• April 1, 2012
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Nonprofits Find Money on the Web

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This past holiday season, the Salvation Army presented its sidewalk Santas in several larger cities with smartphones equipped with credit card readers. The goal was to make it even easier to donate to the Salvation Army, which deploys about 25,000 bell ringers in malls and on busy street corners across the country. In 2010, the sidewalk Santas brought in $142 million to provide toys, food, clothing, and other relief services to people in need.

Besides helping the organization rake in more—and potentially larger—donations, the ability to accept credit card donations provided the Salvation Army with a way to track the donors, because every transaction provides the charity with the donor's name and other vital information. Traditionally, donations have been in the form of largely anonymous handfuls of pocket change and small bills placed in the signature red kettles.

And while credit card donations are nothing new, this initiative complies with a directive from the head of the Salvation Army, Linda Bond, who, a few months earlier, had called on the international relief organization to embrace new technologies in its effort to reach out to people.

In delivering her directive, Bond was particularly interested in having the Salvation Army do more with the Web. The nonprofit organization has responded in dramatic fashion. In many ways, its Web presence is now even superior to those in the for-profit sector, spelling a significant paradigm shift in the way charities reach out to and communicate with current and potential donors, volunteers, activists, and other supporters.

Dean Feener, director of mission information systems for the Salvation Army's USA Southern Territory, in Atlanta, says the organization maintains a "very strong Web presence" as a way to spread the word about its many activities.

What's more, the Salvation Army's USA Southern Territory in late January launched Salvation Army Today, a Web-based news show. The weekly program, put together by the territory's community relations and development departments, offers breaking news and information about the Salvation Army's many activities around the world. A new episode is shared on YouTube every Thursday at www.youtube.com/salvationarmytoday.

The Salvation Army is not alone in its greater reliance on the Web. With donors turning to the Internet to research organizations before making any contribution, nonprofits that want to be responsive to their constituents and drum up new supporters are taking to the Web in large numbers.

"Our Web site is key," says Marla Davidson, vice president of information technology at the Arthritis Foundation, an Atlanta-based nonprofit that funds arthritis research and helps people take control of their arthritis by fostering education, public policy, and quality-of-life programs. "It is the doorway for a lot of the people we see."

Most people come to the Arthritis Foundation's site after they are first diagnosed with the condition, which affects an estimated 50 million Americans. "We would love for people to be referred to us automatically by their doctors…but that's not happening now," Davidson says. "Our Web site is critical because so many people are looking for information on their own."

Even the Washington-based Project On Government Oversight (POGO), a federal government watchdog, couldn't reach people as effectively today without the Internet. "The Web is an essential part of our mission," says Brian Rahija, the group's blog editor. "The best thing we can do is talk about what we find, and the Web enables us to get that information out as quickly and easily as possible."

"Charities need to have a relevant Web presence," says Darian Rodriguez Heyman, a strategy consultant, coproducer of a series of conferences and educational seminars called Social Media for Nonprofits, and editor of the book Nonprofit Management 101. "It's the biggest opportunity for nonprofits today."

Alice Hendricks, founding partner of Jackson River, a Washington-based technology consulting firm that works with some of the leading nonprofits, including Amnesty USA, Greenpeace, the Audubon Society, and the Drug Policy Alliance, agrees. She says an organization's Web site is the best way to let supporters know that their contributions are going to support the cause rather than pay for overhead. Through its Web site, an organization can give almost real-time accounting of its accomplishments and the impact it is having.

Site Suggestions

Beyond that, a well-designed Web site for a charity should have several key components, according to WebDesignerDepot.com. First, the site needs a tagline that clearly explains the charity's mission. Then the charity needs to tell site visitors how their donations are being spent. Photos get the message across and tug at the heartstrings. It also helps to have a button that lets visitors make online donations. It's a good idea to have a running tally of the donations collected so far, a clear fundraising goal, and links that show other ways visitors can help, such as volunteering or organizing an event.

And while the Web is not a huge cash cow for nonprofits just yet—only about 8 percent of the $317 billion that Americans donated to charity last year came through online sources—Rodriguez Heyman says the Web's impact on finances can't be ignored. "The Web spells great potential for the nonprofits that are paying attention," he states.

Research from Blackbaud, a provider of CRM solutions for nonprofits, found that online giving increased by 12 percent for the three months ending in November. And today, 67 percent of U.S. charities actively raise funds online, up from 63 percent in 2010.

For these charities, the benefit is clear: far lower overhead costs, especially when compared to another common practice among fundraisers—telemarketing. If most charities are lucky, they wind up with about 50 cents on every dollar collected over the phone. With the Web, the organization retains a far larger share of every dollar raised.

"A growing part of what we do today is raising funds online," POGO's Rahija says. "We're seeing people shift from mailing in a donation check to donating online. Our online revenue has definitely gone up year after year."

A Social Movement

And as charities increase their Web presence, social media is obviously becoming a key part of their strategy to connect the people who care with the causes that matter most to them.

Of the 1.5 million nonprofit organizations in the United States, 89 percent are on Facebook, 57 percent are on Twitter, 30 percent are on LinkedIn, and 4 percent are on FourSquare, according to Blackbaud's "2011 Nonprofit Social Network Benchmark Report." Other sites where nonprofits are developing a presence are YouTube, Tumblr, and Google+.

And, apparently, these online efforts are paying off. For charities, the average social media community has grown dramatically since 2009. The number of Facebook followers is up 161 percent; Twitter followers are up 535 percent; and LinkedIn members have more than tripled.

The Arthritis Foundation has 29,000 fans on Facebook and about 7,400 followers on Twitter. The Salvation Army's followers on Twitter alone number 15,500; POGO has 6,200 Facebook fans and 3,800 followers on Twitter.

These social sites are great resources for expanding the base of supporters, Rodriguez Heyman says. "By asking supporters to spread the word to their Facebook and Twitter followers, you can turn one donor into five or ten," he says. "We call this the social multiplier effect."

But to effectively capitalize on this potential, organizations need to keep their sites updated constantly with new content. "The biggest pitfall that nonprofits fall into is creating a presence and then letting it dwindle," Rodriguez Heyman suggests. "They set up an account on Facebook and then they don't have plans for keeping it vibrant and alive."

Moving to Mobile

Nonprofits are also investing in the mobile arena, especially as they seek to engage younger generations. One way organizations have done this is through text-to-give campaigns, which allow donors to kick in small amounts, usually $5 or $10, to a specific cause. These campaigns require the donor to send a short text message to a specific number—usually a five-digit sequence. The donation amount is then added to the donor's phone bill. These text-to-give campaigns are easy to set up and often yield significant financial rewards, especially for disaster relief organizations like the Red Cross.

Often with these campaigns, the charities do not receive full donor information; it is often just limited to a person's name and cell phone number. For many groups, though, that just might be enough to start a dialogue with a potential supporter.

Other nonprofits have forged partnerships with some of the location-based mobile check-in apps, like FourSquare, to give users the opportunity to do good through everyday outings. For example, by shopping at a specific store or dining at a specific restaurant and checking in on their mobile phones, users can earn rewards that correlate to donation dollars that they can assign to any of a number of participating charities.

Another mobile strategy involves tailoring the organization's Web site to be read by mobile phone browsers. Charities can also tailor content to speak directly to smartphone users, and provide a mobile option for them to make donations that in many ways mirrors their Web donation forms. And, because an estimated 30 percent of email is currently being read on smartphones, according to Blackbaud's report, it makes sense for nonprofits to provide links to donation pages in their e-newsletters and other electronic solicitations.

POGO, for example, has employed such a strategy. "Our mobile apps make it super easy for people to work with us," Rahija says. "About seven percent or eight percent of our traffic is now coming from mobile, up from one percent or two percent a few years ago."

The Arthritis Foundation has also introduced mobile apps to help its constituents with diet and exercise.

Not Going Anywhere

While Web and mobile fundraising and communication channels are growing, they aren't replacing traditional channels yet. Direct mail and email share almost equal footing as the most common; text messaging is the least common.

That's because the vast majority of fundraising efforts are still geared toward the Mature and Baby Boomer generations, with charities reaching out to them a few times a year via direct mail. As in the past, most charities still buy or rent mailing lists, and the people on those lists receive an introductory package. Typically, one in every 100 responds with a donation.

But don't expect this to stay the same. "The whole marketing mix is changing," says John Stockton, vice president of enterprise products at Convio. "The large majority [of nonprofits] were focused on direct mail, but the effectiveness of it is declining and the cost of it is rising."

Information Overload

From credit cards to Web, social media, and mobile apps, charities today are in a much better position to collect all sorts of data about their supporters. But therein lies a big problem that many, if not most, nonprofits face today. As the number of channels of interaction between them and their supporters grows, so, too, does the amount of data that piles up.

"The amount of data can vary so dramatically," says Eric deJager, director of CRM product management at Blackbaud. "For a smaller organization, it could be a few thousand pieces. For a larger national organization, it could be terabytes of data and tens of millions of data points."

The Salvation Army, which brings in roughly $2.6 billion a year in donations, has more than 7 million donors in its databases. Records for the Arthritis Foundation, which raises $130 million a year, include about 15 million names. Even an organization like POGO has seen its databases expand from 6,000 people a few years ago to more than 30,000 today.

For each name in the database, the charities might also store contact information, status (whether the person is a volunteer, donor, or event organizer, for example), giving history, profile information, preferences, etc. And often, these systems contain data going back 15 years or more.

"We are still grappling with how to use all this data," POGO's Rahija admits.

What's more, many nonprofits maintain information in disparate systems that can't communicate with one another. "It's been a big issue in the nonprofit space for a long time," Jackson River's Hendricks says. "Their online and offline databases, for example, aren't integrated."

As such, organizations have traditionally had a hard time tracking which donors respond to which campaigns, at which points during the year they are most likely to donate, and where they fall within the supporter journey. "If they are a volunteer, how do you move them to being a donor or a major contributor?" asks Diana Krupa, vice president of marketing in Blackbaud's Enterprise Customer Business Unit. "You need to be able to monitor which people are within each stage of their journey with you. It's more complex than what a typical CRM system addresses."

That was a lesson that the Salvation Army's Feener learned quickly.

"We need to see all the people who engage with us in a new way. This person responds to direct mail; this one drops off clothing at one of our addiction centers; this one volunteers. We used to put them all into separate silos," he explains. "We now realize that people interact with us in so many different ways, and we're preparing for a future where they will interact even more with us."

Dissecting Data

Many CRM systems have sophisticated predictive analytics that will tell fundraisers whether someone is likely to open an email or respond to a particular campaign, according to Stockton. "Organizations can use them to do very large number-crunching on the data," he says. "They're changing the way organizations think about each person and develop a strategy for how to engage with them." According to Rodriguez Heyman, being able to separate that data will be crucial moving forward. "You can see where donors came from, how they arrived at your Web site, and the context of their donation—was it earmarked for a specific purpose or cause? The key for CRM in nonprofits is connecting and mapping donations to determine their impact."

At POGO, CRM systems allow the organization "to see how much someone donated to us before so we can talk to them about it," Rahija says. "I see you donated fifty dollars last year. Would you consider bumping it up to seventy-five dollars this year?"

The same systems are being used to convert donors who only give once or twice a year into monthly sponsors. Charities absolutely love people who give on a monthly basis because it can help them build a stable base of income and better project future revenue. And while it's certainly easier to process one check than 12 checks or credit card payments, moving people into a recurring pipeline ensures their continued support.

But, like every other aspect of their business, that makes it crucial for charities to develop relationships and foster a sense of trust. "We have to earn their loyalty, provide value, and be relevant to them," the Arthritis Foundation's Davidson says.

To that end, the organization is borrowing another page from the corporate playbook. "We're taking a consumer-oriented view of the world," Davidson explains. "We're doing more focus groups and outreach to find out what our constituents want from us.

"Customer interaction changes are moving at light speed, and we can't afford to be left behind," Davidson contends.

At the Salvation Army, Feener agrees. "It's incumbent on organizations like ours to be open to all modes of interaction with people and be able to effectively monitor, track, and utilize all those channels."

News Editor Leonard Klie can be reached at lklie@infotoday.com.

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