The Reality of Digital Fundraising

Since the advent of online giving, many people have touted grand promises from the “digital fundraising revolution.” Some have even predicted utter doom for traditional fundraising (especially direct mail).

Cue movie preview voice …

“In a world where urgency trumps everything, nonprofits MUST go all-in on digital fundraising if they are to survive!”

But the reality of digital fundraising is more nuanced….

Digital fundraising has proven itself to be essential for every nonprofit. Your nonprofit absolutely needs to leverage social media and other tools of digital fundraising and stewardship, if only to show that your organization is alive and well – and ready to accept contributions immediately, in whatever way donors want to give.

But is it right to be asking: How can we evolve our old ways of fundraising to adapt to digital? Or is it better to ask: What new opportunities does digital fundraising provide OUR nonprofit?

In our experience, digital fundraising can be either a revolution for your nonprofit or simply the latest evolution of your unique approach to fundraising.

About two decades ago, online giving began as just another way to make a payment. Now it’s a fully formed communications channel. Today, nonprofits can prospect, cultivate and steward individuals almost entirely online … plus digitally manage nearly every other aspect of the donor journey.

But just because you can do it all online doesn’t mean you should!

Every donor — and every donor file — is different, and optimizing donor response and retention requires a unique approach at every nonprofit. How a large state university responds to changes in donor giving behavior will be different than how the Red Cross or a local animal shelter reacts. In fact, if you work for a nonprofit that has a generationally diverse donor base (we’re looking at you, higher education), then you’ll likely need to leverage digital fundraising differently for all your various donor subtypes.

To help you navigate your way to success, we have identified four ways nonprofit organizations can adapt to this ever-shifting landscape and take advantage of digital fundraising:

1. Leverage digital communications to improve your relationship with donors.

First, we need to acknowledge the very real changes in donor behavior, attitude, and expectations that have resulted from technological advances. It’s always been important to focus on keeping donors engaged and building a strong relationship. But good stewardship in the digital age calls for expanding access and “flattening” communications.

Communicating with donors is a two-way street, especially today. Digital tools accelerate inbound as well as outbound communications. Therefore, your digital presence must reinforce positive aspects of your brand and the kind of organization you want to be to donors — namely, one that is open, genuine, engaging and responsive to supporters.

2. Profile your donors in ways that go beyond RFM

In managing a healthy donor list, you can (and should) regularly profile donors to see if they have the potential to give more. RFM metrics — giving based on Recency, Frequency and Monetization — have traditionally been the key markers for giving propensity. But tracking activity on digital can tell you a lot about a donor. Consider assessing your donors not only by RFM, but also by engagement … keeping tabs on which e-mails they open and respond to, how they engage on social media, and more.

It’s also important to understand donors demographically and psychographically. When you have data on RFM, engagement, demographics and psychographics, you can effectively model your donor file to identify traits associated with high levels of donor participation and giving. You can then use this donor modeling to find low-level donors and prospects who mirror these attributes.

3. Create a digital rapid response plan.

Episodic giving — donations based on specific events like natural disasters, important anniversaries or milestones, and political events — has always been part of fundraising. However, digital fundraising has matured to a point where organizations can leverage an individual’s desire to help when it’s at its highest level.

When an issue or event captures people’s attention, your organization needs to be ready to raise its hand and make the connection to philanthropic giving. How your nonprofit does this will vary from organization to organization, but with a little forethought and planning, you can be ready to make the most of episodic giving opportunities.

4. Don’t skimp on what works (and keep testing).

The most important thing a nonprofit can do when facing a disruptive new technology like digital fundraising is to be methodical in setting its fundraising strategy. Figure out what works, scale up effective methods of fundraising, and remain in a constant state of test-and-tweak. Yes, resources are limited. You’ll have to make hard choices and smart calls. But you can make solid year-over-year progress provided you base fundraising program adjustments on actual results — not just the promise of a new technology.

Test new digital strategies against your old analog ones. Track donor giving behavior and monitor how your target audiences are responding … not just to a single appeal, but over time; use data to make smarter decisions; be flexible and try new ideas; be willing to fail quickly and move on. Most importantly, don’t bet the farm on the newest and shiniest fundraising method, and keep cultivating those channels that work best for your particular organization.

Conclusion

Individual giving used to be fairly predictable…. You might do several direct mail appeals a year, make phone calls, have a push at the end of calendar and fiscal years, and that was that. But as prospects and donors began living more of their lives online … and as social media and the 24-hour news cycle have reduced attention spans … things have changed. Today, flexibility and speed are as important as consistency. In order to forge a comprehensive fundraising strategy, you need to leverage digital. For a smart organization that’s willing to be innovative and figure out what actually works, digital fundraising and stewardship can provide opportunities for both increased donor engagement and donor giving.

This blog article was adapted from the IPM Advancement whitepaper, Is Annual Giving Dead? Download the whitepaper from our free Nonprofit Resource Library for more strategies to help your nonprofit adapt to changes in annual giving.