Creating Effective Strategies for Online Fundraising

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While many charitable organizations scramble to learn how the Internet can be used to communicate and raise money more efficiently and more effectively, pioneering nonprofit organizations are harnessing the power of the Web and blazing a trail for online marketing and e-philanthropy that will change the way all nonprofits do business in the near future.


"E-philanthropy today is where e-commerce was three years ago," said Kathy Bushkin, chief communications officer and senior vice president at America Online.


Contributions made over the Internet in 1999 totaled only an estimated $10 million, a small fraction of the $190 billion donated to charities overall. But a growing number of Americans are getting online and choosing to receive their information and react to it in an electronic environment.


Nonprofit executives and other industry analysts predict that as much as $1 of every $4 contributed to nonprofits will be donated over the Internet by the end of the decade.


Early e-philanthropy for most nonprofits has meant participating in charity mall partnerships, earning commissions from consumers' online purchases. After a few years of receiving small checks (rarely topping $100 per quarter), many nonprofits are eager to get in a little deeper for more effective results. The next priority for most small and mid-sized nonprofits should be to provide a more meaningful online experience for their visitors and to incorporate online payment processing.


The American Lung Association, New York, created an online donation form more than a year ago on its Web site, www.lungusa.org, which averages 7,000 unique visitors per day. In one year, $128,000 was raised from about 2,300 individuals through straightforward mission-based fundraising - none of the benefit-driven incentives of frequent-flier miles and online shopping rebates that spell the success of many online fundraising efforts.


Vicki Harkness, assistant vice president of publications and online services at the ALA, said the strategy thus far has been to promote the association's Web site overall and to give donors the opportunity to make a contribution once they get there.


"We did nothing to solicit the donations other than having a pop-up window on our site and various buttons and banners within our site to encourage these contributions," Harkness said. Drawing traffic to the organization's Web site where visitors would see those encouragements, however, takes some effort. "We do work diligently to promote our site through PSA banner placements, promotions and requests for links," Harkness said.


Third-party service providers can design an online donation form to look and feel like the rest of the Web site on a separate, secure server and can authorize a user's credit card order in real time. Most of these companies take a small percentage of each transaction (typically 8 percent to 15 percent) or sometimes a flat fee per transaction, in lieu of any setup fees or other upfront costs.


Although fundraising on a commission basis has long been considered a development no-no, the Association of Fundraising Professionals, Alexandria, VA, formerly known as the National Society of Fund Raising Executives, changed its ethics document last year to acknowledge that reasonable fees in performance-based pricing structures are fair methods of compensation for some Internet fundraising solutions. Leading companies in this industry include www.contribute.com, www.charitywave.com and www.charityweb.com.


The alternative to an online donation form on your Web site is to register with a portal that accepts donations on your behalf, such as America Online's www.helping.org. While this provides an additional platform of visibility among a growing number of proactive donors (including corporate and foundation funders), it also provides visibility for other charities that may be competing for the same funds.


Most nonprofits will want to proceed on both fronts, and savvy fundraisers will partner only with portals that do not accept part of the contribution themselves. Paying someone to process payments on your Web site is appropriate; paying someone more than a standard credit card handling fee to process payments on its Web site is not. Also, make sure that Internet users can click directly to your own Web site, and that the portal agrees to provide information about how many Internet users find your charity on its Web site and what actions they take subsequently.


The next step for charitable organizations with online donation ability is to drive more traffic to the site and to increase the chances of visitors donating once they get there. The American Red Cross, Washington, a leader in Internet fundraising with $2.5 million raised online last year, is just now beginning to test the effectiveness of outgoing cultivation and solicitation correspondence delivered electronically as opposed to delivering it through traditional direct mail. Preliminary results have not been released yet, but look for this effort to have an extraordinary impact on Internet donations in 2001.


Every charitable organization should create its own Internet strategy, considering a variety of online elements, including:


• Building a better Web site. Develop the site to provide meaningful and interactive information for Internet audiences.


• Accepting donations on your Web site. If you do not have a secure server where audiences can give their credit card numbers without worrying, partner with an organization that does.


• Driving traffic to your Web site. Getting people to see your Web site requires a three-tiered strategy: introduce new audiences to your Web site by printing your Web address on all collateral materials; employ proven Internet marketing techniques such as getting your own organization's banner advertisements and text links on other Web sites; and build content on your Web site that changes regularly to make it interesting enough for visitors to make repeat visits.


• Directing traffic to your online donation forms. Web site maximization is a key part of an effective online strategy. As with any printed solicitation piece, you must communicate the need for support and make it easy for people to help.


• Creating an e-mail mailing list of new audiences. New online audiences, which are typically younger, more educated and more affluent, will find you on the Internet when you employ the correct strategies. Be prepared to collect the e-mail addresses of these new audiences and, through separate procedures over time, the demographics of these audiences.


• Converting existing mailing list names to your e-mail list. Start by asking for e-mail addresses on all printed forms. Using a check box on that same form or on a separate survey, find out who would prefer to receive information electronically.


Communicating electronically with audiences that prefer e-mail using e-newsletters and e-solicitations. If they prefer e-mail, then use e-mail. If they have donated electronically, thank them electronically and resolicit them (whatever your standard timeline) electronically. Third-party providers can manage e-mail distribution of your newsletter or solicitations for pennies per household as opposed to the traditional costs of paper, printing and postage.


These are just a few examples of how organizations might start thinking about the Internet as a tool that will become ever more pervasive, and increasingly effective, over time. Some organizations will have much grander things to accomplish on the Web, such as building an online community for audiences to exchange information or developing a comprehensive e-commerce solution for selling tickets and organizational merchandise. In any case, the Internet continues to grow, bringing more services and more relevant information to the desk of the nonprofit official. Nonprofits should take advantage.


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