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The State of Fundraising On-line: Results of a Giving USA Survey

As part of an effort to contribute more to the understanding of on-line giving, Giving USA included questions about Internet use for fundraising in a survey of the public-society benefit subsector that was distributed in spring 2008.

The public-society benefit subsector includes combined funds such as United Way, Jewish federations, and freestanding donor-advised funds. It also includes organizations formed for research in the sciences or social sciences, policy institutions, advocacy groups focused on civil rights and voter education, community and economic development organizations, and groups working to serve veterans and military families.

Researchers at the Center on Philanthropy at Indiana University, on behalf of Giving USA, looked at three questions:

  • What percentage or share of organizations use the Internet for fundraising?
  • Are organizations going beyond "give now" buttons to other uses for social networking or Internet-facilitated giving?
  • How much are organizations raising on-line? Is it a significant portion of their operations?

Previous Research on On-line Giving

Fundraising on-line is an increasingly important vehicle for organizations to use as part of a total development strategy. Ted Hart of TedHart.com and a founder of the e-Philanthropy Foundation recently estimated on-line giving of $10.4 billion in 2007. This is about 4 percent of total household or individual giving, based on Giving USA's estimates for 2007.

The Center on Philanthropy's Philanthropic Giving Index from summer 2007 reported a steady increase in the success of Internet fundraising. In 2000, less than 10 percent of those surveyed reported success with Internet fundraising. By summer 2007, nearly a quarter (22 percent) of charities surveyed reported success with on-line giving.

The American Express Charitable Gift Study released in November 2007 (and also conducted by the Center on Philanthropy) found, among other results, that on-line donors predominantly gave on-line because it is convenient. Further, some off-line-only donors could give on-line but lacked information about on-line giving, suggesting that charities need to inform their donors that on-line giving is an option.

Key Findings of the Giving USA Survey

  • Almost half of public-society benefit organizations are using the Internet, most simply with a "give now" button.
  • For nearly all organizations, the Internet accounts for less than 5 percent of all gift dollars received and about one-eighth (12.6 percent) of gift dollars received from individuals. Organizations in the public-society benefit subsector receive significant support from institutional funders, so this percentage may be unusually low when compared with higher education, health, or other subsectors.
  • One-tenth (10 percent) of organizations in this sample received 50 percent or more of donated dollars from individuals on-line.

Discussion

  • Internet widely used but typically generates low percentage of total funds raised
    In this study of public-society benefit charities, 44 percent of organizations said yes when asked if they used the Internet for fundraising.

    When asked later how they use the Internet, another group of organizations identified Internet use that included fundraising, so the actual total reporting on-line giving from any one of a number of approaches was 54 percent.

    Some 82 percent of those using the Internet for fundraising (36 percent of all organizations in the survey) reported that Internet-facilitated donations amounted to 5 percent or less of their charitable revenues.

    On average, Internet activity led to 4.8 percent of total donated dollars.

  • Internet giving equivalent to one-eighth of individual donations
    The amount facilitated by the Internet was, on average, equivalent to 12.6 percent of donations from individuals, after excluding a few outliers where Internet giving exceeded individual gifts.

    Just over 8 percent of the organizations using the Internet received more than 50 percent of the amount of their individual donations on-line. On average those organizations were relatively small, with an average total contribution of $560,242 and total operating budgets of $906,341, which included revenue from all sources. For those 15 organizations, on-line giving averaged $68,097.

  • Most-frequent use of Internet for fundraising is Web site that accepts contributions
    By a large margin, organizations in this survey used the Internet for fundraising primarily by making it possible for donors to make a gift through their respective Web sites. This method of on-line fundraising was reported by 49 percent of all organizations in the survey (90 percent of those using the Internet). Other methods were also used, although less frequently; they included sending requests or appeals by e-mail; accepting donations or registration for special events; on-line auctions; and participation in an on-line community such as Second Life, MySpace, or Facebook.

    Figure 1 shows the different methods of on-line fundraising used and the percentage of all organizations reporting use of each method.
    state-of-fundraising-on-line-results-of-a-giving-usa-survey-1.gif
  • Internet generates average of less than $50,000 per organization
    Among those organizations using the Internet to raise funds, the mean amount raised on-line was $45,450. This figure excludes one outlier organization that raised more than $1.8 billion total and more than $400 million on-line.

  • Amount raised varies by methods used
    On-line methods used also influence the average amount raised via the Internet. We compared the percentage of funds raised on-line for organizations using (a) only e-mail appeals (there were very few); (b) only a Web site that permitted on-line donations; and (c) a combination of e-mail appeals and a Web site accepting donations. The highest percentage from on-line giving came, as you would expect, at organizations combining e-mail appeals and a Web site at which donors could contribute. Figure 2 shows the percentage of total funds raised by organizations using Web site donation only; e-mail appeal only; and a combination of Web site donations and e-mail appeal.

    state-of-fundraising-on-line-results-of-a-giving-usa-survey-2.gif

    Organizations raised an average of 6 percent of their contributions on-line when they both used e-mail appeals and had a Web site at which donors could give on-line. When the organization had a Web site at which donations could be made but did not use e-mail appeals, it raised, on average, 5 percent of its total contributions through the Internet. The result for e-mail appeals only is shown, but it is not conclusive, with only six respondents reporting using e-mail to send requests for funds and not also having a Web site donation capability.

  • Combined funds (United Way, Jewish federations, etc.) raised most on-line
    Different types of organizations have different levels of success with fundraising on-line. The average percentage of total funds raised on-line is highest among the combined funds, which also have the highest overall amounts raised.

    Table 1 shows the average amount raised on-line, the percentage of survey respondents using the Internet (and the number in the study that use the Internet), and the share of all funds raised that came via the Internet by type of organization.

    Table 1
    Internet fundraising by type of public-society benefit organization
    Giving USA 2008 survey

    Type of organization in study Average amount raised on-line in 2007 % of orgs in study using Internet # in study using Internet % of all fundraising received via Internet
    Combined fund* $457,716 54 67 1.7
    Civil rights, advocacy $40,890 74 39 4.2
    Research or public policy $34,309 56 59 3.3
    Community or economic development $18,650 48 49 3.1


    *Excludes one large freestanding donor-advised fund. With that included, the average exceeds $11 million.

    Note: There were fewer than 30 responses in each other type of org. studied: legal system (CASA), philanthropy and voluntarism (Service Corps, nonprofit center, etc.), membership, or other.

Implications for Nonprofits

Having an on-line presence is a necessity in today's fundraising environment, but in general, organizations should not expect a financial windfall to arrive through the Internet. The on-line fundraising process generates gifts but typically not more than 10 to 15 percent of individual contributions and not more than 5 percent of all forms of charitable giving in the public-society benefit subsector.

Organizations that combine an on-line giving option through their Web sites and e-mail appeals can expect to raise a higher percentage of their contributions on-line than nonprofits that use only an on-line giving option.

Social networking and auctions are both very little used by organizations in the public-society benefit subsector. It is not clear from this work how much impact these venues are having on "typical" charities. There are likely to be different results in a study conducted in a subsector that has ready-built communities such as alumni groups or people with a shared experience (e.g., a mission trip or expedition).

Methodology

We sent the survey by e-mail link to 1,468 organizations, all classified by GuideStar in the public-society benefit subsector. Recipients received up to four reminders between February and April. We received responses from 366, which is a 25 percent response rate.

Melissa S. Brown, July 2008
© 2008, Giving USA FoundationTM

Melissa S. Brown is the managing editor of Giving USA, the annual study of U.S. charitable giving published by Giving USA FoundationTM and researched and written by the Center on Philanthropy at Indiana University.
Topics: Fundraising