News and analysis
June 23, 2013

The Big Boom in Online Giving

Donations to nonprofits of all size grew by 14 percent last year, according to two new studies by The Chronicle

Online gifts to America’s nonprofits are growing far faster than other types of donations, two new Chronicle studies find:

  • Donations rose 14 percent last year from 2011, to $2.1-billion, in a study of 115,000 nonprofits whose giving totals were provided by the online-fundraising processors Blackbaud, Network for Good, and PayPal.
  • Contributions to the nation’s biggest charities also grew 14 percent, to $785-million, in The Chronicle’s study of 149 large nonprofits.

That’s far sharper growth than the overall rise in donations in 2012 reported by “Giving USA,” which last week said that contributions from individuals, corporations, and foundations rose just 1.5 percent last year after inflation.

Among the techniques helping big nonprofits: Some are directing their data analysts to spot supporters who are active in online advocacy forums and figure out how to turn them into generous online donors, while others are taking a page from direct-mail appeals by seeking monthly donations.

No matter how much online giving keeps growing, it still accounts for a small sliver of the budgets of most charities. The median share is just 2.1 percent of all donations from private sources for the charities in the survey of large nonprofits. But some groups are doing far better than that: The American Lung Association says nearly 30 percent of its gifts are made online.

And many groups are bullish about the potential for growth. Nearly three quarters of the groups surveyed say their goal is for online donations to account for more than 10 percent of their overall fundraising efforts in the next few years, and roughly one in five expect Internet gifts to account for as much as 20 percent of their overall donations by then.

“Giving online is just where people are these days,” says Julie Taylor, director of donor information at the Seattle Children’s Hospital Foundation, which increased its giving by more than one third last year from 2011.“That’s how they’re comfortable giving now.

Finding Repeat Donors

Perhaps the only category of nonprofits that didn’t achieve a big burst of online support last year was international relief.

But that is in large part because those groups had extraordinary increases in 2011 after the tsunami and earthquake in Japan.

Organizations that suffered big drops included the American Red Cross, which experienced a nearly 70-percent decline in online gifts last year.

Three other groups reported drops of 50 percent or more: AmeriCares (58 percent), Direct Relief International (53 percent), and Save the Children (53 percent). If their giving had been included in the totals for the Chronicle study of big groups, overall donations would have decreased 1 percent in 2012 from the year before.

Many nonprofits are increasing their online revenue by persuading people to make gifts monthly, quarterly, or over another set period.

In fact, six groups said that they earned at least half of their online-giving totals from people who committed to monthly or other regular withdrawals from their bank accounts or credit cards.

Young Life, a Christian charity that serves teenagers, reported that it had nearly 175,000 gifts from online donors who gave monthly in 2012, up 42 percent from 2011. Those donors helped the group raise $24.8-million online last year, 37 percent more than in 2011.

“You talk to any nonprofit organization that relies on fundraising, and they’ll tell you online monthly giving is the most reliable giving,” says Scott Nilsen, vice president for development services. “They’re the least likely ones to stop giving.”

Young Life has been aggressively promoting online giving since 2009, when it began including information about its Web site on all of its promotional materials, incorporating quick-response codes in signs and printed programs for fundraising events.

In December 2011, it revamped its Web site to make it compatible with mobile devices and to streamline the amount of information donors need to provide before they can make a contribution. The site also makes it easy for supporters to keep track of the amount they give each month. “The whole point of online giving is simplicity and efficiency,” Mr. Nilsen says.

How 2 Charities Raised 20% of All Donations Online

American Lung Association: 29.6%
Donations grew fast after the charity altered its Web site so that its pages display well on mobile devices, paying special attention to the section on making a gift. The group also made sure its e-mail appeals were easy to read on tablets and smartphones.

Direct Relief International: 21.3%
Donors who gave for the first time after catastrophes in Haiti and Japan are continuing to give to the organization, mostly online.

$1-Million Online Donation

As groups refine their online approaches, they are also beginning to attract more large gifts. The University of Texas M.D. Anderson Cancer Center reported that its largest gift online was $1-million, while six other organizations said they had received at least one gift of $100,000 or more online.

Even groups that aren’t attracting $100,000 gifts online say they are bringing in much larger contributions online than from direct mail.

The Environmental Defense Fund reports that its first-time donors online make gifts that are roughly twice as large as those who give for the first time through direct-mail solicitations. New donors typically give $40 to $50 online, versus $20 to $25 through direct mail, says Sam Parry, director of membership.

Such figures persuaded the environmental group to shift more of its resources into attracting online donors. The group has trained its data specialists to scour the Internet to find out who is advocating on behalf of the organization online and then conduct research to figure out what would persuade the activists to make a first-time gift and then give again.

So far, 1 to 2 percent of the people pinpointed have decided to make a gift, and they donate an average of $50. But Mr. Parry thinks they can be encouraged to give up to $500 a year.

The group has also hired a full-time fundraiser to focus exclusively on seeking online donations and to test what works best with people who give through Web sites and mobile devices.

The fund, which raised $2.1-million online in 2012, an 8-percent increase, plans to ask all of its monthly donors to give online, though the group will still accept such gifts through direct mail or over the phone. To encourage more donors to use the online approach, though, it is streamlining its Web site so donors can renew monthly gifts in just one step.  

 Some nonprofits achieved big gains last year by enlisting their supporters to reach out online to friends and relatives.

Seattle Children’s Hospital Foundation, which raised $678,000 last year, grew fast in part by creating personal fundraising pages that allowed current and former patients to raise money online for the hospital. For instance, parents of a current patient have raised $67,000 by soliciting friends and relatives through its site, Ms. Taylor says. In addition, it experimented with using Facebook to give momentum to its year-end appeals.

In late November and all of December, the foundation gave its 60,000 Facebook fans insights into what was happening in the hospital, with stories about new medical techniques and a new building, and paired those updates with solicitations. The hospital received more than $8,000 as a result of the Facebook appeals, and it plans to step up such efforts next year.

The hospital’s foundation is off to a good start for 2013: It has already exceeded last year’s online fundraising total. By the end of May, it had received $813,000, and it expects to exceed $1-million for the year.

A Break From Solicitations

Another nonprofit, KQED, a public radio station in San Francisco, has raised $270,000 a year online since May 2011 by offering its most loyal listeners an unusual incentive: a break from solicitations.

Donors who gave $55 or more received access to a special live online radio stream that did not include any breaks in programming for its pledge drives. The station is also experimenting with a similar incentive for donors who make monthly and annual pledges to the station.

“People enjoy the programming so much that having made their pledge, they really like to be able to listen to as much of it as they can without the pledge breaks that shorten the programming,” says Michael Lupetin, vice president for marketing and brand. Total online giving for KQED rose 10 percent, to $6.1-million in 2012.

Many nonprofits are focusing their online efforts on young donors.

The Jewish Federation of Metropolitan Detroit raised $1-million online in 2012—roughly twice as much as it had raised the previous year — by focusing on donors 45 years old or younger.

The organization used its social networks to promote a series of what it calls “NextGen Epic Events,” says Lisa Cutler, director of campaign and community development.

The events, which feature entertainment and opportunities for people to mingle, are the first step in an effort to build stronger connections with young donors and encourage them to donate online.

The federation reports that it expanded its number of online donors from 10,180 in 2011 to 11,300 in 2012. The majority of its new donors are young.

The organization, says Ted Cohen, senior director of marketing, really tried to “create a rich online relationship that didn’t exist before” with a group that the federation is working especially hard to turn into loyal supporters.

Sarah Frostenson, Emily Gipple, and Marisa López-Rivera contributed to this article.

Send an e-mail to Emma Carew Grovum and Raymund Flandez.