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How Nonprofits Use the Internet to Get Ahead

March 22, 2004
You’ll need more than a nice-looking Web site and a “Donate Now” button. Experts swapped tips at the 2004 Social Enterprise Conference.

  May 16, 2005 Issue
In This Issue
Confronting the Reality of Web Services
Nonprofit Networking: The New Way to Grow
When Employees Have Equity Attitude
Readers Respond: Where is Consumer Generated Marketing Taking Us?

The Internet can be a fantastic tool for fundraising and for engaging your constituents, but it needs to be powered by a smart strategy.

That was the message from four experienced devotees of Internet use for nonprofit organizations at the 2004 Social Enterprise Conference on March 6, in the panel session titled "Internet Strategies for Nonprofit Marketing, Campaigning, Advocacy, and Community Building."

"Just putting up a Web site and a 'Donate Now' button doesn't mean money will come flowing in," said Ted Hart, president and CEO of ePhilanthropy Foundation, based in Washington, D.C.

"There are no shortcuts to raising money online or offline," he added. "But with technology, there are more efficiencies and the opportunity to reach out to more people. And that is what should be drawing nonprofits to the use of the Internet."

By looking at both fundraising and building relationships, panelists agreed that one doesn't work without the other. In the arena of online fundraising, however, the numbers are impressive. Using donor profile statistics from HJC New Media of Toronto, Hart said that online giving ballooned from just $10 million in 1999 to an estimated $1.9 billion in 2003. Online donations are still a small part of overall giving, but at the present rate, by 2010 one-third of money donated will be given online, he predicted.

The more e-mail addresses you have, the more bidders there are.
— Jon Carson, cMarket

For donors, the Internet is a fast-growing segment of fundraising and more donors expect to use it, said Hart. They also see the Internet as a way to get information and communicate with charities. Donors expect more transparency and stewardship than before. And, contrary to the impression many have that online giving is dominated by people in their twenties, most donors are aged thirty to fifty-nine, according to Hart.

The basic rules of mission, fundraising, and governance still apply even though technology and new media strategies are changing how nonprofits and non-governmental organizations operate, said Steve Delfin, Booz Allen and Hamilton's worldwide director of community relations.

Web-based auctions are one way to blend mission and fundraising.

Jon Carson, CEO of cMarket, a Boston-based startup, saw an opportunity by recognizing that auctions such as eBay and Yahoo have carved out a successful Internet model in the mainstream, yet physical auctions for charities are usually limited by the number of people who can fit in a room. Many nonprofits are starting to build substantial e-mail lists. Carson said he saw online auctions for nonprofits as a creative way to take advantage of the Internet's power in such a data-intensive activity. His company gives clients a Web publishing tool that allows people to go to the auction homepage and browse an online catalog of items for bidding. There is also a bid tracker. Using the e-mail database expands the number of bidders.

"More bidders equal more revenue. Better execution also equals more revenue," he said. "There is no magic. It's a math problem. The more e-mail addresses you have, the more bidders there are."

Asked how his company overcomes the complaint that online auctions are eliminating an important feature of charitable giving—the personal interaction between donor and charity—Carson said many clients don't want an either/or situation and actually prefer a mix of online and offline. Using the example of a hospital fundraiser, he said the opening bids at the physical event were the final bids from the hospital's online auction that had closed the night before.

Learning from Howard Dean
The Dean political campaign was a good case study of the Internet's potential and its limitations. Dean's online component was powered by Convio, a nonpartisan company founded and led by Vinay Bhagat (HBS MBA '98), one of the panelists. Though Convio helped the Dean campaign raise $18 million online in just nine months, with an average gift of just $68, the campaign fell flat by the time the Democratic primaries rolled around.

"Don't blackball the Internet just because the [Dean] campaign as a whole didn't work," Bhagat said, acknowledging a comment from the audience that perhaps the online component lent the campaign a sense of overconfidence.

Don't blackball the Internet just because the [Dean] campaign as a whole didn't work.
— Vinay Bhagat, Convio

On the positive side, he said, the campaign did engage thousands of people in the political process who hadn't taken much interest before. In that respect the Internet was great for outreach, he said. It mobilized 630,000 to sign up for electronic updates and 180,000 for so-called meetups, where volunteers got together to meet like-minded people stumping for Dean.

"If you think about how the campaign operated and contrast it with how most nonprofits operate, first and foremost, Howard Dean and Joe Trippi on down viewed the Internet as a strategic marketing tool," said Bhagat. "It was made a core part of strategy, not relegated to IT or even communications. They integrated the Internet with all of their activities. They used the Web as a way to reach out and engage a constituency and get it motivated."

According to Bhagat, there are several enduring lessons from the Dean campaign that can be used by other advocacy groups and nonprofits in the future.

  • See the Internet as a strategic marketing tool and use it as such, not just as an IT tool.
  • Develop a systematic approach to relationships. The Internet is not just for accepting online donations. Many people want to help in other ways, too.
  • Execute micro campaigns. "Don't just have a sign that says, 'We're trying to raise $2 million.' Parcel out your fundraising objectives into manageable goals," he said. Make the "ask" often.
  • Ask your strongest supporters to give more. Have them engaged in volunteer fundraising as well.

As a starting point, nonprofits should set up incentives for people to give out their e-mail addresses, he added. This e-mail address acquisition has to be a focus. And as happened in the Dean campaign, people may develop blogs that will comment on your nonprofit's work. "You can't control blogs, but it's a participatory audience, too," he said.