Online Donations SurgeFund raising tops $100-million, Chronicle survey finds
By Nicole Wallace
Online giving to the country's largest charities surged in 2003, as many groups posted double- and triple-digit percentage gains, according to The Chronicle's fifth annual survey of online fund raising. Combined Internet donations to the 157 nonprofit groups that provided data for this year's survey topped $100-million.
Over all, online gifts rose by 48 percent at the 146 organizations that provided figures for 2003 and 2002, up from $60.5-million in 2002. (This comparison does not include the American Red Cross, which received $65.9-million in the wake of the September 11 terrorist attacks during its 2002 fiscal year and $1.9-million in its 2003 fiscal year.) Online donations doubled at 46 of the 146 charities, while another 36 chalked up gains of more than 50 percent. Eighteen organizations, including the Red Cross, reported drops in the amount received online.
Growing Comfort Level
The gains continue the upward trajectory that nonprofit groups have seen over the past four years as donors have become increasingly comfortable with making financial transactions online and as charities have become more sophisticated in how they use the Web and e-mail to raise money.
For the 50 organizations that provided comparable information over time, total online gifts grew from a combined $11.3-million in 2000 to $47.8-million three years later. Over that period of time, those organizations saw a median change in donations of 496.2 percent, meaning half reported bigger gains and half had smaller increases or declines.
The growing amount of money collected through the Internet has forced many nonprofit leaders to re-evaluate their attitude toward online fund raising and its importance to their organizations, says Madeline Stanionis, a fund-raising consultant in San Francisco.
"People are sitting up and paying attention," she says. "Organizations, especially large organizations, are now putting online fund-raising revenue into their budget. Before it was such a small percentage it was gravy, and now it's a line item."
Although The Chronicle's survey focuses on big charities, other organizations are also making headway in the amount of money they raise online. Groundspring.org, a San Francisco group that processes online donations for 650 small and medium-sized charities, handled more than $1.8-million in 2003, up from about $1.1-million in 2002. In the first four months of 2004, Groundspring processed $849,272, 167 percent more than in the same period the previous year.
And twice as many donors made gifts through Network for Good, in San Francisco, another organization that small groups often hire to process their online donations. Eighty thousand people gave in 2003, compared with 40,000 in 2002. JustGive.org, a charity that processes online gifts, in Oakland, Calif., handled $6.4-million in 2003, up from $893,222 the previous year.
But Cary Kimble, director of development at Project HOPE, an international health organization in Millwood, Va., says that progress in online fund raising is far from universal, even among large charities.
"There are a lot of organizations that have really stepped up and taken some chances, and as a result are seeing some of the payoffs," says Mr. Kimble. But many other organizations have taken a more cautious approach. "There are definitely leaders and followers, and in all honesty, I think most of us are followers," he says.
In 2003, Mr. Kimble's organization raised more than $108-million from private sources, only $58,599 of which came in online.
Project HOPE was not alone. Of the 135 organizations that provided figures for both online contributions and total contributions, only 26 raised 1 percent or more of their total revenue online in 2003. Internet fund raising accounted for 2 percent or more of total revenue for 10 of those 26 organizations.
Percentage of Revenue
Two charities raised more than 15 percent of their total revenue online. Heifer International, an international-aid organization in Little Rock, Ark., brought in $8.2-million online, 15.2 percent of the $54-million it raised in 2003. The United Way of Metropolitan Atlanta raised more than $11-million, 15.2 percent of its total revenue, through on-the-job campaign pledges processed online.
Demand from big companies that run United Way drives spurred the Atlanta organization to move to online campaigns, says Renée V. Nelson, director of the ePledge Initiative at the local United Way, which has seen its online fund raising increase 1,369 percent from 2000 to 2003.
"Our companies expect us to make campaigning convenient for them, and so they said, 'Give us an option or we will look at corporate providers,'" she says.
Automating campaigns saves companies time and money, explains Ms. Nelson, offering as an example Cingular's national campaign, which involves 600 cities and 10,000 pledges. If the company ran a traditional paper-based campaign, each of those pledges would have to be collected and tallied at the local level and then sent to headquarters to be counted and entered into a database, sent to the payroll department, and then filed for tax and audit purposes.
Local United Ways are seeing an increase in electronic pledging. In 2003, employees at 595 companies pledged $110-million through United eWay, United Way of America's online fund-raising system, up from $80-million in 2002 and $20-million in 2001.
According to Michael Schreiber, executive vice president for enterprise services at United Way of America, the total amount processed through United eWay in 2003 rises to $420-million when pledges made online through company systems and then uploaded to United eWay are included. He expects that figure to top half a billion dollars in 2004.
Giving participants in fund-raising events, like walkathons and bike rides, tools to help them raise money online has boosted health charities' Internet contributions, as has offering donors the option to make online gifts in honor or in memory of friends and family members.
The American Heart Association, in Dallas, received online contributions totaling $5.8-million in 2003, up from just over $1-million in 2002. The organization attributes the increase in large part to more participants in its fund-raising events -- such as the American Heart Walk and Jump Rope for Heart -- using the Internet to raise money.
The March of Dimes, in White Plains, N.Y., added the Banding Together giving option to its Web site (http://www.marchofdimes.com/prematurity) in January 2003 as part of a campaign designed to reduce the rate of premature births through education and research.
Donors can make a gift to honor or memorialize a child who was born prematurely and can create a Web page that displays the child's name and how many weeks early he or she was born on an image of a blue or pink hospital band. The page also provides parents the option of listing a child's birth weight, health status, and complications, and other donors who made gifts in the child's honor.
With little publicity, the Banding Together campaign brought in $135,000 in 2003, and the organization expects that donors will contribute more than twice that in 2004. Patricia Goldman, the organization's e-business director, thinks the campaign caught on because it offers people a way to express their feelings at a time when they are not sure what to do or say.
For example, she says, when a child is born prematurely and has severe medical complications, "do you say 'Congratulations' to the parents? Do you say 'I'm sorry'? We haven't figured out culturally how to respond."
Other charities also have started to recognize the potential of so-called tribute gifts. When the Dana-Farber Cancer Institute, in Boston, analyzed who was making annual-fund gifts online, the organization learned that 65 percent were new donors -- and of those, three-quarters were giving in honor of a friend or loved one.
The discovery has led Dana-Farber to rethink its donation form and the giving options it highlights on its site, says Susan E. Rapple, director of development at the organization.
"Right now people can purchase a chair in our auditorium in memory of someone for a gift of $10,000," says Ms. Rapple. "You can be sure that's prominent on our Web site now, because we know that we've got a lot of tribute donors running around on our Web site."
As the financial stakes have grown, organizations are taking another look at their online efforts to make sure they are taking full advantage of the Internet's fund-raising potential.
United Jewish Communities, in New York, has created a new Web site, Found Money (http://www.ujcfoundmoney.org), to help its 156 local federations assess their online fund-raising savvy -- and identify ways to bolster their results.
Federations are scored on their Internet efforts based on their answers to a series of 77 questions. Among the questions posed: If a donor returns to your Web site to make a second gift, does the system recognize him or her? On average, what percentage of visits to your donation page result in a gift?
After filling out the questionnaire, federations receive tip sheets that offer advice and links to other charity examples that could help improve their fund raising. In all, more than 40 Jewish federations have taken the self-test. Some have even retaken the test -- after making the recommended changes -- to see if their scores increased.
Gail Hyman, vice president for marketing and public affairs at United Jewish Communities, says that online fund raising has taken off for federations in the last 10 months, after a somewhat slow start.
"Making donations online and feeling secure and comfortable has taken donors some time," she says, "and also taken the field a little time to get ready."
E-mail remains one of the primary ways charities drive traffic -- and, they hope, donors -- to their Web sites, but many organizations continue to be hamstrung because they do not have e-mail addresses for most of their donors.
Of the 147 nonprofit groups in the Chronicle survey that reported the percentage of contributors' e-mail addresses they had collected, the median was 18 percent, meaning half of the charities had a higher percentage and half had a lower one.
Junior Achievement, in Colorado Springs, and the Baton Rouge Area Foundation topped the list with 75 percent each, while the Leukemia & Lymphoma Society, in White Plains, N.Y., and Williams College, in Williamstown, Mass., reported that they have 70 percent.
These four were among the 18 organizations that reported that they had e-mail addresses for 50 percent or more of their donors. Ten of the 18 organizations were colleges and universities.
On the low end, 11 organizations said they have e-mail addresses for 1 percent or fewer of contributors.
To collect e-mail addresses, nonprofit organizations have long included requests for the information as part of direct-mail or telemarketing appeals, as well as on sign-up sheets for monthly newsletters or contest prizes. But an increasing number -- at least 36 organizations in the survey -- are also experimenting with buying the information through a process known as e-mail appending.
Businesses that offer this service run the names of an organization's donors against master databases of names and e-mail addresses to look for matches.
Having large numbers of donors' e-mail addresses becomes even more important as charities start to integrate their online fund-raising efforts with their offline appeals.
For the last four years, Wake Forest University, in Winston-Salem, N.C., has sent out an e-mail message several weeks before its telethons to let donors know it is coming up, and to give them a chance to make an online gift instead.
A month before the fall telethon in September, the university sent the pre-telethon message to 9,179 donors and potential contributors, approximately 40 percent of the people scheduled to be called. Wake Forest estimates that more than 300 donors made online gifts totaling about $79,000 in response to the appeal.
WGBH, a Boston organization that runs public radio and television stations throughout New England, has started to coordinate the e-mail messages and direct-mail solicitations it sends to donors so that they reinforce one another.
Sharon Corey, a fund-raising official at WGBH, says donors who receive both e-mail and direct-mail correspondence from the organization renew their annual membership at rates 20 percent higher than donors who only receive direct mail.
That statistic, however, can be misleading, says Ms. Corey. While receiving additional communications from the organization might help stimulate giving, she says, it's important to recognize that donors who offer their e-mail addresses and who request additional information are likely to be the ones who feel the strongest connection to WGBH.
Some nonprofit groups are finding that donors who start off giving online do not always want to keep donating that way.
In 2003, 5 percent of all new donors to the Heritage Foundation were people who made an online gift to TownHall.com, a news and opinion Web site run by the Washington think tank. Heritage made sure to send direct-mail appeals as well as e-mail to those new Internet donors. Of the almost two-thirds who made a renewal gift, only 20 percent did so online, while the remaining 80 percent made that gift through the mail.
"Having a new online donor is different from retaining that donor online," says Toby A. Smith, Internet strategist at CARE USA, an international-development organization in Atlanta.
Mr. Smith says that figuring out which donors will respond best to which form of communication is the biggest challenge his organization faces in its online fund raising. In the coming year, he says, CARE plans to conduct tests to see how three different types of donors -- contributors who have only given offline, those who have only given online, and donors who have made both types of gifts -- respond to specific e-mail and direct-mail solicitations.
CARE hopes to encourage more donors to move online as a way to cut administrative costs and to be able to tailor more information to donors' interests. "But we can't rush it," says Mr. Smith. "We have to find the exact equilibrium point at which we can grow e-mail and Web cultivation as fast as possible without cannibalizing the total amount of money that we bring in. And that's a trick."
Leah Kerkman, Stanley W. Krauze, and Cassie J. Moore contributed to this article.
Copyright © 2004 The Chronicle of Philanthropy