The Changing Nature of Online Fundraising

1. The Changing Nature of Online Fundraising Steve MacLaughlin, Director – Internet Solutions Read my blog: www.blackbaud.com/connections

2. About Me  Director – Internet Solutions @ Blackbaud  12+ years experience building successful online initiatives with Fortune 500 firms, government and educational institutions, and nonprofit organizations across the world.  Frequent speaker at nonprofit conferences such as AFP, AHP, CASE, NTEN, IoF, NAIS, DMFA, CAISAP, etc.  Serves on the Board of Directors of the Nonprofit Technology Network (NTEN)  Contributing author in People to People Fundraising: Social Networking and Web 2.0 for Charities and working on a new book.  Read my blog at: www.blackbaud.com/connections Page #2 © 2009 Blackbaud

11. US Fundraising Trends $300,000,000,000 $250,000,000,000 $200,000,000,000 $150,000,000,000 $100,000,000,000 $50,000,000,000 $0 2001 2002 2003 2004 2005 2006 2007 2008 $246B $245B $243B $245B $283B $295B $314B $307B Source: Giving USA Page #11 © 2009 Blackbaud

12. US Online Fundraising Trends 16,000,000,000 14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 0 2001 2002 2003 2004 2005 2006 2007 2008 $550M $1.1B $1.9B $2.62B $4.5B $6.87B $10.7B $15.01B 120% 100% 73% 38% 72% 53% 56% 44% Growth Growth Growth Growth Growth Growth Growth Growth Source: ePhilanthropy Foundation, Blackbaud Page #12 © 2009 Blackbaud

13. 2008 donorCentrics Internet Giving Collaborative Benchmarking Analysis  24 Large direct marketing organizations. • Amnesty International • CARE • Defenders of Wildlife • Doctors Without Borders • Earthjustice • Environmental Defense Fund • Mercy Corps • National Multiple Sclerosis Society • Save the Children • Sierra Club • Special Olympics  Self-selected group of participants with interest in online giving.  Aggregate of 9.5 million donors, $750 million in revenue.  Direct marketing giving which is consists primarily of direct mail, with online, telemarketing, and other direct marketing sources included.  With few exceptions, no large scale event giving.  Gifts above $5,000 are excluded. Page #13 © 2009 Blackbaud

14. Fig. 4: 2008 Median Donors by Age as Percentage of Total File Group 1 Organizations Donors Who Gave At Least One Online Gift in 2008 Donors Who Gave Via Other Channels in 2008 25% 24% 25% 23% 22% 23% 17% 13% 11% 10% 3% 4% 1% 0% 18-24 25-34 35-44 45-54 55-64 65-74 75+ Note: percentages for non-online and online donors w ill not necessarily add up to 100%, as each is a median of the percentages of the 12 participating organizations. Online donors are much younger than traditional, primarily direct mail donors. Source: 2008 donorCentrics™ Internet Giving Collaborative Benchmarking Analysis Page #14 © 2009 Blackbaud

15. Fig. 5: 2008 Median Donors by Income as Percentage of Total File Group 1 Organizations Donors Who Gave At Least One Online Gift in 2008 Donors Who Gave Via Other Channels in 2008 28% 21% 22% 22% 22% 17% 17% 15% 12% 10% 6% 7% Less than $25,001- $50,001- $75,001- $100,001- $145,001+ $25,000 $50,000 $75,000 $100,000 $145,000 Note: percentages for non-online and online donors w ill not necessarily add up to 100%, as each is a median of the percentages of the 12 participating organizations. Online donors have higher incomes than traditional, primarily direct mail donors. Source: 2008 donorCentrics™ Internet Giving Collaborative Benchmarking Analysis Page #15 © 2009 Blackbaud

16. Fig. 7: Trends in the Percent Fig. 8: Trends in the Percent of New Donors of New Revenue That Are Online Donors Coming in Online Group 1 Organizations Group 1 Organizations 27% 16% 16% 22% 20% 10% 14% 7% 6% 3% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Over the past several years, the internet has become an increasingly significant source of new donor acquisition. Source: 2008 donorCentrics™ Internet Giving Collaborative Benchmarking Analysis Page #16 © 2009 Blackbaud

17. Fig. 17: Channel Migration of Donors Acquired in 2007 Who Renewed in 2008 Gro up 1Organizatio ns 100% 100% 91% 64% % Giving Online % Giving by Mail 33% 4% 0% 3% 2007 Giving 2008 Giving 2007 Giving 2008 Giving Acquired Online in 2007 Acquired via Mail in 2007 Since donors may give both online and via mail in a single year, or may give to neither of these tw o sources in a single year, percentages may add to more or less than 100%. Large numbers of online donors migrate away from online or email giving and to other sources, primarily direct mail. Direct mail donors rarely switch channels to become online donors. Source: 2008 donorCentrics™ Internet Giving Collaborative Benchmarking Analysis Page #17 © 2009 Blackbaud

18. Fig. 6: 2008 Median Donors by Giving Loyalty as Percentage of Total File Group 1 Organizations 52% Donors Who Gave At Least One Online Gift in 2008 Donors Who Gave Via Other Channels in 2008 26% 19% 21% 18% 16% 14% 14% 13% 9% New Reactivated 2 Consecutive 3-4 Consecutive 5+ Consecutive Years Years Years Reactivated donors gave sometime prior to 2007, did not give in 2007, and gave in 2008. Consecutive Years refers to the number of years in a row that the donor has given through 2008. Percentages for non-online and online donors w ill not necessarily add up to 100%, as each is a median of the percentages of the 12 participating organizations. Online is a good acquisition source but has poor long-term donor retention Source: 2008 donorCentrics™ Internet Giving Collaborative Benchmarking Analysis Page #18 © 2009 Blackbaud

21. The Channel Gap The Market is Noisy What to do about it?  Start setting meaningful online fundraising goals  Continue mixing direct mail and online communication  Stop working in fundraising silos…now Page #21 © 2009 Blackbaud

23. The Market is Noisy The Donors are Changing  We are getting older  We are living longer  We are getting wealthier  We are getting more complex  We are getting more wired  We are creatures of choice Page #23 © 2009 Blackbaud

24. Projected Population of the United States 40.0 36.9% 35.0 31.2% 30.0 25.0 2000 21.7% 22.1% 22.2% 2010 20.0 19.3% 2020 15.7% 2030 15.0 2040 10.9% 2050 10.0 6.8% 6.7% 5.0% 5.0 1.5% 0.0 0-4 5-19 20-44 45-64 65-84 85+ Source: U.S. Census Bureau, 2004 Page #24 © 2009 Blackbaud

28. Total Income by Generation (Trillions) $3.44 Baby Boomers $3.29 $2.96 $3.67 Generation X $3.91 2007 $4.20 2012 2015 $1.89 Generation Y $2.37 $3.48 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 Source: Javelin Strategy & Research, November 2007 Page #28 © 2009 Blackbaud

36. The Generation Gap The Market is Noisy What to do about it?  Start segmenting your constituents by Generation  Continue to monitor and report across Generations  Stop ignoring Generation Y and don’t be a stranger Page #36 © 2009 Blackbaud

39. Online efforts support those cornerstone strategies in these ways: Acquisition Cultivation Awareness Participation Email Community Friends Asking Friends Recurring & Renewing Advocacy Social Media & Networking First Gift or Membership Stewardship Page #39 © 2009 Blackbaud

40. Online Fundraising 1.0 Step 1: Collect email addresses Step 2: Create or borrow an online donation form Step 3: Send emails to people pointing them to donation form Step 4: Collect donations Step 5: Repeat as necessary Page #40 © 2009 Blackbaud

42. Donor Focus Organization Focus External Websites Donation Mission AmEx Widgets Fish GivingExpress Facebook Causes Network Nonprofit for Good Central Internal Websites Donor Campaign Friends Portal Donation Asking Forms Micro Sites Friends Gift Employee Membership Catalogs Giving Event Forms Portal Registrations Page #42 © 2009 Blackbaud

61. Social Networking Tactics  Engage Go where they are. Give them content that they want / can’t get themselves Engage  Interact Drive them to take an action. Start small. Promote sharing.  Activate Interact Present opportunities to take the next step Use focused variety. Activate Page #61 © 2009 Blackbaud

64. The Experience Gap The Market is Noisy What to do about it?  Start experimenting and begin listening to the networks  Continue to expand both acquisition and retention efforts  Stop waiting for things to be perfect before you change Page #64 © 2009 Blackbaud

65. The Market is Noisy Want to learn more? Be sure to check out….  My Blog www.blackbaud.com/connections  Blackbaud Internet Resources www.blackbaud.com/internetresources  The Baudcast www.blackbaud.com/baudcast  NTEN www.nten.org Page #65 © 2009 Blackbaud

66. Questions? Answers? steve.maclaughlin@blackbaud.com www.blackbaud.com/connections