Research Reveals Promising Findings for Nonprofits That Prioritize Digital Fundraising

Nearly 60% of nonprofits cited 30% or less of their fundraising efforts were in digital channels, per NonProfit PRO’s “2023 Nonprofit Leadership Impact Study.” In that same research, nonprofits had cited reaching the right audience or building a strong community as their main hurdles to moving more fundraising to digital channels despite digital communications being their top donor engagement strategy. 

But what happens if your nonprofit adapts a digital-first strategy throughout the organization?

The “2024 Digital Fundraising Benchmark Report,” which NextAfter released last week, explored how a digital-first approach affected fundraising results by examining 27 organizations that fit that tactic. A digital-first nonprofit puts digital channels first, boosting online methods as the main engagement element in a multichannel approach that includes traditional channels as well.  

Here are three takeaways from the data that shows the benefits of a digital-first approach to nonprofit fundraising. 

1. Digital-First Organizations Are Growing Faster Than the Average Nonprofit

Digital-first nonprofits are seeing a 12.7% increase in growth, with a large amount of that growth coming via online revenue. Though offline revenue still outpaces its online counterpart at these organizations, online revenue saw a 99.1% five-year growth rate while offline revenue grew at 36.4% in the same timeframe among board base donors, which excludes mid-level and major gifts to avoid skewed results from a handful of donations and the impact of economic fluctuations. That’s a 175% faster pace for online revenue. 

Just because larger gifts were excluded from the previous figures does not mean that they are not impacted by digital-first mindsets. For digital-first organizations, NextAfter found major gifts have increased by 18.6% over the past five years, with mid-level gifts increasing 32.4% over the same span. Despite major gifts being known as offline gifts, online major gifts are outpacing their offline equivalents with 58.5% versus 16.1% growth.

“You can often spend a lot less time, energy, and resources to have a conversation with a single major donor — and yield far greater returns than any broad base program will yield,” according to the report. “But focusing on major giving at the expense of building a broad base digital program is neglecting your major donor pipeline of the future.”

2. New Donor Acquisition Online Leads to Larger Gifts and Higher Retention Rates

Despite sector-wide acquisition and retention struggles, digital-first nonprofits are discovering online donors are more valuable than those giving to offline channels. Last year alone, new donors acquired online gave 19.4% more in their first year and therefore were 48% more valuable than offline donors, according to NextAfter. 

Though direct mail remains a viable part of a multichannel fundraising strategy, relying solely on the offline channel may no longer be a winning strategy,

“Digital-first organizations are using direct mail more strategically than ever — powering their mailing lists with online behavioral data and lifting their direct mail results using a multichannel approach,” according to the report.

These newly acquired online donors also gave larger gifts on average — $20.57, or 53%, over offline donors last year, the report revealed. On top of that, their retention rates match those of offline donors. New donors retained at 28.3% when acquired online compared to 31% when acquired offline last year. As for revenue, online donors gave slightly more with 61.6% retained from online donors and 58.9% retained from offline donors. 

In fact, those who give that coveted second gift within their first year as their first gift are 114% more likely to be retained. Well ahead of industry standards, NextAfter found digital-first nonprofits boasted an average retention rate of 52.9% in 2023.

“Any notion that online donors are somehow less committed than their offline counterparts is misplaced,” according to the report. “With the proper intention and cultivation, online donors will stick around and continue to give at least as well as offline donors.”

3. Paid Advertising Spend Drives This Digital-First Approach

The average digital-first organization spends 2.71% of giving on digital ads annually, though some rapidly growing nonprofits spent as high as 64% over the past three years. Paid digital ads lead to higher website traffic, but website conversions and average gift sizes tend to be dependent on the stage of an organization's digital program. However, how much an organization should spend depends largely on the stage of their digital fundraising journey. 

Those spending less than average on digital advertising may be building their program and have a return on investment (ROI) that is less than 30%. A higher ROI means it’s time to invest more. Nonprofits that spend more than the average and get less than 30% ROI are at an aggressive growth stage while those with higher ROI are experiencing sustained growth. 

“These organizations [at the aggressive growth stage] are spending a high percentage of donation revenues on digital advertising,” per the report. “In some cases, they’re laying a foundation of digital donors knowing that the greatest payoff will come down the road. In other cases, they are more concerned with generating awareness of the cause and organization than they are with getting a high instant ROI from their campaigns.”