Jul/Aug 2009

The fundraising landscape is changing. Are you ready?

by Vinay Bhagat, Founder and Chief Strategy Officer, Convio and Quinn Donovan, Analytics Manager, Convio

The 2009 Giving USA annual report on philanthropy recently reported that charitable giving in 2008 in the United States was $307.65 billion, down 5.7 percent from 2007 after adjusting for inflation. This is the largest decline since Giving USA started the report in 1954. The economic downtown is clearly taking its toll on philanthropy, making it critical for nonprofits to seek efficiencies in their fundraising operations and manage supporter relationships more effectively than ever. View the below video for more commentary around the economy, how it's affecting nonprofits, and recommendations on how charities should respond during the second half of 2009.

While most traditional fundraising approaches have suffered declines, online giving continues to grow robustly. Convio’s benchmark cohort of close to 600 nonprofits, most of whom have been actively engaged in online fundraising for years, grew online revenue 16 percent in Q1 2009, in the midst of the economic crisis. And, many participants in our Convio Go!™ program — directed at nonprofits new to online fundraising — experienced much higher growth rates.

Where should you reach your constituents?
While for most organizations, online fundraising still accounts for less than 15 percent of total funds raised, an increasing proportion of new contributions are given online. The 2008 donorCentrics™ Internet Giving Benchmarking Analysis recently showed that for a cohort of 12 nonprofits active in online and offline direct response fundraising, the portion of new donor revenue online grew from 6 percent to 27 percent from 2004 to 2008. Driving this shift is the evolving channel preferences of donors. Many boomers are multi-channel donors, comfortable giving both online and in the mail. In addition, new online fundraising techniques like peer-to-peer fundraising have attracted younger donors.

Although email and the Internet remain the key new media “work horses”, new channels like mobile marketing and social networks have emerged. While significant fundraising results via these new channels are scarce today, they represent significant potential growth areas for the future. In the US alone, there are 262 million mobile subscribers and Facebook reports over 160 million users.

As channels proliferate, integration remains critical. A 2006 study Convio conducted with Strategic One, showed that engaging direct mail donors online, (e.g. via email newsletters and appeals) leads to higher annual donor value and retention rates even if these individuals continue to solely give via direct mail. A recent test conducted by Watershed, Mobile Commons, and the Humane Society of the US illustrated that adding a text message can lift email response rates.

What do your donors expect?
Donor expectations are also increasing. The Wired Wealthy survey we conducted with Sea Change Strategies and Edge Research last year indicated that only 8 percent of donors are inspired by nonprofit websites and emails, and 75 percent wanted more control over email frequency and content. Furthermore, philanthropy websites like DonorsChoose.org  and Kiva.org have emerged to great success, offering contributors unprecedented tangibility and transparency.

Making sure that your organization is ready for success in this changing landscape requires a strategic approach executed via the right resources and tools. Here are some key success factors:

1. Provide control to your supporters. Offer supporters the option to control the frequency and the content of email messages they receive.
2. Maximize your web presence. Ensure your web presence effectively engages donors. Include compelling content and multiple engagement options. Make sure key information donors seek (e.g. how donor funds are spent) is readily accessible.
3. Rethink your email communications. Write messages that inspire donors and reflect their interests. Pay attention to engagement metrics such as email open and opt-out rates. Recognize that not all supporters want the same frequency of communications, or the same content, and segment appropriately. If message frequency is too high, you’ll see a drop in opens and a rise in opt-outs.
4. Make giving opportunities tangible. Even if you cannot run a directed fund operation like Kiva.org, make giving opportunities as tangible as possible. For example, Feeding America explains how many weeks gift levels will feed a family of four.
5. Run multi-step, integrated appeals. Simply sending a follow-up message to an initial email appeal can really lift response. Sending appeals via multiple channels can also improve results. It’s important to make sure such appeals reinforce each other. Integrating appeals across channels can be as simple as incorporating images used in direct mail into emails and coordinating the timing of asks.
6. Implement a moves management strategy. An online moves management strategy uses key donor interactions to acknowledge what they have done so far, and to encourage them to deepen their relationship with your organization. For instance, when a new donor returns to your website, don’t waste precious real estate to ask them again for their email address which you already have – focus on getting them to give again, or better still upgrading to become a monthly donor. 
7. Empower constituents to act for you. Online marketing tools and social networks can provide great vehicles to harness key supporters and make them into recruiters and evangelists for your cause.
8. Organize for success. A recent Convio study about staffing for online success, showed that 90 percent of nonprofits cited insufficient staff as their organization’s biggest barrier to success. Increasing online staffing may be a difficult “pill to swallow” in this economic environment, but in many cases reallocation from declining, or slower growing areas is not only appropriate but necessary.