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Published in Nonprofits
Importance of online fundraising grows for nonprofits Illustration by Rachel Harper

Importance of online fundraising grows for nonprofits

BY Monday, February 20, 2017 06:03pm

Online giving continues to be the fastest-growing type of fundraising for nonprofits, but the dollars it brings in remain very low compared to more traditional methods.

That’s according to Michael Nilsen, the vice president of communications and policy at the Association of Fundraising Professionals.

“From our 2016 Nonprofit Research Collaborative Study, we know that 84 percent of responding organizations indicated growth in charitable gifts received through social media, which is the highest percentage of any method,” Nilsen said. “Online giving probably accounts for about 8 percent of total giving, based on various reports.”

Of the $373 billion given to charities in 2015, about $2.5 billion was through online giving, according to data from Keith Hopkins, owner of Hopkins Fundraising Consulting LLC in Ada. He characterizes online giving as the “flavor of the month.”

“$2.5 billion is a pretty substantial amount, but when you when look at that total amount, it’s very small,” Hopkins said. “I suspect as those folks giving online grow older, the amount of the gifts coming in online will grow.”

Millennials, the most tech-savvy generation to date, represent the largest segment of the online giving population because they react to and are more trusting of electronic communications, whereas older donors prefer more in-person interaction, said Barbara Hohman, who owns a fundraising consulting business and is president of the West Michigan Chapter of the Association of Fundraising Professionals.

Millennials identified social media as the preferred method in 43 percent of cases, followed by email at 21 percent, according to the 2016 Global NGO Online Technology Report from Nonprofit Tech For Good and Public Interest Registry. Baby boomers (30 percent) and Gen Xers (26 percent) both prefer email, followed by social media, at 21 percent and 24 percent, respectively. As a result, three-quarters of organizations worldwide accept online donations. In addition, 95 percent of organizations have a Facebook page, 92 percent have a website and 83 percent use Twitter, according to the report. 

Hohman said most nonprofit operations view online giving as an essential part of a total fundraising package.

“Online giving is one of the many tools that a fundraiser uses to reach out to a donor and it’s a newer way of fundraising that could be anything from a website to an e-blast or an e-communication in marketing,” Hohman said. “It’s very difficult for a fundraiser to quantify how much money comes in directly from an email or online giving unless it’s directly counted by one type of communication. Most of the time it isn’t.”

She likens electronic communications to an entry-level method that may encourage donors to give.

While millennials may prefer online giving, they’re young and not in a position to give away the bulk of their money, Hopkins said.

“What most nonprofits are doing to reach millennials is to get them to volunteer,” he said. “Millennials tend to volunteer at higher rates than other generations. They will write a check to where they volunteer.”

This puts fundraising professionals on two tracks. They must be good at their high-touch activity or face-to-face interactions with donors while also figuring out how to motivate donors to give online if that is their preferred method.

Hohman said fundraising professionals agree that a donor needs to be approached seven times before they’re likely to make a gift. Exceptions to this are events where donors participate in an auction or make an outright gift while there.

“An organization might send out marketing materials to prospective donors and the person who receives that might find it interesting, but will not respond directly to an email,” she said. “The organization might later send a newsletter or another type of communication that’s a little more personal and they will learn a little bit more. The organization might then invite the individual to take a tour of the organization.”

This personal touch remains very effective, especially among older donors who are more likely to give after meeting representatives of the organization and getting a visual idea of what it does.

“Older donors are less likely to give unless they know the organization in advance,” Hohman said.

The more money people give, the more personal interaction they want to have with the organization they are supporting, Hopkins said.

“Most people who write a $1 million check want statistics, information about the client work and interaction with board members,” he said. “Online giving will always be a gateway into giving, but it won’t translate into major gifts.”

The $373 billion in charitable giving that Hopkins cited earlier represents a 4-percent increase from 2014 levels and a 3-percent increase from 2013. He said the 2015 levels exceed the Gross Domestic Product of most nations, including developed nations. About 73 percent of that money comes from individuals and families.

“If you go back to 2008-09 when we had a recession, most experts said it would be decades before we would get back to increasing giving levels. But recoveries have come very, very quickly,” Hopkins said. “A lot of baby boomers are aging, so they’re getting into the prime giving years of their lives and they want to give something to their families and heirs and want to leave something with a legacy.”

With a steadily improving economy and President Trump talking about income tax cuts, Hopkins said he thinks the nation is heading into a “golden era” of philanthropy that will be driven by the giving of baby boomers and the generations before them.

“The last time there was a tax cut, we saw a 16-percent increase in giving,” he said. 

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