Donors warm up to online giving
The Web has radically changed the way we shop, conduct our finances, get our news, and participate in politics. And it鈥檚 changing the way we give.
America is a giving nation: In 2007, for the first time in history, more than $300 billion dollars went to charities, according to the annual report of Giving USA Foundation released June 23. While online giving is a small percentage of that total, many signs suggest that e-philanthropy鈥檚 time has come.
Traditional means of fundraising 鈥� direct mail and telemarketing 鈥� are growing less effective and more expensive each year, according to the Chronicle of Philanthropy. Online fundraising in the United States has grown rapidly from $250 million in 2000 to an estimated $6.9 billion in 2006, according to the ePhilanthropy Foundation ($13.2 billion globally).
Not only is online giving favored by tech-savvy younger generations, but 51 percent of wealthy donors in a recent study said they prefer to give via the Internet. 鈥淭he Wired Wealthy鈥� study also revealed that 46 percent intend to make a greater percentage of their donations online in the next five years.
New websites and technologies that offer donors more immediate and personal forms of giving, including direct engagement with favorite causes and grass-roots projects, are mushrooming. And first gifts given online are 1-陆 times larger than first gifts via mail; repeat gifts are also larger.
鈥淭he future of online giving is now,鈥� says Garth Moore, managing director of interactive services for Changing our World, a philanthropic-services firm. 鈥淒espite the economic downturn, I think we are going to reach $10 billion in online donations by the end of this year.鈥�
Weak economy dims giving picture
But there are clouds as well. Charities are worried about the impact of economic difficulties on overall donations for 2008. Charitable giving generally tracks with the economy, and the $306.4 billion total given in 2007 represents 2.2 percent of the nation鈥檚 gross domestic product.
In its annual survey of online fundraising by large charities, released this month, the Chronicle of Philanthropy said the charities continued 鈥渢o rake in ever-larger amounts of donations,鈥� but that the increases hadn鈥檛 been enough to offset declines in direct mail.
Still, some groups fared well. Heifer International, for instance, raised more than 28 percent of its donations online, and the United Way of America brought in $257.4 million via the Web.
The Internet also has been a boon for numerous small charities, providing a cost-effective way to reach people.
鈥淚t has opened up new channels for a lot of smaller nonprofits with limited budgets to actually make an impact 鈥� and may be one reason there are so many more nonprofits today,鈥� Mr. Moore adds.
Innovative websites have helped boost the growth of giving globally. Kiva.org, a person-to-person microfinance site, enables individuals to become direct lenders to specific entrepreneurs in the developing world. UniversalGiving.org helps donors engage with projects in countries and causes of their choice 鈥� projects that have been carefully vetted for quality. 鈥淲e don鈥檛 take any cut in your donation 鈥� 100 percent goes to that project,鈥� says Pamela Hawley, founder of UniversalGiving.
The Web service has seen tremendous growth: 85 percent from the first quarter of 2006 to 2007, and 101 percent from the first quarter of 2007 to 2008. She attributes such growth to the 鈥済ift packets鈥� they鈥檝e introduced, such as $20 to help provide 鈥渁 lifetime of clean water鈥� for a family, or a similar amount for eyeglasses to 鈥渟ave the sight of a child.鈥� People can also design their own packets, she adds, like the 10-year-old who is sending soccer balls to youths in Ethiopia.
鈥淲hat seems to be compelling is that we aren鈥檛 asking for a change in [donors鈥橾 lifestyle 鈥� they already give gifts for birthdays or anniversaries. We鈥檙e just asking them to give something more meaningful,鈥� Ms. Hawley says.
More donors give globally
The Giving USA report found that 鈥渋nternational affairs鈥� charities experienced the most dramatic growth 鈥� 16 percent 鈥� among all giving sectors in 2007. A recent study by Campbell & Company of generational giving reveals that young people born after 1981 care about causes that make the world a better place, while those born earlier tend to focus on giving help closer to home.
In fact, social networking sites such as Facebook and MySpace may be the new seedbed for young philanthropists. A 鈥淐auses鈥� application on Facebook enables members to recruit their friends to their favorites causes and charities. Facebook participated in a 鈥淐auses Giving Challenge鈥� last winter along with the 鈥淎merica鈥檚 Giving Challenge鈥� sponsored by Parade magazine, the Case Foundation, and Network for Good. The challenges aimed to introduce millions to the idea of using new Web 2.0 (interactive) technologies 鈥渇or good.鈥� More than 80,000 people donated, raising $1.7 million for some 3,000 organizations.
鈥淭he major giving population is aging and a whole new generation of givers is coming that is fluent in the online environment,鈥� says Charles Mauro, of Mauro New Media, in New York. 鈥淎ny nonprofit not aggressively moving into the online giving space now is going to be losing an entire generation of potential givers.鈥�
About 75 percent of people who give do their research online before they give, Moore says. Some adventurous folk even search out projects on their own. Amy Logan, a freelance writer in the San Francisco Bay area, found the organization, HEAL Africa, through her own efforts, and she and her husband donated $3,000 to build a safe house in the Congo for women fleeing sexual assault. 鈥淚 did research on the organization on the Web to make sure it was legit, and spoke via telephone with the director before sending the money,鈥� Ms. Logan says via e-mail.
At the same time, seeking to instill the value of giving in their 6-year-old son, she went to the website of World Vision to purchase a monthly sponsorship of a Honduran boy, who was born on exactly the same date as her son (a site option).
鈥淭hen, I found him a Honduran leatherback sea turtle at the website of World Wildlife Fund that needed adopting, for $25,鈥� she says. 鈥淲e hope to visit Honduras in the next year or two to visit our new friends.鈥�
New tools have even appeared to spur giving without money during these rough economic times, when people tend to cut back on contributions. GoodSearch.com allows donors to give to their favorite charities every time they conduct an online search on Yahoo (which donates a penny per search), and GoodShop.com donates a percentage of every purchase made from more than 700 retailers. Some 60,000 charities are already benefiting.
While people differ on how quickly ePhilanthropy will extend its impact, Mr. Mauro is bullish. 鈥淥nline giving is fundamentally going to alter the entire landscape of giving over the next five years,鈥� he predicts.
