A Surge in Online Giving

Internet donations doubled at many big charities

Online donations to the nation’s largest charities grew sharply in 2004, with many groups receiving at least

twice as much money via the Internet as they did in 2003, according to The Chronicle’s sixth annual survey of online fund raising. Electronic gifts to the 174 organizations that provided data for this year’s survey topped $167.3-million.

Together, the 164 organizations that provided information for both their 2003 and 2004 fiscal years raised $166.2-million online in 2004, up 63.2 percent from $101.9-million the previous year. Over that time, online gifts rose by a median of 55.3 percent, meaning half of the organizations reported bigger gains and half had smaller increases or declines.

Fund-raising experts say that year-to-year percentage increases in online contributions that far outstrip gains in other types of fund raising have won over many of the lingering naysayers.

“Most of the large organizations that had not really taken the Internet that seriously are starting to take it more seriously, and a lot of the people who have been investing in it are increasing their investments,” says Nick Allen, chief executive officer of Donordigital, a San Francisco company that helps charities raise money and conduct advocacy online.

Adding to the momentum: the strength of online donations to help victims of the December tsunamis in South Asia.

A Chronicle spot-check of 22 charities responding to the tsunamis found that $311.4-million of the $1.27-billion those organizations raised came in through the Internet. (See article on Page 13.)

Even so, the tsunamis were not the primary reason for the gain in online giving in 2004. Not counting the organizations that received tsunami-related donations, the median percentage increase in online gifts still topped 50 percent in 2004. The effects of tsunami giving may not be seen fully until charities report their 2005 figures, because many groups had already started their 2005 fiscal years before the disaster struck.

Small Percentage of Total Gifts

To be sure, not everyone agrees on how important a source of revenue online fund raising will eventually become for charities. Internet contributions still account for a small percentage of charities’ overall fund raising. Online gifts made up less than 1 percent of total revenue for 117 of the 141 charities that provided their 2004 fund-raising totals.

But while the percentage of overall fund raising is still very small for most groups, the rate of growth has been significant. Of the 164 groups that provided data for both 2003 and 2004, online fund raising more than doubled at 52 groups, and another 37 had increases of more than 50 percent.

Thirty-nine organizations reported that they had raised more than $1-million online, and of those charities, seven raised more than $5-million.

The five charities that raised the most online in 2004 were:

• Doctors Without Borders USA, in New York, the leader with $16.9-million raised in 2004 through the Internet. The revenue accounted for about 20 percent of the group’s total contributions last year. Because the charity’s fiscal year ends on December 31, that figure includes $12.4-million that the group raised electronically following the tsunamis that struck South Asia on December 26.
• The National Multiple Sclerosis Society, also in New York, raised the second-most online, with $16.5-million in donations.
• Rounding out the top five were Heifer Project International, in Little Rock, Ark. ($10.3-million online); the American Heart Association, in Dallas ($9.9-million); and World Vision, in Federal Way, Wash. ($8.5-million).

Immediacy and Interactivity

As online fund raising becomes a more important source of contributions, charities are seeking to capitalize on what has proven to be the medium’s strengths — its immediacy and interactivity — while also trying to be more sophisticated in the way they conduct their online fund raising.

“Instead of thinking of the e-solicitation as an afterthought, we weave it right into the plan,” says Jean M. Findlay, a fund raiser at the University of Pennsylvania, in Philadelphia. Ms. Findlay focuses on persuading people who attended the institution as undergraduates to make annual-fund gifts.

During telephone solicitations of alumni, for instance, student callers ask donors to provide their e-mail addresses or confirm the address that the university has on file. During the past year, the university has collected 5,991 new e-mail addresses that way and verified another 9,209 addresses. In addition, donors who make a pledge during the calls and have provided their e-mail addresses receive an e-mail message the next day, giving them the option of fulfilling their pledge online.

The university is beginning to see the fruits of these and other online efforts. At the end of April, 10 months into the 2005 fiscal year, 2,490 of the 20,078 gifts to the annual fund, or 12 percent, were made via the Internet, totaling $691,560.

Fund-Raising Events

Fund-raising consultants say that the University of Pennsylvania’s experience — including its success in using the Internet to garner small gifts — is not unusual.

“The reality is the world is migrating online, and online giving is inevitably going to follow,” says Mark Rovner, a managing partner at the Carol/Trevelyan Strategy Group, a fund-raising and advocacy consulting company in Washington. “We’re at a point now where it’s not a matter of whether the Internet will become the dominant small-gift platform, it’s just a matter of when.”

David Price, vice president for information technology at the National Multiple Sclerosis Society, echoes Mr. Rovner’s view, and says that his organization is already seeing movement in that direction in its fund-raising events.

Mr. Price says that participants in the organization’s walks and bike rides have been using the Internet in large numbers — in 2004, roughly $15-million of the $100-million the events raised came in electronically.

He says he wouldn’t be surprised if, in five years, 70 to 90 percent of the funds raised in those events were collected online. Whatever the exact percentages, Mr. Price says, the Internet numbers have nowhere to go but up: “We’re not close to the saturation point.”

Other charities are also finding that online gifts account for a significant percentage of their small gifts. For example:

• At WNET/Educational Broadcasting Corporation, a public-television station in New York, Internet contributions account for 10.6 percent of pledge dollars paid so far in its 2005 fiscal year, which ends June 30.
• At Mercy Corps International, a relief and development group in Portland, Ore., 50 percent of all gifts under $5,000 came via the Internet last year — in part because of the large number of tsunami donors. But the growth is not all tsunami-related: In 2003, Mercy Corps received 30 to 40 percent of such donations online.

Dodging Spam Filters

Not everyone, however, is as bullish on the future of online fund raising, even at organizations that are seeing success on the Internet.

“We’re actually backing off e-mail quite a bit,” says Elvin Ridder, U.S. ministry development coordinator at Campus Crusade for Christ International, in Orlando, Fla. In 2004, the organization raised $6.7-million over the Internet.

The number of donors that open e-mail messages from the organization — let alone click through to its site and make a gift — is going down, says Mr. Ridder. He suspects that donors’ concern about spam, and the spam filters that can snag communication that supporters signed up to receive, are to blame.

Campus Crusade has been able to attract donors by paying for radio advertisements that describe how the organization’s work is related to current events — such as providing school supplies to children in Iraq — and point donors to the group’s Web site. The ads, which primarily run on Christian radio stations, generated $1.2-million in Internet donations over five months last year, largely from new donors.

In testing, the organization found that advertisements that include just its Web-site address produced far more donations than spots that included both a Web-site address and telephone number or ones that offer just a telephone number. But, says Mr. Ridder, when the organization asks those donors for another gift, they are more likely to respond to a direct-mail appeal than to an e-mail solicitation.

“It’s a real conundrum,” he says.

Using Donor Data

Nonprofit groups are working hard to incorporate what they know about their donors into their online fund raising.

At the end of the summer, Stanford University, in California, plans to start a new version of its giving site that will be tied to the university’s fund-raising database. When Stanford donors log in to the new site, information from the database — such as the year they graduated from Stanford, their giving history, and whether they have been identified as potential big donors — will be used to create a Web page customized to fit the donors’ interests.

For example, a person who graduated five years ago might get a page that says, “It’s your reunion year, find out how your class is doing,” while the page produced for an older donor might highlight planned-giving opportunities. The parent of a current student might see a link that says, “Find out how parents are making a difference.”

The thinking behind the new site is “if you can’t make a major gift, you’re not going to establish an endowment, so let’s not distract you with that kind of information,” says Rebecca Vogel, who oversees marketing and communications at Stanford’s fund-raising office. “Let’s talk to you about making the annual gift.”

Charities also are looking to strengthen links between Internet fund raising and their other online programs.

When the Juvenile Diabetes Research Foundation, in New York, decided to enlist volunteers to answer questions and share experiences with other parents whose children had been recently diagnosed with the condition, the organization was thinking about a new way to use the Internet to fulfill its mission, not about online giving, says Peter Van Etten, the organization’s chief executive officer. But it turns out that the program has been a powerful incentive to donors and volunteers.

When the foundation analyzed data from the fund-raising walks it sponsors, it was surprised to learn that people who had first come in contact with the organization through the online program for parents raised a total of $500,000 last year.

That information, says Mr. Van Etten, is changing the way the organization thinks about the relationship between online programs and donations: “The Web has proven to be invaluable in terms of meeting our mission, which is support of families with diabetes, but also raising money.”

Activism and Fund Raising

The Planned Parenthood Federation of America, in New York, is using the Internet to streamline the online activities of its headquarters and its affiliates. In January, the organization started a joint project to coordinate the online appeals and advocacy alerts about threats to reproductive rights sent out by the national office and 37 affiliates. The program also includes a new Web site.

“It’s easier for us to communicate with our supporters and to monitor the cadence of that communication,” says Lorelei Schroeter, the organization’s director for direct-response marketing.

In the past, she says, the national office’s fund-raising and advocacy departments each kept their own e-mail lists and didn’t coordinate with one another. The same was true at many local affiliates. So it was possible for a Planned Parenthood supporter to receive four different, unconnected streams of e-mail messages from the organization.

Ms. Schroeter says that as the new effort picks up steam, Planned Parenthood plans to test the effect of blending fund raising and advocacy. “We’re really interested in finding out, if you give folks too many options, are we going to reduce response rates?” she says. “And how many is too many? If we’re asking for both a donation and an advocacy action, is that too much?”

Some nonprofit organizations have already seen that activism and fund raising can be a potent combination.

This spring the Humane Society of the United States, in Washington, ran an online campaign to protest the annual seal hunt in Eastern Canada that garnered both 67,161 new online activists and many Internet contributions.

The campaign’s first e-mail appeal, sent to more than 251,000 people, asked supporters to sign a pledge to boycott Canadian seafood in protest of the seal hunt and to forward the message to friends and family members.

The Humane Society also promoted the campaign on its Web site — for a time greeting visitors to the site with a page devoted entirely to the issue — and through banner advertisements on other Internet sites, such as Salon, National Geographic, and the Onion.

By the time the second e-mail message of the campaign, a fund-raising appeal sent the day the seal hunt began, went out two weeks later, the list had grown by 33,744 names. That appeal brought in $115,000 in online contributions.

When the Humane Society analyzed who made online contributions, officials saw that as a group those new activists were responsible for more than $20,000 of the revenue.

“When someone first gets involved with you, they’re most excited about the work that you’re doing,” says Geoff Handy, who oversees online activities at the Humane Society. “We’re finding that’s a really good time to ask them for money, where historically we’ve been kind of gun-shy about doing that.”

Personal Pages

As many advocacy groups have learned, e-mail and the Internet make it easy for supporters to spread the word about causes they care about. A small but growing number of charities are trying to harness that interactivity by letting supporters build personal Web pages from which they can solicit donations on the organizations’ behalf.

Charities that run fund-raising events like walkathons and bike rides have been promoting personal pages for several years, but now groups like the U.S. Fund for Unicef, the Girl Scouts of the USA, and Habitat for Humanity International have started experimenting to see if the concept can be successful without an accompanying offline event.

Early results have not produced big money, but nonprofit groups are nonetheless encouraged by what the pages have already achieved.

The U.S. Fund for Unicef, in New York, started offering the option in the fall and, soon after the tsunamis, 500 supporters set up personal sites, from which they raised nearly $100,000.

Habitat for Humanity’s experiment with the idea started with a call from a couple in California who said they wanted to set up a site to raise money for the Americus, Ga., group as part of their 25th-anniversary celebration.

The couple used the site that Habitat built for them to send e-mail messages to family members and friends, and they included the address of the site on the paper invitations to the party. Altogether, they raised more than $4,200 for Habitat.

Since then, the organization has set up sites for other donors who have requested them, and is considering how the charity could make this option available to all supporters.

More than just a source of additional contributions, the personal Web sites would serve as an important signal for fund raisers, says Tim Daugherty, who heads Habitat for Humanity’s direct-marketing department.

Says Mr. Daugherty: “Somebody who calls you and asks you to set that up for them, you know that that’s a good donor and somebody that you should probably be paying some special attention to.”

Sharnell Bryan, Leah Kerkman, and Cassie J. Moore contributed to this article.