Internet fundraising has come a long way since credit card capability was The Big Thing. Come see how youԶe grown.

By Paul Barbagallo

When you assess the sophistication, innovation and e-commerce prowess of Web sites in the nonprofit sector, it’s hard to accept the fact that e-giving accounts for only 1 percent to 2 percent of all funds raised by U.S. charities.

Not so long ago, online fundraising simply meant being able to accept credit card donations through a Web interface.

But nonprofits realized, with the help of sister direct-mail fundraising practitioners and Web-marketing innovators, that people won’t give unless they’re asked. And so charities started building … and building … and building: content-rich Web sites fit with action centers (to voice opinions to elected officials), e-stores (to purchase branded merchandise) and fully equipped donation pages (to pledge gifts safely and easily).

Direct mail, telemarketing and special events, among other means of fundraising, are still largely outperforming e-mail. But most nonprofits have discovered a few interesting things.

First, online donors are younger than those of direct mail, and they’re more likely to volunteer and take action on behalf of your organization than are older contributors. Secondly, the average donation is consistently and markedly higher online than via other channels, ranging anywhere from $35 to $120 depending on the campaign.

Lastly, with e-mail newsletters and action alerts, charities are proactively stewarding “supporters” — those coveted individuals who are interested in your organization’s work, but aren’t quite ready to give — long before they ever think about donating.

Here, in this special cover story, you’ll find stories of your colleagues navigating the seemingly uncharted territory that is nonprofit fundraising on the Web. After reading about them, please drop us a note at mbattistelli@napco.com to tell us about your own successes — and failures.

AGED TO PERFECTION
Faith-based charity finds funds and cadre of young donors online.

Not surprisingly, the International Fellowship of Christians and Jews has relied heavily on direct-mail- responsive older donors since its foundation in 1983. What is surprising is how many younger donors it’s found online simply by overhauling its Web site and launching an e-mail outreach campaign.

With nearly 63 percent of its donor base older than 55 and a static Web site driven primarily by technical staff, the organization recognized the need to diversify its pool and make a serious investment in online fundraising.

Partnering with Internet software and services firm Convio, the IFCJ addressed myriad concerns — starting with e-mail.

“Like most organizations, we’ve seen direct-mail acquisition decline in recent years as people have gotten so overwhelmed by the amount of mail they receive,” says Pamela Barden, vice president of development for the organization, which just this year has fetched an average gift of $80 with direct mail while drawing $113 online.

“The neat part about e-mail is, of course, that we can send messages out to 1,000, 10,000, even 100,000 people, and it really costs us the same,” she explains. “It’s an opportunity to cultivate, and do it in a very cost-effective way.”

The organization now segments its e-mail address file and sends personalized appeals based on constituents’ giving patterns. For example, IFCJ recently dropped an e-mail to everyone on its file, notifying them of an upcoming trip to Israel. Those who previously had indicated an interest in the trip through responses to an online survey received a personalized version of the message.

“Once the tour to Israel happened, we started posting daily updates on our site from participants,” notes Web site coordinator Brad Duff-Hudkins. “We actually had a writer go on the trip and help journal what was going on.”

Barden is quick to mention that some people who initially expressed interest in the trip but didn’t go later regretted their decisions, for they were afforded a glimpse of “what they were missing” in daily e-mail dispatches. And the new features of IFCJ.org gave travelers’ loved ones a virtual window into activities.

All said, the organization increased its list of e-mail addresses by more than 143 percent from June 2004 to December 2004 (18,900 to 46,000), raised $350,000 online in four months ($1,035,131 in 2004 compared with $447,276 in 2003) and motivated 98 constituents to donate more than $9,000 with just one e-mail message. What’s more, a recent online survey of IFCJ supporters revealed 41 percent of respondents were ages 40 to 54, 26 percent were 55 to 64, and only 15 percent were 65 or older.

“We’re also finding that the weekly ‘Message from the Rabbi [Yechiel Eckstein]’ in our new e-newsletter, The Fellowship Inbox, is eliciting comments from our readers on a range of relevant topics — letting us know we’ve hit the target content wise, giving us more material for future issues and letting us know that we’re truly fulfilling the educational and bridge-building tenets of our mission,” says Diane Dubey, director of communications.

MAKE A WISH

New online tool helps donors give teachers what they need for the classroom.

For a recent science lesson, first-grade students at Forest Glen Elementary School in Indianapolis had to pluck and tweeze skulls and bones from regurgitated owl pellets — to learn how to think critically, problem solve and, oh yeah, see what owls eat.

But due to budget limitations, students might never again get to see the innards of an owl pellet up close.

Heeding the call to help save the program, as well as fund basic classroom needs, the Lawrence Township School Foundation partnered with nonprofit-software company eTapestry to come up with an online solution. (The National Education Association estimates that teachers spend an average of $443 of their own money a year on classroom supplies.)

The eTapestry team developed WishList, a straightforward e-commerce tool that functions like baby and bridal registries: Donors choose from lists of needed supplies posted by teachers to the Web site for Lawrence Township School Foundation; after donors select what they want to purchase, the inventory list is automatically updated for the next buyer; and orders are placed with the school district’s warehouse or supply vendors to be delivered directly to the classrooms.

“We have [individual] donors and businesses in the community that want to express their commitment to the school district but really haven’t found a unique way to do so,” says Christie Love, executive director of the Lawrence Township School Foundation, whose husband, Jay, is CEO of eTapestry and the driving force behind WishList. “Now they’re picking items out on a monthly basis to support our classrooms.”

According to Christie, the foundation has witnessed teachers increasingly asking for funding of “basic supplies” rather than grants for special programming. WishList requests have ranged from high-ticket items such as a greenhouse, gymnasium air-conditioning and digital cameras, to everyday items such as Post-it notes and plastic bags. One mother recently ordered her daughter’s classroom five magnifying glasses in honor of the teacher’s birthday.

WishList is integrated into eTapestry’s fundraising database, allowing donor data to be stored and employed for future personalized e-mails.

“Since WishList launched, we have found some of our other nonprofit [clients] using the same techniques,” notes Jay Love. “A food bank will allow donors to go online and purchase a fictitious meal with actual food items. It makes donors feel connected without getting into the aspects of having a stocked inventory.”

A PACKAGE DEAL
Animal-welfare organization reorganizes content, streamlines messaging and gives donors what they want — all to establish a no-nonsense Web presence.

When the International Fund for Animal Welfare set out to retool and redesign its Web site, IFAW.org, it focused on four objectives: educate and sensitize the world about animal welfare, expand IFAW’s supporter base by reaching new demographics, provide a powerful advocacy tool, and collect donations worldwide.

And like many nonprofit sites of its kind, IFAW.org initially lacked the functionality, rich content and user-friendliness needed to adequately support the organization’s mission.

“One of the things that we identified when we moved from the old site onto this new platform was segmentation, and really gathering peoples’ interests and being able to package that information and get it back to them,” says Cassandra Koenen, deputy director of online campaigns and marketing for IFAW, which leveraged Kintera’s content-management system software to revamp the Web site. “It takes a lot of work to make sure there’s always something new and fresh on the homepage, that the features are changing on a regular basis, and that we’re bringing people into an online community.”

Koenen says IFAW’s Web content was once so vast and daunting that the organization would be inundated with phone calls from supporters saying, “I want to learn more about what you’re doing to protect elephants.” Now the site features a special “SAVE ANIMALS” community — featured prominently on the homepage, adjacent to the “DONATE NOW” tab — where visitors can select a species of interest and learn more about its natural history and endangered status.

Web-savvy animal conservationists can read up on harp seals, dolphins, porpoises, whales, bears, elephants, rhinoceri and primates. On each continuation page, which vets the plight of blue whales, for example, IFAW provides a navigation bar for visitors to “Make a Donation,” “Take Action,” “Sign Up for Action Alerts” or “Log In.”

“It was extremely important to us when we rebuilt this site that we were able to have an ‘action’ on every page,” Koenen notes. “We wanted to create a community where people are saying, ‘there’s always constant change here, there’s always action steps to take. I’m going to keep coming back to see what IFAW wants me to do next.’”

According to Koenen, IFAW e-mails one fundraiser and one action alert a month to its online database of supporters.

“The fundraisers clearly are the emotive hard asks, something you would find in a direct-mail piece,” Koenen says, commenting on the 300,000 individuals worldwide who receive IFAW e-mail appeals. “But there are some that we send that are just purely, ‘here’s something of interest.’ It’s one of the brilliant things about the Web. If direct mail wasn’t so bloody expensive to produce and create and mail out, all of the environmental groups would have a potential to tap into, but because it’s so expensive, and you’re not going to get a return, it limits what you can do through the mail purely for activism purposes. With the Web, it doesn’t cost us a penny more to send out an action alert.”

From September 2003 to September 2004, IFAW.org drew 1,009,048 unique Web visitors, a 196 percent increase from the same period a year earlier, when the site fetched only 341,229 visitors, according to Kintera.

During the re-launch year of IFAW.org, approximately $241,466 was raised through e-mail efforts, a 54 percent increase compared to the $156,382 generated from September 2002 to September 2003. The organization also reported a 50 percent increase in response rates to e-mail appeals from September 2003 to September 2004, compared to the previous year. Additionally, the average donation increased by 5 percent, from $44 to $46, during the same period.

And while just 5 percent of IFAW’s 300,000 online supporters (responding in 11 different languages) have converted into donors, the average gift is markedly higher than that of direct mail, from $37 to $50 depending on the issue. Contributors to IFAW’s StoptheSealHunt.com — a Web site launched earlier this year by the organization to combat Canadian seal clubbing — are pledging gifts on the order of $51.

IFAW online donors also range in age from 35 to 50 — more than 10 years younger than traditional direct-mail donors. And Koenen notes that the organization has just entered the early stages of creating a special section expressly for young people ages 9 to 15.

“We want to steward them through so they’ll still be taking action and donating when they’re 35 to 40,” Koenen says.

WORKPLACE GIVING JUST GOT VIRAL
United Way enters online-services arena with new suite of ‘eWay’ products.

United Way of America was never known as a cutting-edge, online-services provider. But the national social-services juggernaut, with 1,350 local affiliates, just entered the fray with a turnkey suite of online products for meeting and tracking organizational-level giving and workplace philanthropy.

Called simply United eWay, the robust services line seeks to help local United Ways and corporations manage an online institutional giving campaign from inception to completion, including a mechanism to capture electronic donations, year-round collection, research, reporting and payment of gifts, and a secure facility with more than 25 staff members who collect and process donations (e.g., payroll deduction, credit/debit, check, cash, stock, electronic funds transfer, etc.).

Recently, United Way partnered with Cambridge, Mass.-based cMarket to extend Internet-based auctions as part of its package of services.

“We find companies start with one United eWay product and quickly expand,” says Michael Schreiber, executive vice president for enterprise services, United Way of America. “A lot come to us and say, ‘I’d like my employees to volunteer.’ Only when they get more involved do they start to say, ‘Boy, I’d like to be more strategic in my workplace giving campaign, and I’d like to get my employees on the boards of local organizations.’”

More than 700 corporations and local United Ways currently are leveraging United eWay for their institutional-giving campaigns, with the latter drawing an average gift of $330.

The service already has garnered the attention from organizations such as UPS, NASA, Hasbro and Sprint. For more information, visit www.unitedway.org/eway.

STAYING IN CONTACT
Boston Library Foundation relies on e-mail to cultivate young donors and keep its board informed.

If your annual operating budget depends largely on unpredictable government funding, as is the case for the Boston Public Library Foundation, it would behoove you to establish a means to attract — and retain — individual donors and supporters.

According to Executive Director P.A. d’Arbeloff, e-mail not only has given the foundation a way to deliver critical, time-sensitive information to its 60-member board of directors, but it’s also helped foster relationships with a group of donors it refers to simply as “Young Professionals.”

“One of the key opportunities that we have with e-mail is promoting and selling tickets for our lecture series and exhibits,” d’Arbeloff says, commenting on the cadre of unique individuals in their 20s, 30s and 40s who volunteer and financially support the foundation. “We have a very active and supportive group of young professionals who prefer to buy tickets online, prompted by an e-mail. People appreciate it. It’s quick and easy and informative, and they find it very helpful.”

D’Arbeloff and the foundation have partnered with Waltham, Mass.-based e-mail marketing service Constant Contact, which recently surveyed 500 nonprofits, associations and member organizations about the responsiveness of their e-mail campaigns. Fifty-one percent of survey respondents reported higher open rates and click-through rates, and of the nonprofit organizations and associations leveraging e-mail, 81 percent use it for membership newsletters, 73 percent employ event invitations, and 43 percent send membership-meeting announcements.

“The majority of our e-mail communication is newsletter and event-promotion focused,” d’Arbeloff says. “It’s not really direct mail, at least the way I think of it. It’s not, ‘here’s our situation, please click here and make a donation.’ At least in the near future, I don’t see the foundation going in that direction.’”

What’s more, as with most nonprofit organizations, the foundation’s board members are significant individual contributors to programs as well as its public voice, and having e-mail to fundraise and communicate with them has been critical, d’Arbeloff says.

For example, early in 2003, the foundation was closely monitoring proposed legislation that would affect its government funding. Using Constant Contact’s e-mail template, d’Arbeloff informed the board immediately when a piece of legislation was passed or vetoed, explaining what it meant for the budget.

A VIRTUAL ART HOUSE

Art buyers don’t like long lines. That’s why PONCHO (Patrons of Northwest Civic, Cultural and Charitable Organizations), an organization dedicated to enriching the quality of life through charitable support for the arts, shifted its efforts online.

The first order of business was to reduce the lengthy lines at the close of each art auction, where patrons often would leave without paying for, or even picking up, their items. The organization partnered with Auctionpay to establish an online pre-registration process for donors, as well as a payment-processing function at the actual events.

“We capture their credit cards, or how they want to pay, when they check in at the very beginning of the night,” says Steve Vitalich, director of finance and operations, PONCHO. “At the end of the night, all they have to do is verify what they bought and take the stuff home.”

According to Vitalich, PONCHO now sends an e-mail to 3,200 art patrons and organization supporters to preview “some of the cooler items” before the night of the event. Says Vitalich: “We received 1,500 hits on our preview page as a result of that e-mail.”

REACH OUT AND CULTIVATE
Seattle University leverages e-mail to reconnect with alumni.

With only 10,000 e-mail addresses on file for its 45,000 alumni, Seattle University last year recognized the need to better engage its graduates in campus life. SU knew full well that cultivating stronger bonds with alumni would lay the foundation for fundraising in support of critical scholarship and endowment programs. Naturally, it looked to the Web.

The real problem, according to Linda Hulten, assistant vice president for advancement services and annual giving for the independent Catholic Jesuit university, was not necessarily the lack of a Web presence. SU had a Web site (albeit static), a quarterly newsletter and an ongoing offering of activities for alums.

“There are a lot of events on campus, but previously there was no way to get a hold of alumni at the last minute to let them know what was happening,” Hulten says.

Hulten cites a recent example of a speaker who came to SU’s downtown campus to discuss the passing of Pope John Paul II. Unfortunately, the alumni relations office lacked the lead time required to drop a mail piece and await a response. And with SU alumni chapters popping up in California, Washington, Oregon and Hawaii, as well as throughout the United States and Canada, the university acknowledged the importance of offering alums a quick and seamless way to register for events without the time-intensiveness (and costs) of telemarketing and direct mail.

The obvious first step was to enrich SeattleU.edu while reducing costs associated with more traditional, offline mediums. SU opted for Blackbaud’s online-community building tool NetCommunity, which works in concert with the Internet software and services firm’s fundraising-management tool The Raiser’s Edge.

The goal was to provide an interactive, customized experience for each visitor with opportunities to register for events held in their area — not to mention make online donations. By leveraging a single donor database that combines online and offline data, SU gives its graduates a true personalized experience.

“We’ve heard from our younger alums that prefer e-mail, some even saying that they don’t want any communications other than e-mail,” Hulten notes.

Since SU went live with NetCommunity in January, SeattleU.edu has logged roughly 8,000 new alumni e-mail addresses.

“Some alums have responded to our e-mail [appeals] by donating online, but it hasn’t been a huge response,” Hulten says. “We’re trying to gently break into soft solicitations. We don’t want people to opt out of our communications.”

UPDATE ON THE STATE OF E-PHILANTHROPY
By Vinay Bhagat

E-philanthropy has evolved greatly in recent years. In 1999, less than 15 percent of the 1,000 groups I researched had a Web presence, and most were just brochures.

Online fundraising was negligible — some groups could accept online donations, but few were running proactive appeals. While dotcom hype generated tremendous interest, it also led to unrealistic expectations of money flowing in by just placing a “donate now” button on a Web site.

While online giving still accounts for less than 2 percent of total funds raised by U.S. nonprofits, people today are much less skeptical about the importance of the Internet. Convio estimates that $3 billion was raised online in 2004 and, although success varies, some organizations are beginning to raise substantial funds online. Success correlates by type of organization and fundraising model:

Special-event fundraising groups have raised a substantial portion of revenue online (up to 75 percent). Much of this revenue is new as participants using online tools have expanded their reach and average gift.

International-relief agencies have garnered substantial funds online in response to disasters — 39 percent of all tsunami gifts came online, according the Direct Marketing Association’s Nonprofit Federation. Not only has the Internet been a great vehicle for collecting funds from new supporters, but some groups have proactively raised funds through e-mail appeals sent during and outside of disasters.

Advocacy groups have built large lists of activists and have mobilized them to support initiatives. Some also have been effective at converting activists to donors through online and off-line solicitation.

Health- and member-oriented groups providing strong online content and community engagement opportunities have attracted growing numbers of supporters and have successfully converted them to donors, advocates and event participants.

The way groups organize also drives success. Successful groups have:

Executive-level recognition that the Internet is strategic and warrants investment of organizational resources;

Embraced online marketing in an integrated fashion and realized that it is important to “organize around the constituent” — adapt to their preferences, interests and participation history;

Ensured that fundraising/marketing functions either control or have an active voice in the strategy for the Web;

Adopted a proactive outbound communications and solicitation approach;

Deployed the right systems necessary to interact holistically with constituents; and

Organically built large e-mail lists for both current supporters and prospects instead of relying on tactics including list appends or rentals.

Unfortunately, many groups have not followed these principles and are not succeeding. The single biggest constraint on success is a lack of executive understanding of the potential value of the Internet. Technology has advanced greatly in the last five years, but there is an acute lack of administrators who both understand the nuances of the Web and also are strong communicators and fundraisers.

Although the nonprofit sector largely focuses on funds raised online as the measure of success, we should pay more attention to holistic metrics such as the impact on overall constituent engagement and results of channel-integration efforts. While we have come a long way, we have a long journey ahead to fully realize the potential of the medium. In July 2001, [consultant and author] Peter Drucker said the Internet will have a more transformative effect on the nonprofit sector than the for-profit sector. I agree.

Vinay Bhagat is founder, chairman and chief strategy officer of Austin, Texas-based Internet software and services firm Convio.

YOU CAN’T SHAKE HANDS WITH A COMPUTER
By Jake Dell

Suppose tomorrow you had to make a choice: You could have your telephone and a call list of 20 recent $50 to $100 donors or your existing fundraising software. But not both.

If you’d rather have the telephone and call list, you’re making the choice to protect your organization’s ability to raise money. Some things a computer just can’t perceive — the edge in a donor’s voice or the reluctance in a handshake. Some things a computer just can’t gauge — the readiness of a major-gifts prospect to give or the degree to which he identifies with the cause.

This is the subtle, personal side of fundraising, the instincts and gut feelings that guide a cultivator as he builds his relationships with prospects and donors.

Designers and consumers of fundraising software need to remember that there is a pool of intuitive data in our fundraising organizations that registers briefly in the mind of a cultivator, enables a decision and passes — untracked — into oblivion.

As an industry, we need to respect that data and the fundraising professionals who make good use of it. We need to make sure that our “decision-support systems” don’t get too big for their britches. They shouldn’t (or shouldn’t foster the impression that they can) make decisions for us.

With so much intuitive data unavailable to the computer, any “decision” (or predictive model) is likely to be wildly distorted. So then, what we need to do is adjust our expectations.

Instead of expecting software to give us answers, we should set it to the task of alerting us when answers are needed: “Calls to new donors have dropped 25 percent since last week” or, “Five major-gifts proposal deadlines have slipped.”

A simple decision-support system can be developed to flag these conditions quickly and alert human resources. But by the time calls to new donors drop by 25 percent, it’s probably too late. Maybe what we really need is an “early warning” mechanism.

Consider: You target a donor for a major gift and set up a proposal in your data system. If you have a history with this donor, you might be able to calculate a ratio of “number of phone calls to gifts received” or the average time from the start of cultivation to the receipt of a gift. You could keep your IT staff busy making those calculations and building models based on even more sophisticated analysis — all of which will look impressive.

But then how do you avoid the “deadline shuffle” that keeps the same six prospects on a “to be asked in the next six months” list for more than a year? A good decision-support system can keep us honest and help us make the most of “what-if” thinking: “What if the deadlines on my A list slip by three months?” “What if this appeal is late?”

In his book, The Haystack Syndrome, Eliyahu Goldratt asks whether an information system can answer the question (not project, but answer): “How much net profit will our company make next quarter?” His answer: Yes.

Might we expect the same from our fundraising systems? I suggest that we can, if we follow Goldratt’s methods. This means: the rigorous scheduling of gift “production” activities (scheduling backwards from the deadline, you define a series of “moves” to advance the gift); development of mechanisms to alert managers when gift-production activities start late (or fail to start at all); and scaling back or abandoning analytical efforts to spot trends or profile donors, and relying instead on the intuitive data possessed by our best fundraisers.

Wealth indicators, scores, models: They tell you that the money is there, but they don’t do anything about getting people to give. Thirty seconds on the phone will tell an experienced fundraiser — with certainty — far more than any score.

It’s up to flesh-and-blood fundraisers, with all their instincts and intuition, to actually tap donors and help them realize their giving potential.

Jake Dell is a business analyst for the Legion of Christ, a Roman Catholic congregation of priests founded in 1941 and active in 20 countries on four continents. He can be reached at Jacob.Dell@legionofchrist.org. Or log on to www.jakedell.com.