The Young and the Restless

Someone 20 years old, or 30 or 40 — even 50 — might never become a direct-mail donor. He or she probably will give online from the beginning. And there’s evidence that online donors might act quite differently than their direct-mail responsive parents and grandparents.

While the dot-com predictions of the death of direct-mail fundraising were premature, the stark difference in age between direct-mail and online donors indicates that we could see an increasing schism between the old(er) folks who give by mail and the younger ones who give online.

That’s one of the conclusions I’ve drawn from the most comprehensive comparison of online and offline donors to date, prepared by Target Analysis Group for the first donorCentrics™ Internet Giving Collaborative Benchmarking Report.

For many years, Target’s donorCentrics™ reports on direct-mail and telephone fundraising have helped nonprofits evaluate and compare their direct-response programs. This new online-giving report, produced with Donordigital, shows that while online donors give much larger gifts and produce more revenue per year, so far they look to be less loyal than direct-mail donors. Over several years, direct-mail donors produce more revenue than online donors, despite online donors’ higher acquisition and renewal gifts.

Who are online donors?
The report aggregates 2002 to 2006 data from 12 organizations, ranging from international development agencies that raised tens of millions online for Hurricane Katrina and the tsunami relief, to health, environmental and human-rights organizations with more modest success online.

It confirmed what many of us know: Online donors are much younger and have much higher household incomes than direct-mail donors. Even controlling for household income, online donors give larger gifts. One thing this finding suggests is that perhaps organizations should figure out how to position themselves online to acquire these younger, show-me donors who might never develop the same loyalty as their elders.

Most fundraisers have assumed that donors who give via multiple channels should be better donors, and the study bears this out: Two-year value of online donors who were acquired in 2005 and renewed in 2006 is highest for donors who gave via multiple channels in both years — and online donors were more likely to be multi-channel donors.

Therefore, organizations might want to persuade mail donors to give online as well. We recently sent a series of online appeals to direct-mail donors for whom we’d found e-mail addresses, and while the response rates were low, the average gifts were high and the revenue was gravy.

For half the organizations in the benchmarking study, online gifts accounted for 30 percent of all new fiscal 2006 (July through June) revenue, but it was less than 10 percent for four of the 12 groups.

Many donors gave online for the first time in response to disasters, so it’s not surprising their loyalty might be weaker. While the number of first-year donors eligible for renewal varied enormously across organizations, the online-acquired donors generally renewed at lower rates than mail-acquired donors. However, online–acquired donors provided higher — often much higher — revenue than mail-acquired. Though motivations were not addressed in the study, one conclusion that might be drawn from this finding is that online donors may give based on a more episodic, urgency-driven, transactional motivation than from a loyalty “renewal” mindset. Organizations with a strong brand name and strong institutional loyalty among traditional donors have the propensity to attract more donors to their Web sites, so be sure to hone and leverage your brand online.

Knowledge is power
In the end, the more you know your donors, the better you can encourage them to give. Based on this new donorCentrics report, here are some of the moves we’ve been recommending to clients:

• Give online donors the opportunity to give by phone and mail; call them and mail them as soon as they join your file.

• Give mail donors the opportunity to donate online (you might upgrade them!); give them a reason to provide their e-mail addresses, and test “appending” e-mail addresses to their records.

• Test the best ways to get second gifts from online donors. As with mail donors, recency seems to be the key factor.

• Even your own donors could be Googling you; consider buying keywords that take visitors directly to a donation page.

Nick Allen is CEO of online fundraising, advocacy and marketing agency Donordigital. To download a summary of this report: www.donordigital.com.