps more and sooner.

People 55 or older make up the majority of nonprofit donors today. While older people are going online rapidly, many of the oldest donors - the most important for their bequest potential - may never get online. However, if nonprofits can use the Internet to persuade younger people to give, it will begin building the donor base of the future.

A recent San Jose Mercury News story, "Net Result a Plus for Non-Profits," (June 23, 1998) surveyed online fundraising efforts.

A few groups have experimented with banner ads - mostly donated impressions - to bring people to their sites. In a recent effort using banner ads to bring people to a holiday season donation site, the "acquisition cost" per donor would have been comparable to direct mail if the organization had paid for the ads (which were donated).

Real Networks has also conducted several fundraising and membership-building experiments, including the Julia Louis-Dreyfus video pitch which enlisted more than 2,500 non-paying new members for the Environmental Defense Fund's Action Network. Tori Amos fans were offered 13 online videos in exchange for a contribution of $5 or more to her sexual abuse organization, which grossed about $6,000. This effort may indicate that one-shot efforts don't raise a lot of money and that music video fans aren't the most likely online donors.

NonProfitAuction.com, funded by Broderbund, the Washington Post, and a venture capital firm, sought to conduct online auctions for organizations; it closed its doors last month after failing to find a single large nonprofit client who could collect enough products to auction. Onsale and other commercial auction sites, as well as Universal Studios and others, conduct a few auctions to benefit nonprofits.

The absolute numbers of people making contributions have been small, and few organizations have invested the time and money necessary to resolicit these donors and track them. Will they give a second gift? What's the best way to resolicit them - by e-mail, phone, or mail? How are they different from mail-acquired donors in demographics, preferred communication channels, giving levels, etc.? We need to explore these questions.

Nonprofits can often profitably invest $5 to $30 (sometimes more) to acquire a new donor via direct mail. Acceptable cost depends on calculations of the long-term value of the donor in terms of subsequent gifts and even bequests and other "planned giving." Most of the donors acquired online so far have not given a second gift or third gift yet, so their long-term value is unknown.

Of course, the Internet offers other attractions to fundraisers. It may enable them to:

• reach younger donors and others who can't be reached by mail or phone
• build much closer, personalized relationships with donors than is practical with mail or phone
• cultivate donors and potential donors by enlisting them in action networks
• send immediate "special appeals" in response to news, events, and other special opportunities
• communicate and fundraise at much lower cost and with much less waste of resources

What's working

Based on very limited information, the most successful fundraising efforts so far involve:

• National organizations with high name recognition and credibility
• Content-rich, frequently updated (expensive) sites with relatively high traffic
• Fundraising "pitches" tied to content on the site

There is also evidence that fundraising can be more successful when it's tied to well publicized events. The Red Cross site, for example, gets more traffic and more donations during big floods and other disasters. The ACLU site gets more traffic when Internet censorship issues are on the front page; an environmental site might get more traffic around Earth Day or around a big oil spill.

Members and potential members who receive an organization's e-mail newsletter and/or who are part of its action network may also respond more favorably to traditional mail or phone solicitations.

The future of Internet fundraising

As U.S. Internet use increases dramatically in the next 2-3 years and becomes near-universal by 2005, acquiring, cultivating, and renewing donors online will become central to many organizations' fundraising efforts.

More bandwidth will make it easier to send and receive information-rich content. For instance, an enviromental or electoral organization could send every member a colorful map with toxic waste (or voting) information on it. Urgent appeals from the executive director or a celebrity supporter could include audio and video. Already many e-mail users can receive content-rich HTML-mail and respond to messages by clicking to Web pages. As Internet connections become always-on, e-mail and the Web may become seamless.

Improved Internet security (and a major PR campaign to convince consumers that Internet transactions are safe) will make most people as comfortable sending their credit card information online as they do calling an 800 number to order from Victoria's Secret today. Micro-transaction payment systems will make it easy for Web or e-mail users to click on a banner or Web page or e-mail and contribute $1, $5, or $10 without filling out a long donation form. When people can purchase information for 50 cents or $1 with just a click on their cyber-wallets, organizations will be able to sell information retail.

The Internet-integrated databases will allow organizations to relate more individually to members and potential members. With a member's profile, you could address her personally, customize an e-newsletter with the issues or events that she cares about most, and serve her the pages you think she would be interested in. Your fundraising solicitations could be tailored to her interests and giving level, too.


About the author
Nick Allen is president of donordigital.com, which helps nonprofits do online fundraising, marketing, and advocacy. With Mal Warwick and Michael Stein, he is author of the first book on online fundraising, Fundraising on the Internet. E-mail Nick, or call (510) 647-2700, or visit his web site at www.donordigital.com.

Other articles on Fundraising and marketing on the Internet
• Does your organization need a Web site?
• Fundraising sites worth seeing
• Using e-mail to cultivate donors
• 10 ways to get more people to your site
• University fundraising online
• Online guides for donors