Is online fundraising cheaper than direct mail? 

Some people say it's much cheaper to raise money online than it is via direct mail. What do you say?

Mal answers: Our collective experience in raising money over the Internet is inadequate to yield any reliable numbers about the average or typical cost to raise a dollar online. However, online as well as in the mail it's important to distinguish between appeals sent to previous donors and those sent to prospects. The fundraising ratio is dramatically different between the two.

It may indeed be the case that the cost of securing a gift from a donor online is lower than it is by mail. If you take into account only the cost of writing and sending email messages to donors, sure, the per-message cost is vanishingly small, and the cost per gift is still likely to be lower than it is by surface mail. However, very few organizations possess email addresses for more than a small fraction of their donors — and, once they try soliciting them online, they soon discover that a lot of them have no desire to be asked for gifts by email. So, at this juncture anyway, email isn't a very effective mechanism for fundraising for most organizations — despite its low cost. Surface mail is still an essential fundraising tool for almost every nonprofit.

The situation is a little different in the case of prospecting. In the mail, the cost per dollar raised is likely to be upwards of $1.50. But there's no comparable cost in online communications — because no sensible fundraiser solicits contributions online from prospects. On the Internet, fundraising is a two-step process. In step one, we attract prospects with some sort of "offer" — perhaps a free book or calendar or some other incentive. Then, and only then, might we solicit gifts from them. To evaluate the cost of attracting those gifts, we have to take into account the costs entailed in both steps. Together, they might be very considerable — and very possibly far more than $1.50 per dollar raised. More to the point, this method only works for a small minority of prospects. These days, much larger numbers are more susceptible to appeals by mail.

Over time, these conditions may change. But don't hold your breath. It could take many years before fundraising online is a serious competitor to fundraising via surface mail.

How important do you think the credit card option is to a fundraising program?

Our organization has been around for more than 15 years but only recently began a formal fundraising program. Thanks to your books, we've had great success increasing gifts. At this point, we do not have the ability to accept credit card gifts or any online gifts. The vast majority of our gifts come by check with a small percentage through foundations or charitable checking accounts. Do you have any statistics about total giving by credit card? How important do you think the credit card option is to a fundraising program? Thanks in advance for your advice!

Mal answers: I'm delighted to learn that my books have been helpful to you.

I have no quotable statistics about the role and impact of credit card giving in the overall fundraising picture. However, I can safely tell you this:

** When I started in fundraising, it was clear that offering credit card payment options was likely to depress results. That is assuredly not the case today.

** Online giving without credit cards is a non-starter. If you have any illusions about raising money by email or through your Web site, you should sign up with a ISP that can offer you that service. It's standard now.

** Credit card options have become a standard feature in direct mail. Our experience seems to suggest that gifts with credit cards are larger on average than those by check. More significantly, monthly giving isn't practical when checks are the only payment option: you need to have the facility to accept credit card gifts.

Can e-mail work effectively in combination with snail-mail?
I work with a small but ambitious public media and community arts nonprofit co-op. We have a few startup programs that are, in varying degrees, successfully launching.

We have a well-developed email list, primarily used for alerting people to our projects and programs. We have not yet used it for fundraising, but plan on sending a funding appeal at some point. The appeal would invite people to make an online donation (through egrants), and also ask people if they'd like a formal snail-mail package with a sampler of our various projects and publications.

We are initially developing the direct mail package to be sent to people identified by our board of directors as possible major donors. We were going to send it in December, but I notice on your Q&A list that December is identified as a bad month to send mailings.

My question (two parts):

For a no-budget org like ours, is this a good strategy (combining email with snail mail?)

Is January a good time of year to send a direct mail package?

Sorry for the long letter. Hope to hear from you.

Mal answers: Your first question is about the wisdom of combining email and snail mail. The approach you suggest seems sound to me — though I confess that I don't have any base of experience on which to ground an answer. There just isn't enough collective experience about this combination. However, every time I've tried reinforcing mailings with email, I've gotten the clear impression that the combination worked.

You also asked whether January is a good time of year to send a direct mail package. The answer is almost always yes. By mailing donor acquisition packages then, you'll avoid the year-end rush. However, I wouldn't choose to mail a donor appeal then instead of mailing in November or December. Most donors are accustomed to giving at year-end, and for most nonprofits the year-end is a prime fundraising opportunity.

How effective is re-soliciting online donors via snail mail?

Has anyone done any studies on this? Thanks.

Mal answers: "Studies" in fundraising usually involve simple direct response tests, the results of which are typically held close to the chest. I'm sure that many fundraisers have, indeed, tested this question - but I have no data to draw on. All I've got are anecdotal comments, which are mutually contradictory. Some say converting by mail is cost-effective. Others say only the telephone works well enough. My advice is to test the question yourself.