Many nonprofits are feeling the impact of the financial crisis — in particular those reliant on corporate gifts. Others are bracing themselves for challenging conditions. In difficult economic times, it can be a natural reaction to stop all new investments. Yet, building strong constituent relationships and acquiring new donors to replenish losses is more important than ever.
Nonprofits must adopt a strategic approach to their fundraising investments, cutting less efficient areas and investing where gains can be realized. The traditional fundraising model has been in decline for some time. The financial crisis and competition for donor dollars has heightened the imperative to change models today, re-allocating investment from waning traditional fundraising approaches to new approaches that incorporate the online channel.
Vinay Bhagat
[This is] a challenging year. In addition to the recession, we are also seeing some other troubling indicators. Direct mail-based donor acquisition is getting harder and more expensive due to postage rate increases, mailing list fatigue and postal mail delivery challenges. Many nonprofits have cut back on direct mail-based acquisition efforts as donor files shrink and current communication approaches fail to align with a more empowered “new breed of donor” — constituents who value transparency about how their funds are being applied, are increasingly taking an active role in their philanthropy and have high expectations as to how they should be communicated to online.
Online social networks allow people to come together around shared interests or causes, such as making friends, dating, business networking, hobbies, interests and political discourse. The number of visitors to online social networks has grown exponentially in recent years. In June 2006 alone, MySpace.com had an estimated 55 million visitors. While most social networks attract a very young demographic (the primary age group for MySpace.com is 14 to 34), there are several networks geared toward older individuals; among them is Gather.com, which appeals to audiences such as public radio listeners.
The growth in recent years of online contributions to disaster-relief organizations clearly illustrates that Web fundraising has come of age. Consider the online giving that the American Red Cross has generated following major disasters: $64 million related to the Sept. 11 terrorist attacks (2001); $140 million in the wake of the Southeast Asia tsunami (2004); and $479 million after Hurricane Katrina (2005). Also telling is that the percentage of individual donor funds raised online (excluding corporate contributions) grew from 29 percent for Sept. 11 to 55 percent for the tsunami, illustrating that donors have become increasingly comfortable giving over the Internet.
Many organizations have successfully used the Internet for direct-response and special-events fundraising, but few have tapped its potential for major giving. The question nonprofit professionals should ask is whether online marketing and constituent relationship management can support major-donor identification and cultivation.
Historically, major-gift efforts primarily have sourced donors two ways: referrals from key donors and board members; and direct-mail programs.
For the most part, fundraisers no longer believe online marketing is competitive with offline marketing. Most understand that you need to incorporate both into your marketing strategy and that they should be coordinated in order to realize synergies. Many fundraisers, however, struggle with determining how much to focus on and invest in online marketing, and how to drive coordination between online and offline channels.
