June 1, 2011

Web Is Good at Acquiring Donors, Not Retaining Them

Study uses research on nonprofit online giving in the context of an integrated direct marketing program

Multichannel giving has become a popular objective of nonprofits as a way to build constituent support, but it is not widely practiced, a report released Tuesday by Blackbaud found.

Most donors give through only one channel and use only direct mail as their vehicle for donations, according to the 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report, which was developed by Blackbaud’s Target Analytics company.

The report found that only new donors acquired online do significant multichannel giving. Large numbers of these donors switch to direct mail giving in subsequent years. This is the group of donors for which multichannel giving is crucial for garnering repeat gifts and realizing true long-term giving potential.

“The Internet is becoming an increasingly important acquisition channel but has not proven to be as effective for retention,” Rob Harris, Target Analytics’ director of analytic products and a co-author of the study, said in a statement. “It is the ability of online-acquired donors to use another channel—that is, to start giving through direct mail—that significantly boosts the long-term value of this group of donors. The most successful organizations have integrated online and offline marketing teams and CRM systems to develop effective multichannel communication strategies that can maximize donor value.”

The research also found that for donors already on file, evidence of past multichannel giving was not predictive of future retention or long-term value. Traditional direct marketing segmentation variables such as frequency, gift amount and how recently a gift was given were far more predictive.

Other key findings about online donors:

  • The majority of gifts are still received through direct mail, although it has become increasingly common for new donors to give their first gift online.
  • Online-acquired donors are significantly younger and tend to have higher household incomes than mail-acquired donors.
  • Online-acquired donors tend to give much larger gifts, but have slightly lower retention rates than mail-acquired counterparts.
  • In aggregate, online-acquired donors have much higher cumulative value over the long term than traditional mail-acquired donors. However, long-term value varies depending on the donor’s origin gift level, and the substantially higher gift amounts given by online-acquired donors can mask issues with retention.

The data presented in the report came from the most recent transactional data available for the 28 organizations participating in Target Analytics’ donorCentrics online benchmarking service in 2010. Organizations that participate in these online benchmarking groups are prominent national nonprofits covering a range of sectors, including animal welfare, the environment, health, human services, international relief and societal benefit.

Thirty-year-old Blackbaud provides software and services designed specifically for nonprofit organizations, enabling them to improve operational efficiency, build strong relationships and raise more money to support their missions.

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