Strengthening Your Online Presence: Now is the Time

Many nonprofits are feeling the impact of the financial crisis — in particular those reliant on corporate gifts. Others are bracing themselves for challenging conditions. In difficult economic times, it can be a natural reaction to stop all new investments. Yet, building strong constituent relationships and acquiring new donors to replenish losses is more important than ever.

Nonprofits must adopt a strategic approach to their fundraising investments, cutting less efficient areas and investing where gains can be realized. The traditional fundraising model has been in decline for some time. The financial crisis and competition for donor dollars has heightened the imperative to change models today, re-allocating investment from waning traditional fundraising approaches to new approaches that incorporate the online channel.

Challenges with traditional fundraising channels
Direct mail-based donor acquisition has been getting more difficult and more expensive due to postage rate increases, mailing-list fatigue, postal-mail delivery challenges and shifting consumer preferences. The Target Analytics Index of National Fundraising Performance, which tracks some very large nonprofits, shows donor counts have been declining consistently for the past two and a half years. In the first quarter of 2008, for the first time in two years, overall revenue declined as well. Revenue fell 1.8 percent from Q1 2007 to Q1 2008.

Until now, increases in revenue per donor compensated for donor declines, allowing overall revenue to continue to grow. In the most recent quarter in the analysis, however, continued revenue per donor growth could not make up for the donor decreases nor prevent overall revenue from declining. For most organizations, overall donor declines have been due primarily to a decrease in new-donor acquisition. New donors declined 2.3 percent from Q1 2007 to Q1 2008, on top of a 5.3 percent drop over the same period one year before. Additionally, telephone fundraising is growing more difficult in the wake of “do not call” regulation and the substitution of cell phones for land lines. In this context, nonprofits must find more economic ways to source new donors and enhance their lifetime value.