Online Fundraising Success Factors

By Gene Austin, Chief Executive Officer, Convio, Inc.

The true value of the Internet for any organization is in creating and sustaining constituent relationships to ensure ongoing support. This is achieved by implementing an online Constituent Relationship Management (eCRM) strategy to involve constituents -- especially donors -- in more than one activity so they can provide support for the organization in multiple ways at different times. Consider the following factors when evaluating the overall success of an organization’s online fundraising efforts.

DRIVE ONLINE AND OFFLINE GIVING
Consumers frequently conduct research online before making a purchase. However, when making the decision about where to make actual purchases, they tend to follow individual preferences based on convenience, comfort with online transactions and other factors. Donors, like consumers, make gifts or purchases where they feel most comfortable and, for some donors, that still is through traditional methods such as direct mail or telephone. Keep in mind that online communications and appeals will likely drive offline donations, and remember to factor that into the assessment of online success.

INCREASE DONOR LIFETIME VALUE
The lifetime value of a donor is based upon his average gift level, gift frequency and expected retention rate. Each of these variables depends on the quality of the organization's relationship with the donor. Effectively communicating with donors and involving them in additional activities -- such as advocacy, volunteering and sending messages to friends -- will likely help to develop closer and stronger donor relationships.

Research by the Indiana University Center on Philanthropy (published in FRM Weekly) suggests how important this is. One thousand lapsed donors from nine charities were asked why they discontinued giving. The study yielded the following "Top Ten Reasons Why Donors Stop Giving":

10. Charity did not inform donor how contribution was used (1.7 percent)
9. Charity asked for an inappropriate donation amount (3.1 percent)
8. Charity did not remind donor to give again (3.3 percent)
7. Charity's communications were inappropriate (3.6 percent)
6. Death (5.2 percent)
5. Donor relocated (6.7 percent)
4. Donor still supports charity by other means (6.8 percent)
3. No memory of ever supporting charity (11.4 percent)
2. No longer able to afford support (22.3 percent)
1. Feeling that other causes were more deserving (26.5 percent)

Most of these reasons for lapsed giving could be attributed to poor donor relationships. Traditional mass communications such as direct mail and telemarketing focus primarily on solicitation, but the Internet opens a world of new possibilities for donor relations because of the ease and low cost of sending constituents frequent, targeted and personalized online communications. Remember when measuring online success that online communications increase an organization's capacity to build stronger, more personalized relationships. And that often leads to a greater lifetime value of each donor.

REDUCE COMMUNICATION AND FUNDRAISING COSTS
Paper-based communications such as newsletters, member updates and program guides are expensive. By moving many of these communications online, costs can be significantly reduced without sacrificing the frequency or quality of communications. While the Internet will never completely replace paper-based communication, in some instances -- for example, urgent appeals based on a current event -- email and Web site content are still more effective alternatives. Plus, by using the latest online fundraising software, a nonprofit can prevent information overload for its constituents (and cost overload for the organization) by only sending relevant information to the constituents based upon preferences they indicate through online registration and other means.

SUPPORT MAJOR GIVING
As donors become more comfortable giving online, organizations can expect to attract larger transactions over the Internet. However, a nonprofit should still consider using the Internet to support traditional major giving efforts. This will allow the organization to cost-effectively expand its capacity to communicate regularly in a personalized manner with large groups of major donors and prospects, resulting in more "marketing coverage" at a reduced overall cost.

ENCOURAGE CONTRIBUTIONS IN OTHER AREAS
Donors and prospects may want to support an organization in ways other than providing financial support. This support can be just as valuable as a direct financial contribution. A nonprofit can use email and Web site content to encourage constituents to volunteer, participate in advocacy campaigns, attend events and forward an organization's messages to friends.

SUMMARY
When evaluating the success of an organization’s online fundraising campaign, keep in mind that there are multiple ways for a constituent to support an organization in addition to donating. Consider multiple factors such as decreased fundraising costs and increased donor lifetime value as well as financial support when evaluating online results. Online fundraising yields few results if it is unplanned and separate from an overall fundraising strategy, and an organization should be prepared to examine all angles of a campaign when determining its success.

About the author: Gene Austin is CEO of Austin-based Convio, Inc. -- the market-leading provider of software and services to help nonprofits use the Internet for developing strong constituent relationships to drive fundraising, marketing, advocacy and other forms of support. For more information, please visit www.convio.com.