Heeding The Patient Prediction of Steve MacLaughlin
For years Steve MacLaughlin, VP of Product Management at Blackbaud and author of Data Driven Nonprofits has patiently predicted that online giving would grow beyond 10% of total giving.
2020 was the year it finally happened.
The detail of this online breakthrough –along with a treasure trove of other giving data – is reflected in the Blackbaud Institute’s 2020 Charitable Giving Report.
The Report tracks $40+ billion in charitable giving across 8,800 organizations of all sizes in 2020. Bottom line: Despite what started out as a horrific year ended up with a 2% overall increase in giving over 2019 with an online giving increase of 21% over 2019. For the first time–bringing Steve’s patient prediction to life– online giving finally exceeded the 10%-of-total-giving mark, weighing in at 13%.
You’ll want to read the entire report (here) to see how organizations in your sector fared both in terms of online and offline… how nonprofits in the U.S., Canada, the UK, Australia and New Zealand did in 2020…and check out performance by sector and size of organization.
In this post I want to spotlight the Report’s section summarizing online giving.
Although 2020 was a year most of us would rather forget, but from a giving standpoint it turned out to be an unforgettable year. You’ll recall that early in the year giving was down, and then the pandemic hit. What started out as a pretty pessimistic fundraising picture turned brighter and brighter as the pandemic revved up.
Nowhere did the picture brighten as much as with online giving. the picture brighter than in online giving. At the start of the year, in the first quarter online giving was down 8% by the end of the year it was up 36% in the final quarter, marking an overall annual online giving increase of 21% over 2029.
“Digital transformation” is a term, much overused, to describe the movement of donors to online giving during the pandemic. After reading the Report I called Steve to see how he would describe 2020’s significant migration of donors to online. He told me he preferred the term “digital adaptation” because the spike in 2020 online giving reflects the pandemic’s forced removal of ways in which organizations could raise money and ways in which donors could give.
In short, as galas, marathons, other events and person-to-person contact were curtailed, there was little alternative but to move online. And that’s exactly what alert and capable nonprofits did.
Steve noted –and sent me the chart below—that phenomenon also occurred in the retail sector. Sure matches my personal behavior and I suspect that of most Agitator readers as well. Far fewer visits to brick-and-mortar establishments, far more Amazon deliveries. No attending fundraising events and meetings, far, far more online contributions.
For nonprofits who believe that this consumer/donor behavior is likely to revert to pre-pandemic days I believe they’re in for a real disappointment. We’ve all had nearly a year to form a digital habit that will be hard to break.
So, for those organizations that found themselves digitally unprepared in the pandemic, my advice is to read this Reportcarefully –especially the Online Section—share it with your CEO and Board, and then get busy boosting your investment in building digital skills.
Roger
6 responses to “Heeding The Patient Prediction of Steve MacLaughlin”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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Roger, this is great and a good indicator of trending in digital behavior – something we all need to be watching. But is it an indicator of response to solicitation? Many of these online donors could be responding to a direct mail appeal or even an organic website hit, correct? In other words, online giving isn’t necessarily an indicator of efficacy of digital (i.e. email) appeal vs. other methodology (i.e. direct mail). My feeling is that we need to be prepared and focused that more donors may be more trusting and comfortable making a gift online, but it doesn’t mean we should throw all our eggs in the email-only appeal.
Am I missing something? Why is the term “online giving” so vague in this report? Giving a donation online is the mechanism used to donate. It is not necessarily the channel that drove the donation. How can an organization make good strategic decisions about “online giving” if there is no information showing what drove the donor’s decision to give?
I have certainly seen an increase in DM(and DM+Email) donors choosing to give online this last year. I have also seen an increase in online giving driven by orgs that had to pivot from live events to virtual events.
But where is the data showing us the breakdown of which channels drove that 13% of overall giving that came in online?
This is vital information.
Why? Because DM donors choosing to respond by donating online are likely to continue donating online. So that increase is going to be stable and growing. But the increase in online giving driven by events being cancelled and going virtual is not likely to hold up. Some of that growth will be stable but many event driven donors will be eager to return to the event experience rather than stay with the virtual experience. I suspect a hybrid of the two will become the norm.
But please, can someone provide the vital data that tells us what channels have driven this “Covid bump” in online giving? How can an organization make good strategic decisions about where to invest if that data remains a mystery?
One good strategic decision that everyone can make is to improve their donation landing pages to create a frictionless and satisfying online giving experience. But this report gives no data on what is most effective in driving those donations to your landing page. This is fairly critical info for fundraising… don’t ya think?
Thanks Denisa and Clay,
Perhaps Steve will weigh in with a note about methodology regarding channels.
I agree that this is important information. My point in doing the post was that regardless of the channel that triggers the gift it’s important not to neglect the essential role of the digital donate and landing pages. Sadly, this is an area that’s been woefully neglected.
See this Agitator post on donors’ feedback regarding the online giving process. http://agitator.thedonorvoice.com/feedback-week-what-people-dont-like-about-your-online-giving-process/
Thanks, as always for your perceptive comments.
Roger
great questions… I had a conversation with several client about this very thing recently as we were evaluating year end results. Unfortunately, unless you have a special url in your direct mail, it’s very hard to track the online gifts made from direct mail. Some orgs do and for those we have definitely seen an increase of online gifts made from the direct mail but most don’t have the bandwidth to do it/track it. And even with a special tracker, many donors may still go online to your general donation page.
I think it’s more important to look at how many donors do you have where you do not have email addresses for? How many donors are giving both by mail and online?
And, while 13% online is great, that still means that 87% of gifts come in offline folks! Direct mail is alive and well!
Especially if you cannot do events, if you cannot do face-to-face/street fundraising! I always recommend looking at direct mail and online gifts in tandem.
As always, the intelligent and spirited debate here helps improve the sector in many positive ways.
For as long as I’ve been analyzing data, I have also continually cautioned: Do not confuse the channel of engagement with the channel of the transaction.
And at the same time it’s clear in the data that an online-only or offline-only engagement approach will never outperform an offline+online strategy. Beware the tyranny of the “or” and embrace that multichannel engagement gets better results than single channel.
The other key insight here is reminding fundraising professionals that donor behavior mirrors consumer behavior. The expanding channel preferences of people — the common denominator in all this — do not exist in an isolated giving multiverse from other activities.
Really enjoying the debate and questions when we have data to react to.
Great conversation and points. The Blackbaud data tracks alongside what we saw at Neon One, though I always try to remind myself that offline data as well as larger organizational revenue are not necessarily going to be accurately reflected in any tech company’s analysis. The National Council of Nonprofit’s analysis of 990 data is an excellent resource on the bigger world of revenue, for example: https://www.nonprofitimpactmatters.org/
The only truly known number is the online data because there is a merchant processor that needs to verify the transaction upon initiation into the giving platform. There is not the same type of process for offline giving and indeed COULD be online transactions that are then hand entered after the fact from a random giving platform. Or grants and DAF checks. Or random junk that someone decides to put in around in-kind. Offline giving data is the Wild West in CRMs and other data collaboratives.
The channel is a completely different story and as Erica mentioned even harder to identify. But what we do know is that there continues to be a slow but sure shift towards digital in some form of engagement and execution to support an organization and there still continues to be a lot of so-called traditional methods of engagement and giving that are working just fine.
Reports like Blackbaud’s are lovely – but they aren’t the whole story by a long shot.