$100 Million in Online Giving by Network for Good

Recently, Network for Good released a white paper called "The Young and the Generous:  A Study of $100 Million in Online Giving to 23,000 Charities."  You can view the basic findings and download the white paper here.

Thank you to Network for Good (NFG).  The effort to compile this data and share findings is a tremendous service to the nonprofit sector.  The conclusions in the paper are understandably slanted in NFG's favor.  Nevertheless, the data is right there in front of you in a way that allows the reader to draw their own conclusions.  Here are mine.

Donors are giving more online.  Surprise!

The growth of online giving is in fact not a surprise at all.  Neither is the fact that online giving follows the same trends as online banking.  Here we see the 10 year rule in effect.  Results from a 1996 Booz Allen Hamilton Internet Banking survey showed the average cost of different types of bank transactions:

1. Online transaction:  $.01
2. ATM transaction:  $.27
3. Telephone transaction:  $.54
4. Branch Transaction:  $1.07

10 years later, which is about the lag-time for the nonprofit sector to adopt technology and innovation, NFG gives us data on average costs per type of donation.

1. Online Donation:  $.05
2. Telephone Donation:  $.63
3. Direct mail solicitation:  $1.25

Look familiar?  You can buy the rest of the Wells Fargo Case here.

The 10 year gestation period for technology to enter the nonprofits sector may in fact be an opportunity for entrepreneurs.  Think about it.  If you're at a startup in mobile technology or internet TV, or some other hot market right now and things don't work out, YOU DON'T HAVE THROW EVERYTHING AWAY!  Just zip it up and launch it again in 2016 targetting nonprofits.  Coming in 2017 - Nano for Nonprofits, Mobile Donations, Nonprofit Robots that can fill out 990's while shaking down major donors.

The Nonprofit sector is top-heavy and fragmented

To be sure, there are some big league companies in the sector.  Habitat for Humanity, The Y, Big Brother, etc..  These orgs and others like them get most of the donations.  But the overwhelming majority of nonprofits sport annual revenues under $5MM.    The NFG report only confirms this and brings up another related question. 

Does the high fragmentation in the Nonprofit Sector limit the effectiveness and impact of donations?  Take for example the ALS nonprofits in the greater Boston area.  There is the ALS Association, ALS Foundation for Life, ALS Therapy Development Foundation, Angell Fund, ALS Family Charitable Foundation, and Compassionate Care ALS.  I'm sure I missed some.  All of these nonprofits are within 75 miles of each other.  They are good organizaitons run by nice people.  They all claim to do distinct things but there is a ton of overlap and as a result redundancy and waste.  None of these orgs generates more than $5MM a year and all but one do not exceed $2MM.  Everyone pays for administration, accounting, IT, etc, etc...  And donors foot the bill.  Wouldn't it be better if there was some consolidation, some rolling-up of all these small fragments into one $8-10MM a year organization where donors only have to foot the overhead for one company?  Maybe its time to provide incentives for consolidation to protect donors from paying for redundancy while building stronger organizations with a better chance to actually solve the probelsm they are trying to address.

Hallelujah!

Religion ranked 10th among causes for total number of donations.  Shocking.  Sounds like an opportunity for someone here.  It would take a radical paradigm shift but if you could do it...

Network for Good is the best choice for small and startup nonprofits

The low transaction fees, zero setup costs, and rapid implementation make NFG the ideal online donation processing solution for small nonprofits with little time or money.  There is really nothing even close.  Not even paypal. 

But what I've seen in the field is that there is a life cycle for online donation products that mirrors the growth of the organization.

Organizations that reach a certain level eventually want more customized reporting and features that may be specific to their organization so they develop something in-house.  If they continue to grow they will make the mistake of switching to Donor Relationship Management software like Convio or Kintera, even though CRM in the for profit world fails 70%of the time.  Why would the nonprofit sector be ay different?  I'm curious to see what nonprofits will do once their DRM fails.  Maybe another opportunity for someone...10 years from now.

Republish the report without disasters

I think I would have preferred the paper if the Disaster donations were not included.  I think the reader and writers, for the matter, could have drawn more valid conclusions on the nature of online giving.  Nevertheless, it's good to know that if there is a disaster, Network for Good is a reliable and ready channel through which people can make an impact.  But i'm hoping there are no more disasters.  What if there weren't any disasters for a while?  Does that mean Network for Good is in trouble?  Does NFG need disasters?  That would be a disaster.

So all in all, very useful stuff from NFG.  Lots to learn from a strategic point of view.  And some tactics that nonprofits can implement immediately like the following:  send email appeals on Tuesdays to people between 35 and 45.