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Cybergiving Today and Tomorrow

May 7, 2001

Last month, CharityVillage President Doug Jamieson joined a panel discussion at the annual conference of the Society of Fund Raising Executives in Halifax. Doug shared his thoughts on a range of current issues affecting nonprofits who are using the Internet. Below, are some of Doug's insights into where we are and where we're going.

What's going on?

Despite all of the negative headlines, the Internet is not dead. A lot of ill-conceived web sites, based on questionable business plans, were unable to attract an adequate audience, and closed down. In addition, a huge amount of Internet infrastructure was built to improve the network's performance and capabilities, and we will all be the beneficiaries of that for many years to come.

Every day, more people are doing more things online.

Still primarily a communications medium

The Net is still more of a Communications medium than a Transactions medium.

A recent Study in the U.S. indicates that 23% of Internet users learn about charities online, but only 8% use the Internet to donate. An interesting sidelight is that Internet users are nearly 3 times as likely to have donated to a new cause in the past year.

So the message is, "Use the Internet to tell your story to donors doing research in preparation for giving." Use it to build the trust that we all know is so important for quality, long term relationships.

At an Association of Fundraising Professionals conference last fall in Toronto, Richard Ivey, philanthropist and founder of donations portal Charity.ca, predicted that all donors would be "professional donors" within a few years, with access to the kinds of information about individual charities that has only been available to foundations and major donors in the past.

Cybergiving is in its infancy

Money is being raised online, but for most organizations it is hundreds, or perhaps a few thousands, of dollars. Online giving will be huge, but not right now, except for a few special situations like natural disasters, displaced refugees, and so on. Back in 1998, the American Red Cross raised $1 million online for victims of Hurricane Mitch, and in 1999 it raised $1.1 million for Kosovan refugees over the Internet. But those kinds of successes are still rare.

A Web Site is not an Internet Strategy

There is no need to panic. The train has not left the station, but organizations need to get thinking about their technology strategy, and within that their Internet strategy. Too many organizations believe that cribbing some text from a brochure, and putting it on a web site, is adequate for the time being, and there are plenty of non-profit web sites that may actually be damaging their prospects for donor support by presenting an uncompelling face to the online public.

There are powerful efficiencies available through the use of the web and e-mail, and through integration of those with data management technologies, but all of this has been a distant dream for most small organizations. Now, however, there are low cost solutions emerging to help even these small groups take advantage of technology, and every Executive Director should be investigating their options.

What can you do?

At CharityVillage.com, we've been watching the online giving field evolve over the past six years, and now there are many options for organizations. Let's review the main choices on the menu:

• Register on a "click-to-give" site.

  This is a "no-brainer". Every dollar raised through these is a dollar you wouldn't have otherwise. Most are U.S.-based, but some accept Canadian organizations. Examples include 4GoodnessSake, 4mycommunity, CharityBanner, DigitalDonation, MySmallPart, OnGiving, QuickDonations, SearchToHelp, and Wedid.

• Sign up for Online Affiliate Programs

  There still isn't much revenue potential here. These are primarily of interest as additional services for your audience, and as traffic-builders. Canadian examples include Chapters.ca, ConsumerSaints.com, KidZlibrary.com, and SportingInsurance.com. Various charity malls constitute a subset within this category.

• Register at Online Donation Sites

  These sites aggregate many organizations together into one portal that attracts and processes donations. Processing of the credit card transaction, direct transfer to your Visa or Mastercard merchant account, and electronic receipting for tax purposes are some of the bells and whistles offered. This can be a low-cost solution, but you must market the site in your other promotional media if you expect donors to visit the site to make a gift. Canadian examples are Charity.ca, CanadaHelps.org., Canadian Book of Charities Online, Community Storefronts, Generositas.com, and Givex.com.

• E-mail based Programs

  Spam (unsolicited e-mail) is still a no-no , but e-mail may be the most cost-effective way to stay in touch with your donor base. There is now software available from suppliers like Knead Marketing and Artez that is making this much more sophisticated.

• Online Auctions

  These are becoming more popular, often run in conjunction with "real world" auction events, but require much planning in order to be even modestly successful. For a look at what's happening with auctions, check out BenefitsEvents.com, CauseLink, eBay, HopeLine, WebCharity.com, and Yahoo.com.

• Enabling your site for online giving

  This category presents a wide range of approaches, functionality and sophistication. At the most basic level, an online form with a "bill me" checkbox presents an alternative to your prospective donors. As most giving is not an impulse activity, even something this simple may produce some results from site visitors with a strong connection to your organization.

  Moving up a level, you may opt for an online form with fields for credit card information and a gift amount, with an automatically-generated, personalized confirmation/thank-you message sent by e-mail. Remember that security is a high priority for those doing credit card transactions online, and the absence of a secure page will be a definite deterrent.

  One way to solve this problem is to lease a secure donation page from a third-party vendor called an Application Service Provider (ASP). Your donors will actually be using the ASP's server to make their donations, but all of that is relatively transparent and seamless to users. These services include credit card transaction processing and a direct transfer to your Visa or Mastercard merchant account.

  Some of these ASP services also offer donor analysis and management tools as an option at additional cost, providing functions that are similar to those of relatively sophisticated, free-standing donor management software programs.

  If you want to play in the big leagues, you'll be considering your own secure e-commerce server, with all of the above functions, including full integration with your accounting and donor-tracking systems. At this level, we're getting into options that are only realistic for brand name organizations with a large constituency and fairly significant human and financial resources.

  We can expect for-profit companies to continue to be predominant as providers of these services to non-profit organizations, because they are better vehicles for mobilizing the necessary risk capital and technical resources. And we can also expect to see continuing consolidation among these service providers, as some exit the field after finding that the marketing costs required to achieve the necessary scale are prohibitive. This will be exacerbated by financial constraints, cautious decision-making and foot-dragging on adoption of technology within the non-profit sector.

  So I encourage you to explore your options and to begin your journey into this exciting new world of fundraising. But whatever you choose to do, you must recognize that putting some neat technology up on the web won't accomplish much unless the relationships with members of your constituency are in good shape. This relationship-building must continue to be the primary focus.

What's coming?

Predicting the future is a dangerous game, but we can't resist. There are several trends that hold promise for communications and fundraising by organizations. They are:

• Application Service Providers

  The ASP is the new way to add powerful software to your web site or intranet, without having to purchase, install and support it. It's here, and it will grow like crazy.

• Localization

  Despite all the hype about global reach, it's dawning on everyone that the real power is in enhancing relationships and providing services to the people in your real-world community. Focus on the folks down the street and across town who care about you.

• Netification of common tasks

  The ways we currently perform many everyday tasks, from signing up as a volunteer to paying our membership fees to ordering tickets for the gala, are changing as we increasingly expect to be able to deal with organizations online.

• True Multimedia

  Expect to see most Internet users with enough bandwidth to support video, telephony and teleconferencing. We'll see online conversations, meetings and donor-initiated visits. Handling this stuff will require resources. Will you be geared up when the donor clicks through to you?

• Micropayments

  We've been waiting years for this, but it's a concept that makes so much sense, that it's bound to happen. If you could sell something (a service or a chunk of information, for example) for 50 cents to 20,000 people this week, and deliver it online, you'd have $10,000. Think of the possibilities for turning your organization's web site into a revenue generator!

• Ubiquity

  It's everywhere --- on your cellphone, your laptop, your TV, your PDA, your kitchen appliances, your car. Your members and donors will expect to reach whenever the mood strikes them.

• Context-driven Personalization

  Think tailored messages to that client/donor/volunteer/member at their point of need, in the context of what they're doing that involves you. That means taking care of them, even during what we now think of as off-hours, when they contact you online to say:

  "I need to replace a lost donation receipt right now while I'm e-filing my taxes at 10:00 pm."
  
  "I need to change my volunteering schedule right now before the kids get home."
  
  "Remind me on the previous Friday about that Sunday Run I signed up for, and give me a link to the event details and the online pledge form."
  
  "Give me that planned giving information while I'm updating my will here on Sunday afternoon."

That's a big departure from the brochureware that typifies most non-profit web sites today, but like it or not, it's coming, so get ready! It's gonna be fun.

Doug Jamieson is president of CharityVillage Ltd. Reach him at doug@charityvillage.com.

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