Jan/Feb 2007

The State of E-Philanthropy in 2007

by Vinay Bhagat, Founder and Chief Strategy Officer, Convio

The nonprofit sector has come a long way in its use of the Internet. In the last six years, funds raised online by nonprofits have grown 20-fold from $250 million in 2000 to more than $5 billion in 2006. The pace of growth today continues to be strong. In fact, estimates suggest industry average online fundraising growth continues to exceed 30 percent per year.

Just as online fundraising has grown, so has the adoption of online marketing technology. In 1999 when I founded Convio, less than 15 percent of nonprofits I researched had Web sites. Few were taking gifts online, and even fewer were collecting and sending emails. While many large, sophisticated groups had built robust Web sites, they suffered from disparate systems that were cumbersome, expensive to maintain and ineffective for building holistic constituent relationships across functions and channels.

The nonprofit space in 2007

Today, almost every nonprofit has basic online marketing capabilities including a Web site and the ability to take donations and send email. More than 1,000 have deployed robust eCRM (online constituent relationship management) platforms that help them attract, engage and drive ongoing support for their constituency. Convio alone has grown to a company serving more than 600 nonprofit organizations with eCRM software and services.

The nonprofit sector also has grown its capacity for conducting effective online marketing. A small but strong stable of nonprofit professionals skilled in using online tools and online marketing practices has emerged. New Internet marketing agencies serving nonprofits have developed, and several direct mail agencies now provide online services. Best practices have become increasingly defined and shared.

In the last year, probably the most important best practice to emerge is the integration of the Web with other communication channels — in particular with direct mail. Savvy nonprofit groups are beginning to see the importance of integrating online and offline communication and solicitation efforts. They also are recognizing that a single communication channel's value should not be measured in isolation, but rather by its impact across channels. A soon-to-be-published paper by Convio and StrategicOne, an integrated marketing analytics company, will illustrate the impact online communications and engagement can have on direct mail donors, regardless of whether they actually donate online.

Today's challenge: online marketing capacity

While progress has been strong, online marketing capacity remains a significant challenge. While nonprofit executives increasingly appreciate the strategic role the Web can play, most do not know how to organize for success. Very few have cogent Internet marketing plans. Many lack a sufficient allocation of human resources or the appropriate in-house skills. Many groups still struggle with defining what metrics they should measure and how they should gauge the level of their success.

Convio is committed to help alleviate the sector's capacity challenges. In 2007, we will:

• Take an even more active role in educating the sector on Internet best practices;
• Partner with more Internet marketing and direct mail agencies providing services that can assist our clients;
• Continue to build our Client Success Services group, a function that provides strategic consulting, campaign management, analytics and Web master administration services;
• Provide an annual online key metrics benchmark report that defines what metrics are valuable to measure and provides guidance as to what nonprofit organizations should expect to achieve based upon their vertical segment, size and online development;
• Continue to research the impact that online marketing has on direct mail fundraising and vice versa and how to optimize the use of both channels; and
• Continue to help foster communication and collaboration among nonprofits to share Internet best practices and tips through guides, papers, this email newsletter, our annual Customer Summit and other forums.

Maximizing success online in 2007

To maximize online success in 2007, I recommend that nonprofit organizations remember the following core principals of eCRM.

• Focus on building your email file — aspire to collect email addresses for 50 percent or more of your active donor base while building an additional email file for prospects.
• Engage your constituents via compelling emails, Web content and other online interaction opportunities.
• Ask for support at an appropriate frequency through email appeals. Also, ensure those appeals are clear, tangible and have a strong case for support.
• Retain and grow your constituents by providing opportunities to become sustaining donors, keeping them apprised of how their contributions are being utilized, and offering them opportunities to deepen or expand their involvement. Segment or personalize your communications to show that you recognize their specific contributions to date and understand what they most care about.

In addition, I recommend that organizations step up their channel integration efforts. Avoid the temptation to measure your channels solely based upon the revenue collected by each channel. Recognize that channels can be very synergistic.

Finally, I recommend that organizations adopt a constituent-centered approach to online fundraising. Offer constituents the opportunity to drive their own philanthropic experience through gift catalogs, directed giving opportunities and installment payment plans. Allow your most passionate constituents to help you reach and garner support from others through enabling peer-to-peer fundraising capabilities for tributes, memorials and constituent-driven events.