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by Michael Stein

Mobile fundraising is an intriguing proposition with over 250 million customers in the U.S. toting around these ubiquitous everyday devices.  With mobile use reaching all demographic groups, nonprofits are naturally curious to explore this medium for digital messaging and fundraising.

Efforts to raise money for Haitian earthquake relief in January 2010 produced the most notable example of mobile fundraising to date.  Charities unleashed fundraising efforts via direct mail, television, email and mobile phone.  Numerous nonprofits, notably The American Red Cross, promoted a mobile five digit “short code” and encouraged donors to send a text message to that code, whereby a $10 donation would be collected via the mobile user’s regular phone bill.  This “text-to-give” technique was heavily promoted through the media, the White House, and across online social networks Facebook and Twitter.  Americans donated more than $774 million for Haitian earthquake relief, with most of the small donations coming via the Internet, and over $30 million via mobile text-to-give donations.

This recent example highlights several developments in the last few years which have made mobile fundraising attractive as a technique for digital fundraising.  The lowering of fees charged by the mobile carriers has dramatically improved the outlook for mobile fundraising.  Whereas mobile carriers once took a 50% cut of monies raised, that percentage has now declined to below 10%, which is more in line with traditional fundraising costs.  Nonprofits were understandably leery of venturing into a fundraising channel where the return on investment was so artificially low.

Another important development is the means by which donors make mobile gifts.  The ability to charge a text-to-give donation to a user’s phone bill vastly simplified the process since text messaging or “texting” is now so common.

Mobile giving has been growing steadily since it first came on the U.S. scene in 2008, when it raised a modest $500,000 for charities.  In 2009, mobile giving topped $2 million, and 2010 giving already stands at $30 million due to events in Haiti.

Slowly but surely, U.S. charities are making investments in the technology by working with mobile vendors, acquiring “short codes,” and getting their supporters used to the idea of giving through this new medium.  Charities such as American Red Cross, The Salvation Army, UNICEF, Keep a Child Alive, ASPCA, Share Our Strength, Friends of the World Food Program, United Nations Foundation, the United Way, among others, have active mobile fundraising programs.  All of these charities continue to engage in other digital fundraising campaigns particularly email fundraising, but are now venturing into mobile fundraising.

What we’ve learned thus far about mobile fundraising is that it has a role to play in some unique circumstances.  Disaster relief is one circumstance for which mobile fundraising is a good fit, as it allows large numbers of people that hear about the need to make quick and easy financial gifts without a deeper engagement with the charity.  Ironically, this lack of deeper engagement is a quandary for charities.  The charity gets limited donor information aside from the mobile number and thus very limited ability to use it for cultivation and further fundraising.

Large stage events, rock concerts and political rallies may be other circumstances for which mobile fundraising fits well, since someone on stage can ask thousands of audience members to take out their mobile phone and make an instant donation.  Several well-documented events including some with pop sensation Alicia Keys have used this technique to good effect.  Keys included appeals for mobile donations during a concert tour in 2008 for her charity Keep a Child Alive. These real-time appeals raised $40,000 from 8,000 concertgoers who each gave $5 via text-to-give.

These examples illustrate the strength, but also some of the challenges of mobile fundraising. For mobile fundraising efforts to succeed, the organization must have the ability to reach large numbers of people, and be able to count on the media or government agencies or other perfect media storms to spread the word about a giving campaign.

Mobile fundraising needs to be considered within a broader context. It must be one element of an integrated multi-channel outreach strategy that an organization engages in to reach a broad and diverse audience.  Email messaging succeeds today because it combines with direct mail and other “brandraising” strategies that include using Facebook and Twitter to reach supporters.  Mobile will likely succeed in the years ahead by adopting that same strategy: Offer donors and prospective donors a wide array of subscription choices, content types, and device options, and accept that some supporters will prefer and choose one or more channels over others.

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by Michael Stein

Online fundraising is now fifteen years old and email appeals have become a staple of the online experience for millions of Americans.  Most charities that send direct mail solicitations to their donors and prospects are also sending out email appeals to those with email addresses on file.

With fifteen years under their collective fundraising belts, nonprofits have learned a thing or two about their return on investment (ROI) in online fundraising.  And more often than not, these nonprofits are comparing their ROI to that achieved with their direct mail programs — assuming they have one — which for numerous decades has been our fundraising foundational benchmark.

It’ll come as no surprise that online fundraising results vary widely.  Philip King, the CEO of online fundraising solutions company Artez Interactive, writes in Fundraising Success Magazine in January 2009, “While some fundraisers have struck gold — generating 10 times their online investments in as little as three months — others just break even after three years of hard work.” Lots of factors play into this including how long an organization has been building an email list, the tech savvy of key management staff, or simply the luck of riding the coattail of some viral marketing event that delivers instant results.

So what is the value of an online donor?  For the past decade, we’ve seen the gradual rise in the size of the average online gift.  According to the most recent online benchmark reports from both the Nonprofit Technology Enterprise Network and tech vendor Convio, the average online gift in 2009 stands at $70. This is twice the average gift that is typically received offline for events such as direct mail appeals or walk-a-thons.  Add to this the very marginal cost of sending a thousand emails instead of just one email, and the mathematics of online fundraising look very good.

The two other key variables in the online fundraising equation are the size of an organization’s email list, and the online fundraising response rate.  Email list size is a critical issue, since the mathematics depend on scale to be effective.  The challenge for most organizations is how to build up the size of their list.  This depends on how long and well they’ve been collecting emails, how often they email updates to supporters, and whether they have an active online advocacy program which is one of the most effective list generating techniques.  List sizes vary widely from a few thousand for a local charity, to sizes in the seven digits at large national nonprofits with name brands.

The online fundraising response rate is how successful a nonprofit is at raising money from their list.  The national benchmark (from the same earlier sources) is around 0.12%.  You might think that achieving this benchmark is easy, but the devil is in the details: From lines, Subject lines, good copy, a Donate Now button, an embedded video, and a good donation landing page.  Add to that an email (messaging) vendor and some savvy at creating an HTML email template.  The complexity adds up fast.

This is why online fundraising has become a career choice for savvy fundraisers turned techies, or techies turned fundraisers.  Having made my own living at this trade for the past few decades, I have high praise for those who labor silently behind the scenes, putting these various tools and techniques together to raise money for nonprofits.  Finding a good staff person to manage these tools is a rare and valuable commodity.

A key strategic decision for organizations that want to increase their online fundraising investment is to decide whether to outsource that work or hire someone in-house.  The industry of service providers willing to assist with online fundraising is vast, and has become specialized by verticals such as unions, alumni networks, environmental groups, conservatives, and others. The competition for business in this service industry is huge, with firms vying for lucrative contracts.

Finally, the technology tools themselves provide a high cost variance.  It’s become relatively inexpensive to build a basic website or send out simple emails, but succeeding with online fundraising requires a more complex process of integration.  Integrated online solutions are the growing trend, and vendors such as Convio, Blackbaud, Democracy In Action, Wild Apricot, MemberClicks, eTapestry and numerous other web-based systems are now available to send emails, process online gifts, and track donor data.  Costs range from $100 per month for some of the solutions, to several $1,000 per month for more complex integrated systems, and the right solution for you will depend on what you’re trying to do online and the size of your email list and online audience.

Most of this discussion about the return on investment in online fundraising has presumed that the email appeal is the technique being used to drive the giving process, with the size of the organization’s email list being the scalable variable.  Fast forward to 2010, and new opportunities for online fundraising have emerged in online social networks Facebook and Twitter, and mobile fundraising.  These digital platforms are playing a new role in the online fundraising equation, and their value is still a hot debate topic and subject to real world testing.

Writes Donordigital founder Nick Allen in a recent article in Mal Warwick’s Newsletter: “Facebook, Twitter, iPhones, and whatever comes next are going to play an ever larger role in fundraising, even if you can’t easily measure the ROI from social communications.”  Nick urges nonprofits to “dedicate more staff time to building relationships with donors and other supporters who use the networks, and try to figure out the revenue stream as well.”

Digital fundraising is alive and well, and pushing new boundaries with social media and mobile tools.  This fast evolving medium reminds us that just as technology is changing, so are donors’ interests and preferences in how they want to be involved in the fundraising experience. Paper-based fundraising has remained relatively unchanged for several decades, while digital fundraising is reinventing itself every few years, trying to keep up with the attention span, interests, and devices being used by the average donor.

Philip King of Artez Interactive: “Any way you look at it, your digital ROI should beat every other direct channel at your disposal … hands down. In comparison to your phones, your mail and your canvassing, every dollar spent on digital should produce more dollars for your cause. Why? Because the average gifts will be higher, and the cost to get each gift will be lower. As an added bonus, you’ll be saving many, many trees!”

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by Michael Stein

As a nonprofit technology analyst I’m enamored by “benchmark” and “trend” reports that look at digital fundraising.  These are published with regular frequency by research organizations, trade associations, consulting agencies, and tech firms.  The question for many of us in this field was whether online giving trends in 2009 would mirror the turmoil in the American economy and lead to a decline in revenues for nonprofits.

Steve MacLaughlin from Blackbaud offers us a review of online giving trends in 2009, writing for NTEN, with a slant toward larger nonprofits using Blackbaud products.  An analysis of the past 36 months of online giving continues to show positive growth despite challenging economic conditions. Blackbaud’s research found that online revenue grew by 46% in 2009 compared to 2008. The two largest months for online giving were December and May. Even though February was the smallest month for online giving, the first three months of 2009 had a 60% year-over-year growth rate in online revenue.

The final three months of the year represent the largest amount of online giving to nonprofit organizations. In 2009, 46% of online revenue was processed during October, November, and December. The month of December accounted for 30% of revenue and 18% of the transaction volume. The average online gift in December 2009 based on Blackbaud data was $244. This was a decrease of only 2% compared to December 2008. Another very positive sign was that online giving in December 2009 grew 32% compared to December 2008.

The average online gift in 2009 was $144, which represents a 5% decline from 2008, but remains significantly higher than other fundraising channels.

Putting 2009 behind us, here are my thoughts for online fundraising trends to look out for in 2010:

* There will be substantial growth in the number of smaller gifts, particularly as more people make gifts using mobile and social media tools.
* Online appeals of all kinds (email, social media, mobile) will continue to grow as more organizations test the waters of digital fundraising.
* Recurring gifts will be a growing portion of online giving, as donors want to continue to support the charities they love, but want flexibility to spread out their gifts.
* Year-end gifts will continue to account for a substantial percentage of total annual contributions.
* Multi-channel fundraising will be reborn as organizations weave together the online and offline into real-time Web fundraising events.
* Peer-to-peer fundraising (raising money from friends) will expand, as volunteers and donors are called upon to expand outreach efforts to raise money for causes they care about.
* Video will expand as a fundraising tool, since it increases responses rates, in spite of higher production costs.
* Mobile fundraising will continue to grow, but in limited circumstances such as stadium events and disaster relief.
* Social media will grow as a fundraising platform, driving small gifts in larger numbers.

There is little doubt in my mind that the next few years will offer some big opportunities for digital fundraising.  The continued growth in the use of smart phones, the arrival of tablets, and the convergence of the Web with televisions will provide some exciting new terrain for charities to experiment with rich media messaging and interactivity.  The digital fundraising revolution has many more chapters to come.

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