CASE STUDY: CANCER RESEARCH UK
Head of e-business at CRUK, Roseann Wilson, explains that the internet is already an important component of the charity's fundraising activities.
"We have facilities on our website that allow people to make a cash donation or sign up for a direct debit. Some of our supporters also set up their own sponsorship forms using the facilities provided by Justgiving and BMyCharity. We feel that for many of our supporters this is their preferred method of giving. We hope it will encourage more donations and it is often the most cost-effective way to give." Wilson has been encouraged by results to date and expects to see a lot of growth in this area. "As people's propensity to transact online increases, it is logical that more and more of them will want to give to charity in this way. Supporters also realise that it can be much cheaper for us if they use the website rather than phoning or writing to us, and this will further increase the amount that is donated online."
CASE STUDY: MUSCULAR DYSTROPHY
The Muscular Dystrophy Campaign is one of many charities that are just beginning to explore the possibilities that e-giving can offer.
Lucy Vlam, the charity's special events co-ordinator, describes the campaign's activities in this area: "We direct individuals who compete in our events towards the events section of the Justgiving website.
"We promote it as a relatively easy way to fundraise, as all they have to do is personalise a template on the Justgiving website and then email all their contacts asking them for sponsorship. It's easy for both the person doing the event and the sponsor as it's all done online and there's no chasing outstanding money after the event.
"It works well for us because the money is donated directly from Justgiving into our account so we don't have to chase sponsors. The only possible downside is that it removes the personal touch of having someone ask for sponsorship and explaining the work of the charity. All in all though, it's a really good system and I believe its popularity will grow in the future."
The internet has the potential to deliver cost-effective fundraising, but it is not widely used by many charities. Alex Blyth finds out what they're missing out on.
Online giving is the most cost-effective way for a charity to raise money, believes James Grieve. But then, as marketing manager for Justgiving, a leading provider of online donation services to UK charities, he probably would.
Many disagree with him, and it is certainly the case that the reality of online giving has failed to live up to its early hype. However, almost all online activities have failed to live up to their initial surge of self-promotion, but some are now beginning to enjoy a tentative renaissance.
While some charities and consultants have written off online giving as a bubble that has burst, others believe that it is just coming of age, and that it has a great deal to offer the not-for-profit sector.
In December 2003, fundraising consultancy Sargeant Associates published the findings of its extensive research into how the charity sector is using the internet. It selected 120 charities from CAF's Top 500 and tried to donate £10 to them online- it found this to be remarkably difficult.
It was not possible to donate to seven of the organisations, and in one case they were unable to even notify the charity that its giving mechanism had failed, since the email address on the website was wrong and the receptionist at the charity was unsure who administered the site.
Of course, very few charities are this inept, but it is hard to disagree with the conclusion of the report's author Adrian Sargeant, professor of non-profit marketing at Bristol Business School: "There is little sign of an e-philanthropy revolution in the UK."
The prime problem is simply that most charity websites are intended to inform rather than fundraise. According to Sargeant, the average UK charity established its website in 1998, invested about £4,000 on development, spends around £2,500 a year on maintenance, and receives only £1,600 in online donations.
There is, of course, great variation within the sector, but many charities take the same position as VSO, Amnesty International, and Battersea Dogs Home, which all freely admit that they have so far done little in this area.
Michael Newsome, head of direct marketing at deafblind charity Sense, has been more active, researching the possibilities, but his findings have not encouraged him to take it any further.
"We did a fairly comprehensive review of options just over a year ago, and made a conscious decision that while there is a lot to online fundraising, we need to make sure that any medium we use is driven solely by building relationships with our supporters," he says. "With the exception of Justgiving, too many e-giving products are oversold and underpriced. Once you cost in the time spent developing communications, making changes to your website, and ruing opportunities lost while you read through huge jargon-ridden contracts that in fact net small amounts of money from a small number of people, you usually regret ever having started."
While the overall picture is not encouraging, there are a few signs that online donations may start to play a greater role in future charity fundraising.
Justgiving is widely cited as an example of what can be achieved for charities when the internet is used effectively. Set up in 2001, it is a private company that processes donations and reclaims tax online on behalf of charities. It pioneered the extremely successful 'events sponsorship' programme which enables charity supporters to collect donations through secure personalised mini-sites.
Donations through Justgiving have been growing 500 per cent year-on-year since 2001. In that year, £20,000 was donated through the site for the Flora London Marathon. In 2002, it handled £180,000, and last year £1.4m.
In 2003, more than 10,000 people created a personal fundraising page.
The site now works with around 500 charities, many of which actively promote the site to their supporters.
BMyCharity is another third-party donation site that is building a reputation for itself, while the better-known name, CAF, is also active in this area.
On its sites, GiveNow.org and AllAbout Giving.org, charities can add their details and CAF will gather donations through them on their behalf, reclaim the tax, and send it on to the charity.
CAF also offers a tailored e-fundraising service. Through this, the organisation helps charities to fundraise from their own websites through card payments and direct debits. In just over two years, CAF has raised more than £900,000 online and it believes that charities are starting to see the internet as an integral part of their fundraising strategy.
William Makower, chief executive of interactive marketing agency Panlogic, agrees that things are changing in the charity sector. "About a year ago, the UK was a long way behind the US in terms of online fundraising, but this has started to change," he says.
"With 'chugging' raising so many problems, and direct mail requiring ever greater input for the same returns, charities are turning to the internet as a fresh medium for fundraising. Once there, they're finding out that it has a lot of potential. We've run very successful campaigns for the Institute of Cancer Research and the WWF, and we're just launching one for the Red Cross."
Makower believes that interactive marketing agencies are increasingly keen to work with charities.
Charities, such as the NSPCC, are increasingly keen on online fundraising.
Currently, the children's charity receives 12 per cent of direct-marketing income online, and has a dedicated e-giving site, an email-marketing programme, and a supporter site on which it is possible to amend direct debit levels and update contact details.
Jessica Mannix, supporter strategy manager, says: "Online fundraising is a small area of fundraising, but one that will become more important to us. We are developing our technology so that we can track where a donation has come from, and we need to develop our use more fully. The internet is clearly useful for campaigning by email and for fundraising around disasters, but before long it'll be a key part of fundraising for every charity."
The potential benefits are indeed compelling. As Adam Rowe, charity services manager at CAF, points out, online fundraising is uniquely measurable and trackable. "If a charity is sending an email newsletter to its supporters, we can provide a unique donation link to allow the charity to monitor the number of donations resulting from that activity."
This sort of process allows charities to build more accurate donor group profiles and to alter mailing campaigns accordingly. Online fundraising also does away with problems of geography and provides an accessible route for many to give to charity.
"In the old days, it was difficult to get sponsorship for a charitable event," argues Justgiving's Grieve. "You could only get it from people you saw, your mate in Australia couldn't sign your form, and you had to spend months after the event chasing everyone up to get the money. By going online, all of these hassles have now been removed."
Others point out that online fundraising tends to attract the sort of donors that most charities want. Although the internet is now just as likely to appeal to the 'silver surfer' as it is to young people, it is nevertheless most widely used by the well-off and employed. Few people believe that online fundraising is more applicable to one type of charity than another, but most agree that it is a good way to reach potential supporters who are likely to have the funds, time and inclination to give to charity.
Despite all of these potential benefits, many charities are still concerned that internet forays will be costly, yet they can be surprisingly inexpensive.
Justgiving charges 5 per cent of the Gift Aid contribution, so every penny of the donation reaches the charity. Many interactive agencies are willing to design, build and host charity websites for free. Online fundraising need not be expensive. However, it can prove costly if it is done badly.
Makower points out the first common mistake. "Many organisations view online fundraising as a simple extension of off-line fundraising. They use the same agency, regardless of its online expertise and try to apply the same marketing principles as they would to poster advertising or a direct-mail campaign."
Access is all
There are many differences and charities must take this into account.
For instance, research indicates that, once a donor has reached a website, its accessibility has a greater bearing than the strength of the appeal has on visitors' propensity to give. So, the sort of emotional appeals commonly used in direct mail are unlikely to be appropriate to a website.
In the same way, many charities use direct mail to drive traffic to their websites, ignoring the potentially more effective route of email or even text-messaging.
There are potential pitfalls in online fundraising, but many potential benefits too. So, most observers advise charities to start investigating, but to do so with their eyes wide open and with the help of a trusted and informed adviser. The greatest risk is to ignore the area altogether.
Charities that refused to accept that fundraising could develop beyond the rattling of tins on Saturday mornings have struggled to raise funds in the age of direct mail, DRTV and outbound telephone fundraising. The same fate may well lie in wait for those who remain oblivious to the possibilities of online fundraising.