Last Wednesday the headline in a New York Times story proclaimed “Study Shows First-Time Online Donors Do Not Return.” Sort of a ‘dog bites man” headline since, truth be told, neither do first-time direct mail donors. That aside, Stephanie Strom’s NYT piece is worth a read by all fundraisers.

And worth far more than a casual read – really spend some serious time on it – is the study that triggered The Times story: Blackbaud’s release of the 2008 donorCentrics Internet Giving Benchmarking Analysis.

For several years Target Analytics, now a Blackbaud company, has been benchmarking and tracking internet giving as it has done over the years for offline giving (primarily of the direct mail variety). In the just-released study, you can get a basic overview of the demographics, average gifts, retention rates, etc. of online giving and how that compares to giving offline.

Given The Agitator’s near-constant drumbeat about retention, loyalty and the need for serious channel integration, several findings and insights in the Blackbaud study deserve highlighting.

• Even in the absence of major disasters like Katrina, online giving continued to grow rapidly in 2007 and 2008, but is still dwarfed by direct mail giving. (Only 9% of all donors studied by Blackbaud gave online.)
• Higher average gifts and revenue per donor from online givers may well mask issues involving the cultivation and retention of these donors.
• In fact, the study shows that the “renewal channel” is not strong for online giving. Every year large numbers of online donors migrate away from giving online to other channels –primarily direct mail.
• However, the fact remains that over the past few years online giving “has become an increasingly significant source of new donor acquisition.”

So, in light of the findings of this study and plenty of other research, including our own DonorTrends 2008 survey, some observations:

• Effective online fundraising clearly goes beyond technique — such as focusing on “hits” and “open rates” — and must absolutely involve integrating this new channel into the tried and true older channels (dm, telemarketing) to get the most donor value possible.
• The donorCentrics study notes that “while online giving is proving to be a great source of new donor acquisition, it is not clear that online donors are being cultivated to their true potential once they are brought into the file.”
• It is clear from the donorCentrics study and from our own DonorTrends studies that currently direct mail-acquired donors produce higher long-term revenue than online-acquired donors. In my judgment, this is not some immutable law that will apply forever and ever. Fundraisers who learn to mesh the online channel into a high producing direct response program will outshine all the others.
• In terms of those all important qualities of ‘loyalty’ and ‘retention,’ the donorCentric study reflects the fact that while online donors may seem to have higher retention rates this is not the case. As a group, they actually have lower retention rates and value over time. The mirage is created because online donors come in with substantially higher initial gifts than direct mail donors, who have much lower entry gifts. As a general rule, the higher the average gift the higher the retention rate.
• Be alert to the fact that significant numbers of online acquired donors switch their giving channel to direct mail in the second year of giving. The donoCentrics study of 12 organizations shows that a median of 33% of the donors who were acquired online in 2007 gave offline when they renewed in 2008.
• And, the online-to-offline migration continues into future giving years as well. The donorCentrics study notes that “a median of 37% of the donors acquired online in 2006 who gave in both 2007 and 2008 never gave online again.”

As far as I’m concerned, the jury is still very much out on the true value of online acquired donors. A lot more understanding and analysis is needed. I suspect that as this occurs and the general rules and principles of effective integration become better understood, the real and surprisingly positive truth about the value of online donors will be finally be revealed.

Roger

P.S. Our DonorTrends survey analysis and actionable recommendations focused on Online Giving and Donor Loyalty are available now in The Agitator’s online Library – the Vault — exclusive to Premium Members. Premium Members, click here to login into the Vault. Not a Premium member? Learn more and join this special community today.