The End of the Beginning for Online Giving
2019 marks 20 years since online giving first began in any significant way. In 1999, Blackbaud pioneered the nonprofit technology market by introducing reliable, secure and donor-friendly online donation forms. Fast forward 20 years, online giving now represents tens of billions of dollars in charitable giving each year.
The last three years have shown how online giving continues to be a growth engine for fundraising in the nonprofit sector. Since 2016, online fundraising has grown 17% among nonprofits in the U.S. We are 20 years into this online giving adventure, and there is still a tremendous amount of upside for nonprofits.
Here is a short list of innovations that happened after online giving began in 1999: Airbnb, Android, Bitcoin, Chrome, Dropbox, Etsy, Facebook, Github, hashtags, Apple, jQuery, Kindle, LinkedIn, MySpace, Netflix, Oculus Rift, Pinterest, Reddit, Slack, Tesla, Twitter, USB flash drive, Venmo, Wii, Xbox, YouTube and the zettabyte.
Many of these innovations have been around long enough that they are common household names. Online giving is older than all of them and yet, in some circles of the nonprofit world, it is treated like the new kid on the block.
Stop, Start and Continue
Let’s stop acting like online giving is still a new thing—it’s not. Let’s start embracing the fact that the next 20 years will bring tremendous digital transformation in the nonprofit sector. Let’s continue to focus on delivering multichannel giving experiences for donors.
Based on research from the Blackbaud Institute’s “2018 Charitable Giving Report,” online giving in the U.S. represents 8.5% of total fundraising revenue. That might seem low, but it’s actually on track with other online trends. As a point of comparison, the U.S. Department of Commerce estimates that e-commerce sales in the third quarter of 2018 accounted for 9.8% of total sales. Donor behavior is keeping pace with consumer behavior. (Hint: Donor behavior is consumer behavior.)
Let me also suggest that we need to stop placing a wall between offline and online giving strategies and tactics. While many nonprofit professionals are digital immigrants, we’ve had 20 years now to learn the language and customs of the digital native world.
The data shows that both digital immigrant and digital native donors have embraced the multichannel wonderland.
There is perhaps no more telling data point than this: Online donors 65 years and older have the highest retention rate. And donors that are 55 years and older have the highest retention rates for both online and offline giving. This online versus offline wall is mostly in our own heads. It’s in our organizational charts. But the data clearly shows that donors do not see themselves as online or offline—they’re just supporters who don’t care about the attribution games nonprofits play.
Common Best Practices Remain Uncommon
One would like to think that after 20 years of testing, more testing, conferences, webinars and pithy blog posts about online giving that there might be wide adoption of best practices. Sadly, that is not the case. Studies done by Dunham+Company in both 2013 and 2018 reveal that even many leading nonprofit organizations have struggled to implement common best practices.
In many cases, we are not dealing with unknowable or unsolvable mysteries of the online giving universe. Instead, there are some fundamental best practices that improve the donor experience, reduce friction and produce better results. For example, 65% of charities still do not pre-select a mid-range gift on their donation forms even though the data shows this approach performs better.
For most of the last 20 years, we’ve also had an ongoing debate whether online giving cannibalizes offline giving. Thankfully, we have lots of data to settle the argument. Only 3% of offline acquired donors switch to give online. Compare that to 17% of online acquired donors that switch to give offline. One might argue that offline cannibalizes online—but this is equally silly.
If we were to look at the engagement channels and the transactional channels, we are likely to see a symbiotic relationship between online and offline. Do not confuse the channel of engagement with the channel of the transaction. Do not fall for the false choice of online versus offline. Do not let someone talk you into dumping all offline engagement in favor of online. Do not let someone else convince you to drop online for offline. High-performing nonprofits know the value of using both.
The future will reward nonprofits that move on to next-generation practices designed to optimize the entire giving experience.
Yes, we are seeing some parts of the nonprofit sector doing a much better job of engaging, communicating, optimizing and acknowledging donors through digital channels; but expect to see a widening gap in performance between organizations that are continuously optimizing and those that are standing still.
We are at the end of the beginning of online giving. The future of online giving is inextricably tied to the future of charitable giving. The future of online giving will be completely unrecognizable from the past. This should scare you and energize you—both at the same time.