Algebra For Fundraisers
Awhile back I read yet another exclamation about the rapid rate of online fundraising growth. Fundraising blogs are littered with such exclamations.
For example, in this reference to 2014’s fundraising performance: “…online giving grew almost five times faster than overall giving, which grew at 2.1 percent, while online giving grew at 8.9 percent.”
Now, don’t get me wrong; I’m genuinely thrilled — for all the fundraising efficiency reasons we all understand — that more and more donors are making their gifts digitally. After all, I do use a computer and an iPhone to buy and give.
But I would like to suggest a bit of a reality check.
So here’s an algebra challenge to you fundraising analysts reading The Agitator.
Suppose direct mail giving in 2014 was X. And its growth that year was 2%.
Suppose online giving was Y. And its growth that year was 9%.
Finally, assume that direct mail giving was eight times greater in dollars than online giving in 2014 (that’s an actual ratio from one study of nearly 4,000 nonprofits, but the serious student might find another, documented, universe to set the ratio).
Using the two growth rates as a constant, how many years will it take online giving revenue to equal direct mail revenue in volume?
Do we have a math whiz out there? I’m just curious.
Tom
P.S. Hint: In 10 years, online will be just shy of half way to catching up. For Roger, it’s a question of which comes first, the crossover or his 100th birthday. Either way, I’ll be there to celebrate.
6 responses to “Algebra For Fundraisers”
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So will I.
I may have said it here before – and even if yes – I think this is worth repeating!
WHAT DO FUNDRAISERS MEAN BY “ONLINE GIVING”?
ONLINE GIVING has 3 key components:
1. Paying the gift online.
2. Finding the organization, falling in love, and making an unsolicited gift online.
3. Asked for the gift via direct mail or personal solicitation. And then going online to pay.
Why do we keep collapsing those 3 different concepts?
I mean really…. How often do any of us think that #2 happens? I’m trolling the internet (because I have so much spare time that’s what I do). I fall in love with a cause on the website. And then – unsolicited – I give. Geez. Isn’t one of the mantras in fundraising: ” The major reason anyone gives is because they’re asked?”
So please please please please please please please please please STOP IT EVERYONE! Demand that the research differentiate.
Usually I read The Agitator early in the morning when I first get up. And sometimes I just get annoyed…. Not at you two. But just annoyed with the NGO sector, fundraisers, bosses and boards, and and and and and and ….
So you’ve started my day with annoyance. But at least I could vent here.
I think it all depends on the org. I have clients whose online revenue now trumps that of direct mail giving. I work with orgs that started in the past 10 years, and they don’t have direct mail programs – it’s all digital giving. So, context really is key when looking at those numbers. Older orgs, with mature programs, and well developed annual giving programs with a solid mail base aren’t seeing the same online returns.
Now, to Simone’s point above…. the general rule of thumb is that 1/3 of online giving can be sourced to email. Last year, however, Benchmarks had it at 22%. That means somewhere between 66-88% of online giving comes from an additional source (sometimes identified, and event, and many times the source isn’t obvious). Yes, mail is part of it. But so is paid search, retargetting, digital display advertising and other social campaigns. This is a huge part of online prospecting.
People do make unsolicited gifts online. But typically, these are gits that appear to be unsolicited – the ask isn’t direct, it’s indirect. These are gifts that come in through an online donation page with no obvious single source you can attribute them to…because there’s been a whole lot of touch points or connections that you can’t track with a person before they donate…they saw a post on a friend’s FB page, then they saw a display advertisement, then they read a news story about X issue, and then looked up the charity the encountered before to make a donation. As online marketers, we are magicians who can somewhat orchestrate your #2. Last year, that was somewhere around 20% of online gifts I do believe.
It will take 32 years for Online to overcome DM using the growth rates and starting points you described. Take for example DM starting at $1,000,000 and Online at $125,000. In 32 years Online would have grown to $1,970,416 and DM would have grown to $1,884,541. I am not positive I got all the variables right though, because I did not get the same answer as you Tom after ten years. I show DM at $1,218,994 and Online at $295,920 after ten years with growth rates of 2% and 9% respectively. That would mean after ten years Online would only be 24% of DM. Thank you for the math question.
Ben,
You’re correct. I mis-read my own numbers.
I’m afraid Roger’s 100th birthday will indeed come first!
Tom
I completely agree about differentiating the ways people discover vs. pay on line giving. Would say that direct mail is still our lead source for our appeals, but actually online giving $$ are greater than our mail appeal dollars.