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Online Giving: Donors Are Younger, More Generous, and in a Hurry to Help
Network for Good, the largest nonprofit site for charitable giving, recently asked online donors a very important question: "Why do you donate online?" The most common answer -- "It's easier than writing a check" -- says much about the changing face of philanthropy. Online giving is easy, and for a new generation of donors, convenience can be as important a consideration as the cause itself.
What's the Hurry?
Never before has convenience been such a valuable commodity. Stores sell pricey pre-sliced apples so we don't have to wield a knife. McDonald's has created a stored value card to make fast food even faster. Banks and retailers let us manage our money -- and spend our money -- with a few clicks of a mouse.
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Charities are not exempt from the craving for convenience: More and more people expect a pre-sliced, fast-pass, click-through process when they want to give. Fortunately, the Internet makes speed and simplicity possible, turning an impulse to help into a donation within seconds.
Marketing guru Seth Godin likes to say that all people are lazy and in a hurry. In the case of online donors, the same principle is at work: People are generous with their money, but perhaps less so with their patience.
The craving for convenience and immediacy has driven much of the exponential growth of online giving over the past five years, from $250 million in 2000 to more than $4.5 billion in 2005, according to the ePhilanthropy Foundation. Network for Good has processed more than $100 million in donations for more than 23,000 charities since our inception five years ago. Much of that giving occurred after disasters, when people were in the greatest hurry to help.
What's the Significance?
While it is growing rapidly, online giving still represents only 2 to 3 percent of the more than $200 billion in individual charitable giving in the United States. So while many people are in a hurry to give online, not everyone is there yet. Why then is it so important, and why should charities be in a hurry to embrace it?
- Online giving is on the verge of going mainstream. It is expected to track the trends of online shopping and online banking, which, while representing a small proportion of overall banking and shopping when initially introduced, now play a significant role in those sectors.
- Online giving is already donors' charitable avenue of choice in times of disaster. The Chronicle of Philanthropy has noted that Internet donations for the 2004 South Asian tsunami relief accounted for more than one-third of the total raised -- more than twice the proportion of online gifts in the aftermath of the Sept. 11, 2001, terrorist attacks. After Hurricane Katrina, half of relief giving was online, representing the largest outpouring of online donations in history.
- Online giving is particularly cost-effective for charities. While it can cost $1.25 to raise a dollar from a new donor through direct mail and more than 63 cents through telemarketing, the cost per dollar of raising money online can be as little as 5 cents. (Sources: Fund-Raising Cost Effectiveness, by James Greenfield; Cost-Effectiveness of Nonprofit Telemarketing Campaigns, by Keating, Parsons and Roberts; and Network for Good.)
- Online giving levels the digital playing field and capitalizes on the long tail, essential benefits to smaller and medium-sized nonprofits. Similar to the long tail phenomenon at Amazon, where bestsellers may sell many copies but not as many as the sum total of niche titles, online giving is often directed to smaller, niche organizations that can efficiently find supporters online. Giving portals like Network for Good are able to further level the fundraising playing field among big and small players, with small to medium-sized players accounting for 70 percent of giving via our site.
- Online giving is important because of whois giving online: younger, more generous donors. Network for Good's study found that online givers are young (averaging 38 to 39 years old) and generous, giving several times more than offline donors on average. Network for Good's average gift size over the past five years has been $155.
What's the Takeaway?
If you're a donor:
- Give online. It's easy for you, and it costs your charity less. This is especially great for your local charities, which can't afford to send you slick fundraising materials.
- Follow your passion. Put money into the causes you care most about, rather than just responding to the blitz of requests you get from nonprofits. There are more nonprofits than ever -- more than 100 new ones are formed every day -- so there are likely causes that closely match the values and issues closest to your heart. At Network for Good, you can search our GuideStar database of more than a million charities by topic, name, or ZIP code.
- Give wisely. With the Internet, it's never been easier to do quick research on charities. Make sure the organization you want to support is in good standing by looking at an organization's financials and ratings at Network for Good or Charity Navigator. The Internet makes it quick and simple to do basic homework.
- Give steadily. Online givers tend to give when there is a humanitarian crisis and at the end of the year. This year, consider being less of a "disaster and December giver" and more of a steady investor. December giving means your wallet takes a big hit when you can least afford it -- the holidays -- and it's also hard on the charities you care about, because they can't easily predict or plan their funding levels when they rely on one month of donations. Consider making recurring gifts to your charity through automatic monthly credit card deductions in the year ahead.
If you're a nonprofit:
- Get online now. It's cost-effective and efficient, and it allows you to reach a whole new generation of donors.
- Ask for recurring gifts. Online givers are impulsive and give most often at times of crisis and at year-end, with little activity in between. They also may not like solicitation -- 20 percent of Network for Good's donors ask to be anonymous. That means it's important to ask for steady support and not just a one-time gift. Consider offering recurring giving as an option in the online donation checkout process and emphasize to donors its value to you.
- Keep it simple. Online givers are in a hurry. They want to help quickly, so text-heavy appeals are not advisable. Leave the details to thank-you notes, when nonprofits can expound on the impact of donor gifts.
- Use the long tail. Find people likely to support you where they are already congregating and seeking information online. Be sure your charity is listed in giving portals, accessible via search engines, and visible to passionate communities on social networking sites, blogs, etc.
Scott Case (no relation to Steve Case) is chairman of the board of Network for Good. He founded the nonprofit Direct Help and cofounded Priceline.com. Katya Andresen is vice president for marketing at Network for Good and author of Robin Hood Marketing: Stealing Corporate Savvy to Sell Just Causes. Her blog on nonprofit marketing is called Getting to the Point.