November/December 2003

Integrated Marketing -- How to Apply Internet Marketing to Increase Total Fundraising Effectiveness

by Vinay Bhagat, Founder and Chief Strategy Officer, Convio

America is online, but not everyone is giving online--particularly seniors
Recent surveys¹ show that 71 percent of Americans regularly access the Internet. Even seniors are now online. In 2001, 60 percent of people 55 and older, and 35 percent of people 65 and older had Internet access². Yet, in studies on online giving, the 55+ segment represented only 8 percent of online contributions³. However, the fact that seniors are not yet contributing online in large numbers does not mean that the Internet is not playing an important role. If an online relationship can help yield a more loyal direct mail donor, that is a great result.  Moreover, if an organization can access new donors cost-effectively through the Internet, that is enormously valuable, too.

Internet marketing plays a key role in initiating new relationships
Internet marketing is an efficient method for reaching new donors. Nonprofits that build lists of email subscribers and cultivate them through online communication and involvement (e.g., advocacy) are able to convert them to donors. Convio has found that constituents on an "organically grown," or e-cultivated, list will respond at three to four times the rate of people on a rented list when solicited for a first contribution⁴. This can significantly improve fundraising cost-effectiveness. Even if an organization uses traditional mail to convert the list (i.e., email is not used for solicitation), the cost-per-dollar raised (CPDR) drops by 66-75 percent.

Many nonprofits say acquiring email addresses is a big challenge. Although there is no "silver bullet," the Internet now enables virtually every organization to make big strides in this critical task. Convio has helped nonprofits of all sizes and from all segments of the nonprofit sector exponentially scale their email files. In 22 months, Convio helped the American Society for the Prevention of Cruelty to Animals (ASPCA) grow its email file from 22,000 to 208,000. In 15 months, another client, KUT Public Radio (a small NPR station in Austin), grew its email list from zero to 8,700.

Internet marketing also builds donor loyalty
Due to the high cost of mail, most nonprofit mailings necessarily are solicitations versus communications to steward constituent relationships. Donors frequently express frustration with these communications because they only ask for money and do not explain how the nonprofit is using contributions. Fundraising is about building relationships, which Internet marketing can facilitate cost-effectively. At Chicago Public Radio, the first-year donor renewal rate for subscribers to the organization's monthly e-newsletter was 20 percent higher than the first-year renewal rate for non-subscribers. The ASPCA has found that donors with an "e-relationship" have, in the last two years, contributed four times as much as donors without such a relationship, average gifts have been 112 percent higher and giving frequency has gone up by 85 percent.

Internet marketing supports mid-level and major giving
Nonprofits also should use Internet marketing to support mid-level and major giving. An organization can use online interactions to learn about donors' interests and better understand their motivations for involvement. The group then can use this information to send targeted email communications based on what is relevant to each constituent. Moving general communications online allows major gift officers to spend one-to-one time with donors to truly understand their philanthropic preferences versus just providing general updates.

¹ The UCLA Internet Report -- Surveying the Digital Future,  February 2003
² NTIA and ESA, U.S. Department of Commerce, using U.S. Census Bureau Current Population Survey Supplements
³ HJC Interactive, 2003 AFP International Conference
⁴ Convio data across several clients