August 2008

The most important thing for raising money online is the capacity to accept donations on your Web site.
E-mail costs so much less than direct mail that it is rapidly replacing it as a fundraising medium of choice.
Nonprofit organizations in the United States are raising more than 10% of their revenue online, and that proportion is expected to rise to 50% by 2013.
The way to raise money online is to take your direct mail letters and send them out by e-mail to all your donors.
Almost everyone in the United States is now online, so it’s only a matter of time before nonprofits can expect their donor lists to grow exponentially through an influx of younger donors who will join through the World Wide Web.

Careful now—that was a trick question.

Have you got it? You figured out that not one of these answers is true? Go to the head of the class! But if you’re unsure about whether these statements reflect current reality, listen up. Fundraising online is a highly promising field, but it’s a world in itself, with its own rules, quirks, and culture. If you plunge in blindly, heedless of the idiosyncrasies and challenges of communications online, you may find that fundraising via e-mail and the Internet is anything but cheap.

For starters, here are a few of the things you can (and can’t) expect from online fundraising:

E-mail, not the Web, is the key to raising money online. A strong Web site is absolutely necessary, but it’s far from sufficient. If you build it and just let it sit there, they won’t come.

Online fundraising revenue is growing at an astounding rate—an estimated 35-40% annually—but it’s building on a very small base. The most reliable estimates I can find indicate that e-mail and the Web yielded approximately 1% of total philanthropic revenue in the United States in 2006, or a little more than 1% of giving by individual donors. Even if we assume straight-line growth at the rate of 37% per year (which is not a safe assumption), we’ll have to wait until 2014 before online fundraising accounts for even 10% of philanthropic giving.

Online fundraising techniques don’t work equally well for all nonprofit organizations. Those engaged in emergency humanitarian relief are the biggest beneficiaries—and those organizations with well-known brands, such as the Red Cross, the Salvation Army, and UNICEF, are the biggest of all. Prominent advocacy organizations such as Amnesty International and the Human Rights Campaign have also gained in major ways from the Internet, largely because they deal in hot-button issues that dominate the headlines. (The issues that have attracted the most attention are personal and civil liberties, environmental protection, and human rights.) High-profile political campaigns—with Barack Obama’s extraordinary success the standard-setter here—have benefited, too. Although organizations in other fields have sometimes managed to build significant online donorfiles, they tend to be the exception, not the rule. Not yet, anyway.

Despite the hype about the Internet’s big fundraising success stories, relatively few donors have given online. However, those who do make contributions online give significantly more money on average than do direct mail donors—frequently twice as much. Online gifts of $100 or more are common.

The Internet’s competitive advantage against all other media is speed. In your direct mail fundraising program, you may allow months to elapse between conception and the mailbox. That would lead to utter failure online. It’s no accident that the most successful online fundraisers are disaster relief agencies, advocacy organizations, and political campaigns—because all of them rise or fall with breaking news. To make the Internet work for you as a fundraising tool, you’ll need to find some way to introduce a strong sense of urgency into your appeals.

The demographics of Web users reflect a lower median age than that of direct mail respondents. After all, the median direct mail donor for most nonprofits tends to be 55 or older, and for some organizations the median age can reach into the seventies. But the fact that teenagers and twenty-somethings have grown up with the Internet and can often be found in cyberspace at any hour of the day or night doesn’t mean that they’re now rushing into philanthropy. Yes, online donors tend to be younger than direct mail donors, typically in their forties and fifties rather than their sixties or seventies. But online communications reach older folks as well as youngsters—and it’s the older ones who disproportionately respond to appeals for money.

Decades of research into the habits and expectations of direct mail donors have given us considerable insight into what’s likely to work in the mail, and what isn’t. (Even so, our best guesses are wrong far too often!) Research into the minds of online donors is, by comparison, in its infancy. At this writing, the Web is celebrating its 15th anniversary, and fundraising online on any meaningful scale dates only to the late 1990s. Bluntly put, there’s a whole lot more that we don’t know than that we do know about raising money online.

One thing we know for certain, though: Many of the techniques that work in the mail most assuredly do not work online. There are profound differences in style, format, and approach between the two media. If your Web site features brochures and direct mail appeals transposed intact, you’ve probably already discovered how ineffective they can be.

Oh, one last point: The technical demands of raising money online can be daunting. Chances are, unless you or a member of your staff is a dyed-in-the-wool geek with a broad knowledge of what works online, you’ll find your organization’s performance on the Internet to be limited if you try going it alone. For starters, you’ll need to sign up with an online service provider, such as Convio or one of its less expensive competitors, to manage the technical aspects of maintaining your list, sending out e-mail messages and e-newsletters, and hosting your Web site. You’re also likely to find it advisable to hire one of the growing number of online fundraising consultants. Let the consultant keep up with the proliferation of online opportunities on your behalf—and stick to raising money yourself.

2. Marketing legacies online? (Part 2)

By Rob Blizard

Editor’s note: In the first installment of this article, Rob Blizard reported on the lackluster returns many charities have received on their investment in promoting planned giving online. Below he recounts the positive side of the story.

Not all nonprofits feel let down about their planned giving e-marketing efforts. Some success stories shatter the conventional wisdom. The Nature Conservancy (TNC) recently closed a six-figure gift annuity solely through e-mail contact with a donor who’d run his own scenario with the charity’s online gift calculator and conferred minimally with staff, according to Ed Cadogan, Senior Associate Director of Gift Planning.

Cadogan also tells the story of a donor who included TNC and another organization on the same initial e-mail inquiry. The other organization never responded, leading the donor to fund a $450,000 charitable remainder unitrust to benefit TNC.

With a planned giving Web site less than two years old that’s bolstered by the organization’s weekly news alerts that occasionally link to planned giving information, the American Society for the Prevention of Cruelty to Animals (ASPCA) has closed gift annuities only through e-contact.

“The donor will complete our online form and then we e-mail back a brief proposal. If the donor is interested, we e-mail a more detailed proposal letter and application. When we receive the completed application with a check or securities are transferred, that may be the first time we have direct contact with the donor,” says Matthew Bershadker, the ASPCA’s Vice President of Development and Special Giving. Charles Schultz, President of Crescendo Interactive, tells of a university client who recently received a gift of $3 million from a donor who visited the planned giving Web site for information as a first step. He also notes that one of his client organizations received a call from an 83-year-old donor who ran an online gift calculation. Her question: “Do you have gift annuities for $100,000?” The gift was completed and the e-marketing potential realized.

Meanwhile, Nathan Stelter, Marketing Consultant for the Stelter Company, says he’s seeing the online marketing revolution evolving among some of his clients. “More and more, nonprofits are having terrific success and closing planned gifts from leads that first materialized via Web contact or e-mail.” He cites a $600,000 charitable remainder trust benefiting a Maryland prep school and a Florida university receiving a $1 million gift.

Such cases indeed represent the kind of success for which e-marketing of planned gifts holds such potential.

What the prognosticators say

“We have worked with more than 1,000 nonprofits on their e-marketing for planned giving,” Stelter says. “We knew online marketing would help educate and motivate many donors so that they are more versed in the available options when they are ready to act. This can only help the teams of professionals working with those donors.”

The best strategies for a successful return in e-marketing investments? Stelter advises, “Keeping it simple is our philosophy. Dynamic gift-planning tools, fresh monthly content, and electronic outreach to donors and/or advisors all serve to plant the proverbial gift-planning seed. We are seeing nonprofits increase both gifts and gift expectancies through wise e-marketing. Many of our clients have subsequently closed gifts from conversations that began through Internet-driven contact.”

Volume is also a consideration. According to Schultz, “Many gift planners regularly make e-mail or Web site contacts with only one percent of their support base. Those who increase their regular electronic communication ratios to 30% or more will often double their planned gifts production.”

He also encourages gift planners and nonprofit executives to “involve board members in the discussion of e-marketing potential, because they often will support the program and fund the requisite budget.”

"E” on down the road

While e-marketing may not be revolutionizing charities’ efforts for marketing to receive planned gifts, such change to “video star” from its current status as tool-belt necessity may have its day in the next few years - especially as more Web-savvy generations age, earn higher salaries, and become engaged in the throes of estate planning.

“Seniors will become very comfortable online,” Schultz instructs. “They will expect to interact with gift planners by e-mail and through the Web site.”

“In fact,” he theorizes, “most charities should have a goal for 60% of contacts to be electronic by 2010. This ‘e-contact ratio’ will produce a substantial increase in planned gifts.”

In the meantime, however, the status quo prevails and expectations hang in the balance.

“I think everyone understands that we have to provide a meaningful Web page and e-mail marketing,” Woods says. “While the resultant volume of responses is not knocking our socks off now, we believe that will come with time.”

And, in the world of planned giving, this means a healthy life left at this time for the marketing “radio stars” of personal contact and direct mailthat are still proving to be the most effective devices for generating leads and booking gifts.

Rob Blizard serves as Gift Planning Director for George Washington’s Mount Vernon Estate & Gardens in Mount Vernon. Contact Rob at roberteblizard@yahoo.com.

3. Destination marketing

By Tom Gaffny

At the 2008 DMA Nonprofit Conference in Washington DC, late in January, Tom Gaffny, then Epsilon Executive Vice President, delivered an extraordinary workshop, relating the findings of his year-long study of online best practices. The presentation included a staggering 192 slides and revealed so much about the state of fundraising online today that it was virtually indigestible at one sitting. Tom graciously agreed to allow us to publish his findings piecemeal as a new column in this newsletter. What follows is the sixth installment.

In my year-long study of the online practices of 144 nonprofit organizations, I learned about 12 ways that charities are using the online medium to bring donors closer to the cause...again and again. They’re thus making their organizations more relevant, more provocative, more stimulating, and more engaging.

Here, once again, are those 12 techniques:

Be relevant—be local
Highlight the video
Engage constituents
Leverage techniques that work in the mail
Send information in bite-size chunks
Work at channel integration
Personalize your organization
Be visual—be provocative
Say “thank you” in different ways
Ask friends to “get the word out”
Be timely—be there
Highlight your partners

In my previous columns, I addressed the first three of these 12 approaches. This month I’ll cover the fifth.

Send information in bite-size chunks

Take a close look at the following two e-mails from the American Red Cross—an organization that obviously has a very big message that can’t be accurately conveyed in a single e-mail. Yet these communications convey the gist of one important element of the Red Cross’ essence, and they do so in a context that clearly fits the time in which they were sent.

Here’s another great example, illustrating how Thirteen/WNET New York—that city’s large PBS affiliate—deals with just one of a large number of programs calculated to appeal to a substantial number of viewers. Here, the specifics of the message, like those from the Red Cross, are calculated to be more motivating to many recipients, even if they aren’t of interest to everyone.

And here’s another example, this one from Covenant House—a Father’s Day message that makes no effort to span the totality of the organization’s mission, but focuses on a single connection with donors’ lives.

Finally, take a look at this excellent promotion from Defenders of Wildlife. Note how specific and detailed is the message—calculated to capture attention easily and provide a point of entry for those recipients to whom the idea of “adoption” appeals strongly.

Stay tuned for future columns, as I explore channel integration in my next column, and the remaining six online best practices of the American nonprofit sector in the months that follow.

Tom Gaffny can be contacted at Tom Gaffny Consulting, 71 Cliff Road, Wellesley MA 02481, phone (781) 685-6825, fax (781) 685-0817, e-mail tomgaffny@hotmail.com.

4. Making it about “you”

By Managing Editor Deborah Block and Paul Karps

The best kind of direct mail fundraising package draws recipients in by making the appeal about them—not about the organization.

That means you must constantly strive to engage readers, and the most effective way to do this is by emphasizing their connection with what your organization does. But relax. Because as this “warm prospect” package by the AARP Foundation (Washington DC)—mailed to AARP members in a commanding #11 outer—aptly illustrates, it’s not nearly as hard as it sounds!

In fact, the 8-1/2 x 11” two-sided, personalized letter simply begins, “I’m writing to introduce you to the AARP Foundation.” From there, over and over again, AARP succinctly connects readers to all the Foundation can achieve . . . with their gifts, that is.

For instance, copy draws in members by telling them, “Let me give you just a few examples of the important services your AARP Foundation contribution will make possible.”

Smartly, the letter then bullets three specific ways in which, as Foundation donors, they can make a difference. Even smarter, each bullet leads with “You’ll”—as in “You’ll help assist . . .”, “You’ll help fight . . .”, and “You’ll help provide . . .”

Members are then offered a more general way in which they can help: “With your Annual Fund contribution today, more seniors will be able to lead better and more fulfilling lives.”

On page two, another bulleted portion (which, by the way, is one too many sets of bullets for our tastes) assures members that “With your help . . .” and “And your backing of the AARP Foundation . . .”

But don’t for a minute think that all this negates the need for strong Asks. Instead, the letter includes four Asks. The first appears in paragraph two and provides a suggested gift string. There are Asks after each bulleted section and again in the P.S.

And, in a more subliminal way, the Foundation includes the venerable yellow post-it on the top right stating, “Thanks so much for your support!”

Carrying on the theme of being all about the readers and not the group, the package includes a 10-panel brochure entitled, “Answers to Your Questions About the AARP Foundation.”

The basic reply states, “Yes, I am providing my support to the AARP Foundation to help seniors . . .”

Like this entire package, it’s not flashy. Rather, it’s simple, direct, and with a focus on how the prospect can help. It’s about “you” and that’s what’s most important in every fundraising appeal.

To see this complete package, click here.

Copywriters Deborah Block and Paul Karps are partners in BK Kreative, 1010 Varsity Court, Mountain View CA 94040, phone (650) 962-9562, fax (650) 962-1499, e-mail bkkreative@aol.com.

5. Ask and ye shall receive

By Managing Editor Deborah Block and Paul Karps

Okay, we admit it. We’re only human. Because we keep making the same mistake over and over again.

Just when we think every organization in the world must know the cardinal rule of fundraising—to straight-out ask for a gift—we’re stopped dead in our tracks by some nonprofit that just doesn’t get it.

In fact, we recently received an appeal (addressed to “Friend and Supporter of. . .”) from a local environmental education group with an admirable mission. Yet, this package didn’t forcefully ask for a gift. Even worse, copy actually seemed to go out of its way to dissuade us from giving!

Think we’re exaggerating? After referring to our (nonexisting) “ongoing support,” copy quickly deteriorates: “As we enter into our annual fundraising season, you may wish to support XYZ in an additional way.”

Notice that we’re not telling you the name of the group. Honestly, we’re not writing this to call out anyone. As we said, we greatly admire the goals of this particular nonprofit. But we only wish the good people in charge would get some gumption—and soon.

The letter continues, “We deeply hope that you might consider making a financial gift, however small. . .”

Not satisfied, the letter then goes on to hinder the chances of getting a gift, no matter how meager, by assuring us that, “We truly appreciate all that you do on behalf of XYZ, and we understand that you may not wish or be able to support us financially at this time.”

Huh??

From there, the letter hands us an all-too-easy way to opt out of giving—not just immediately, but down the road, as well. Copy says, “If you would prefer not to be solicited in the future, please fill out the attached form, check ‘do not solicit’ box, and mail it back to us.”

Compounding the problem, the “Please do not solicit” option is placed right at the top of the reply form—directly next to the all-important gift string. What’s more, the reply form itself discourages a gift by offering a credit card option only and requiring us to fill in our name and address. Not to mention that the reply lacks the traditional “Call to Action,” which reinforces the need for a gift.

We can only presume this well-meaning charity decided that its donors are different from those to other causes. And that prospects will somehow be offended by a direct Ask.

That’s so very wrong! Because folks support this organization for a reason. They care about the cause. They want to help. They’re not different in any way, shape, or form. We can’t stress this emphatically enough.

What this letter desperately needs is forceful language like “I urge you to send a gift today,” “Please do your part by rushing a contribution right now,” and “Will you send the largest gift you can without delay?”

In addition, we often indent and/or boldface our first-page Ask to have it really stand out. Especially if it falls somewhere toward the bottom of the page.

So what’s the moral of this sad saga? Ask. Ask directly and ask often. Because when it comes to direct mail fundraising, is that too much to ask?

Copywriters Deborah Block and Paul Karps are partners in BK Kreative, 1010 Varsity Court, Mountain View CA 94040, phone (650) 962-9562, fax (650) 962-1499, e-mail bkkreative@aol.com.

6. How to write awe-inspiring e-mail subject lines

By John Arnold

OK...awe-inspiring is probably shooting for the moon. But the following advice can help you become uncommonly effective, because there are certain subject line characteristics that consumers will almost always respond to.

According to Jupiter Research, 35% of e-mail users open their e-mails because of the words in the subject lines of the e-mails they receive. Since the average consumer reads over 300 subject lines per week, your subject lines have to be extra special to get noticed. So, how is your e-mail going to stand out in the inbox? Give your subject lines one or more of the following five characteristics and you’re likely to draw more attention to your e-mails.

Short phrases

How short? Two words. That’s right. I’ll explain. Your subject lines can be longer than two words, but e-mail heat maps indicate that most consumers are so time crunched that they only read the first two words of a sentence before they decide to read the entire sentence or jump to another part of your e-mail! Make sure the first two words begin with your point. For example, instead of Everything in our store is on sale until Friday, try Store-wide sale ends Friday. Or, instead of The top 10 places to play golf, try Golf: 10 best places to play.

Immediate benefits

Convincing your audience that your e-mail is valuable isn’t always enough because it’s better if you can convince them that your e-mail is even more valuable if opened immediately. For example, the aforementioned golf subject line might be stronger by adding an element of time, as in Golf: this weekend’s 10 best places to play.

Value words

Value words are personally relevant to your audience. For example, golfers consider any words related to golf as more valuable than other words. For example, a golf equipment store or golf vacation planner will draw more attention when using words like hole-in-one, fairway, clubhouse, par, chip-shot, or driving range. Value words can be used literally or figuratively. Try an analogous subject line.

Emotional appeal

Most purchase decisions are emotionally motivated on some level. Write your subject lines toward passion or away from pain to generate emotional appeal. For example, Golf your stress away next week at our newest resort moves away from pain while Golf your way to a promotion at our VIP event moves toward passion.

Specific value propositions

Be specific when describing the main benefit of your e-mail’s offer in the subject line. For yet another golf example, Tee shots 20 yards longer – guaranteed is a better choice than New titanium drivers on sale because the former subject line describes the value of the offer instead of just describing the offer.

John Arnold is the author of E-Mail Marketing for Dummies and the Director of Constant Contact University. This article, originally published in E-mail Marketing Tips, is Copyright © 2008 by e-mailtrainer.com. Contact John at www.emailtrainer.com.

7. How’s e-mail doing . . . revisited

Last month, we noted how a survey of 21 large national not-for-profits found that the percentage of people who opened or responded to the groups’ e-mail decreased in 2007. According to a study by M+R Strategic Services and the Nonprofit Technology Network, as recounted in The Chronicle of Philanthropy, we mentioned how the percentage of people who opened the messages dropped from 21.3% in 2006 to 17.6%. Meanwhile, the percentage that clicked through to a Web link fell from 4.9% to 3.8%.

This trend was confirmed recently by MarketingSherpa, which posted the following as its Chart of the Week:

In light of this unmistakable trend, does it seem ironic that the organizations increased the amount of money they raised online by 19% during that same time period?

Well, not so fast.

MarketingSherpa asserts, in an article accompanying the chart above, that it’s unwise to base strategy decisions about e-mail marketing campaigns based on open rates alone. Indeed, according to the article, “The open rate for e-mail is not what it seems. In fact, the stalwart of e-mail marketing metrics is flawed because image blocking reduces the ability to measure an open rate. So, it’s limited in its usefulness for e-mail marketers.”

The article explains how e-mail open rates are measured: “A line of code resides within an e-mail that asks the server to deliver a single pixel image. When that image gets served, it’s called an open. The problem? If the e-mail client (Outlook, Yahoo! Mail, etc.) doesn’t allow the image to arrive, the open doesn’t get counted.”

In other words, some recipients might be reading your e-mail—sans graphics—even though you’re led to believe they’re not.

Unmistakably, the ever-increasing glut of e-mail is taking its toll on readers’ time and willingness to read the stuff. But it’s equally clear that something’s working: The amount of money raised online continues to grow, and the totals raked in by e-commerce continue to mount, year after year.

8. Where's Mal?

Click here to find out the whereabouts of our favorite traveling direct mail fundraising guru.

9. Is anyone reading your Web site?

By Rick Christ

Will you read this article all the way through? Probably not. Here’s the punch line:

The most important pages of your Web site are failing to live up to their potential.

You know that in your gut, but can’t prove it. Well, let’s try. Answer these three questions first:

1. Which page of your Web site is the most important to achieving your online goals?
2. Which page is most popular with visitors?
3. Are they the same page? If not, why not?

Now, open your browser and pull up one of these pages from your site. How many words are on the page? Seriously. Go ahead and count them. Now multiply that by 20%. That’s the number of words your average visitor reads, according to a recently released study.

If your page contains 500 words of text, your visitor will read 100 of those. Eye-tracking studies tell us that people view a Web page in an “F” pattern, and focus on information that’s presented in headlines, subheads, the first two paragraphs, and bulleted lists. They quickly scan for information related to whatever search brought them to the page.

Next question: How many text links appear in the most heavily read copy of the page? Clicking hypertext links is the most-used feature on any Web site. Your Web site and users are not the exception to this rule.

Last question. Where is your navigation, logo, text? A study by Neurofocus says that if your logo and navigation are on the right, and your text is on the left, Web site users will have a harder time processing the information on the page. Their brains aren’t wired that way. A Web audit can help you identify problems like this.

Rick Christ runs NPAdvisors.com, 39 Garrett Street Suite #2, Warrenton VA 20186, phone (540) 428-3640, fax (540) 428-3638, Web www.npadvisors.com.

10. How many??

Large, national not-for-profits tend to get all the press, so it’s easy to forget that many small organizations across the country are also in the business of philanthropy. In fact, the Urban Institute’s 2007 Nonprofit Almanac—as reported by Eugene R. Tempel in NPT Instant Fundraising—finds that of the 1.4 million charities in the U.S., 900,000 have gross revenue of $25,000 or less. That’s nearly two out of every three nonprofits in the country!

11. Ask Mal

Since 1994, when the Mal Warwick Associates Web site went online, Editor Mal Warwick has answered fundraising questions posed by visitors to the site. Hundreds of those Q&As are available here. In this feature, we'll spotlight one Q&A from the most recent month.

Question: I was wondering what you were telling your clients about the effect of this nonstop electoral fundraising on the rest of us this year and next. Seems like the big donors are being asked to max out now. But there will be multiple campaigns and races. More impact on the lower-dollar side, maybe? Or is the stock market and this sub-prime mortgage mess the real problem?

Mal Answers: Good questions. Last one first: Yes, the unfolding recession, a gathering storm that threatens to become a hurricane, is indeed the biggest concern. Clearly, if the economy goes south as a result, always a possibility, that will have an impact on giving, and not a good one. When people feel well off, they give. When they feel economically fragile . . . well, not so much.

The impact of election fundraising on philanthropy is largely an urban myth, in my opinion. As you know, the last, best estimate for total giving in the U.S. was just above $300 billion for 2007, the most recent year. All political fundraising in an election cycle—federal, state, and local, for every office—might draw a total of $3 billion. Since your arithmetic skills are quite as good as mine, you can see that that's only about 1% of all giving. How, then, could the impact possibly be as great as it’s cracked up to be?

There are two further factors to consider:

1. Though there is undoubtedly some overlap, political donors tend not to be philanthropic donors. Nearly three-quarters of the adult U.S. population gives to “charity” each year. The percentage of people who give to political parties, committees, and candidates is minuscule by comparison. Yes, Barack Obama’s fundraising efforts, primarily online, have attracted more than 1.5 million donors. But even that’s a small number compared to the achievements of some charities, many of which have millions of donors.

2. The only impact I've discerned from the political process on philanthropic giving is that, in election years, there’s often a flood of voter-persuasion mail in the last 10-15 days before an election, followed for a few days by exhaustion and disgust with the sorry scene it portrays. I advise clients to avoid mailing during those periods simply because it's harder for them to gain attention then.
There you have it.

Mal Warwick, Editor
Deborah Block, Managing Editor
Erin Ehsani, Production Manager

Contributing Editors:
Nick Allen, Donordigital
Ken Burnett, Cascaid Consulting
Harvey McKinnon, Harvey McKinnon Associates
Jerold Panas, Jerold Panas, Linzy & Partners
Steve Thomas, Stephen Thomas
Joe White, Share Group, Inc.

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