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How the Net Is Changing Donor Relationships

Not surprisingly, the nonprofit sector, which employs about 7 percent of the workforce in the United States, is already experiencing the profound impact of the Internet.

E-mail, once seen as a quirky social implement, has emerged as a staple of internal and external communications, displacing volumes of comparatively inefficient memos, phone calls, faxes and overnight mailings. Web-based tools are increasing the overall effectiveness of practitioners and programs by making information ubiquitous and collaboration seamless.

Even Internet fundraising is beginning to generate significant — sometimes dramatic — revenue. What's next? A political process that involves everyone?

“Who's doing what?” and “How much does it cost?” are the concerns of the day. As some nonprofits implement intranets and extranets, realign and reassign staff and start to think about donors and members in radical new ways, others are scrambling for models. What's justifying such proactive spending on Internet technology? Before understanding who's doing what and for how much, it may be useful to look at why.

Nonprofits that are seeing success online — especially with fundraising efforts — are generally ahead of the curve in their recognition and understanding of some basic trends.

Here are just a few:

Access to information brings your constituents closer. Whether customers, members, donors, volunteers or competitors, the availability of information and the means by which it can be acquired, analyzed and stored, is forcing both for-profit and not-for-profit organizations to reinvent themselves as customer service driven and relationship-oriented. When the big foundations, such as Mott Foundation and The Pew Trusts, offer grant seekers a look directly into their grants databases, it's an undeniable sign that significant — probably paradigmatic — change is afoot. Information is currency, and to the extent that what you've got is of interest and/or utility to others, you're in business 24 hours a day, seven days a week. Adding value to your information, by offering resources, tools and connections to others, is what will keep constituents coming back for more, and closer to you still.

Donors are more informed than ever and want to stay that way. This raises the bar even higher. The old fundraisers' adage about the Baby Boomer who writes you a check for $10,000 and then writes you a ten-page letter telling you what to do with it is real. It points to the rise — or reincarnation — of what Russell Allen Prince calls the “investment donor.”

Internet donors of all ages are coming to you via your Web site with more knowledge about your organization and the issues it deals with than they would have ten or twenty years ago, in part, because the first trend makes it possible. This means the need for nonprofits to demonstrate and substantiate credibility, money stewardship, and program success is critical.

Communication through the Web and e-mail are powerful tools to accomplish these increasingly critical tasks. The World Wildlife Fund recognized this in 1996, when it created a 15,000-page Web site (www.panda.org) dedicated to wider distribution of deeper information on its myriad programs in the field. The site has seen millions of user sessions since.

Internet technology represents the coming of age of “one-to-one” marketing. Seth Godin, Yahoo's vice president of direct marketing, calls it “permission marketing.” Direct mail has been clumsily going at it for years personalizing envelopes and return address labels, offering a choice of premiums and segmenting targets by gross association, for instance, with lists and demographics.

Web technology, including cookies, relational databases and powerful Web-based list management applications are turning speculation into near-science. These tools, combined with the willingness of individuals to give you information about precisely what they're interested in, make possible new levels of interaction. Sign up for the International Red Cross' Online Delegate's program (www.helpicrc.org) and see. You'll get personalized, customized information from them only on program areas of your choice. When there's an emergency in a part of the world you're interested in, they'll tell you what's going on there. According to early returns on e-mail campaigning to members of these kinds of lists, you may be as much as 20 percent more likely to respond.

New models and metrics for direct marketing and fundraising are emerging. While Internet fundraising is still immature, it has been going on long enough now (about 1,500 days) to begin to yield new approaches and new ways of measuring success. Some initiatives are Web-only, some include e-mail, while others are hybrids that use multiple channels to convert and cultivate prospects. The heightened importance of data collection and management cannot be understated.

Invest appropriately in this part of the direct marketing apparatus. The dividends will come. True, direct mail is a proven, predictable practice, but online fundraisers are seeing higher response rates and higher gifts — as much as 50 percent to 200 percent higher than comparable gifts through traditional channels — and a higher frequency of major gifts: Some charities have received online gifts of $15,000, $20,000 and $25,000.

With annual spending of more than $1 trillion, the NGO movement alone, if viewed as a nation, would rank eighth in economic power (Johns Hopkins University, 1999). Clearly, there is a lot at stake here. As stated, the global nonprofit sector is beginning to change the way it works in large part because of the influence of the Internet. Other important factors include an increase in human need and the diminishing role of governments and other large institutions. The overriding challenge for nonprofits large and small is to connect — faster, cheaper and in more lasting ways than ever before.

Creating and sustaining relationships based on personal-level interests will mean the difference between an organization with tens of thousands of active contributors and those with hundreds of thousands of active contributors.

Ken Weber is director of strategy and client development for AppNet, Bethesda, MD, a single-source provider of end-to-end Internet solutions for nonprofits.

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