Online Fundraising

What does it mean?

Successful online fundraising is a combination of targeting the right donors who have Internet access with the right pitch so they will be motivated to make a contribution to your organization.

Providing a quick and easy way to accept contributions online via a credit card is a tool that facilitates donations, it does not replace the need for identifying your audience and persuading them to give to your cause. So in addition to an "Internet Presence" strategy, you are looking for the underlying functionality for a donor to enter their contact and credit card information into a secure Web-based donation form, and have that information securely transmitted to you.

There are essentially three different strategies you can use to implement online fundraising:

(1) Online Donation Portal

A donation portal Web site typically provides information about many different nonprofit organizations. Web visitors can select their favorite charity and make a donation online using their credit card. The Donation Portal processes the transaction, acknowledges the gift, and forwards the money along with a report including donor information to the nonprofit organization. The main advantages for nonprofits are that it requires a minimal investment in time, staff, or technology to experiment. Helping.org and Just Give are two of the better known portals, and you find a large list and reviews here.

(2) Online Fundraising ASP

A fundraising ASP is a vendor who will "rent" you the software to manage the entire back-end of your donations, bank processing, and record-keeping. The first generation of donation ASP services only offered secure web pages where donors could record donation information, including credit card details, which would be passed along to the nonprofit for processing as a regular donation. Many of the online donation ASPs have extended their services to include processing of the credit card information, so that the nonprofit receives a monthly sum deposited to their merchant account, without all of the processing overhead (that'sincluded in the fee or percentage cut taken by the ASP). The latest trend in online donation ASPs has been to add donor analysis and management tools that can perform many of the functions of sophisticated donor management software programs. You find a complete list of vendors and reviews here.

(3) Build Your Own

While this option enables your organization to have complete control of the transaction process, it requires a substantial investment of time, money, and expertise. There are two components to building your own donation processing system: 1) The capacity to receive credit card information via a secure Web page and 2) The capacity to authorize the credit card transaction and deposit it to your bank account based on that information. This approach is best for organization that have a fairly large fundraising effort, have the technology expertise in-house, and have explored and tested different fundraising efforts.

Whatever method you take, you'll need to also think about the legal issues and getting a merchant's account if you don't already have one.

Other Considerations

A number of states have laws that require nonprofits to register as a professional solicitor in order to solicit donations. These laws could apply to online solicitations. You should consult with your own legal advisor as about the need for and how to register your organization. You can learn more details in this FAQ as well as get the most recent update from About.Com.

If your organization can already handle credit card transactions, you don't need to acquire a merchant account before you launch your online fundraising campaign. If you want to be able to offer your "offline" donors the same convenient payment options as online donations, you will need one. According the OneNorthWest's "Sorting out the Chaos," if your organization is likely to generate at least $100/month in credit card activity, setting up merchant account independent of any online fundraising efforts you undertake should be part of your planning.

Why is it important?

Online fundraising is still in the early stages of development. With new vendors appearing and disappearing and no available "consumer reports" type research, the challenge for development officers is to become knowledgeable consumers. Technologically savvy nonprofit arts organizations that thoughtfully explore the tools will be better positioned to be successful online fundraisers in the future.

Resources

OneNorthWest: Sorting Out the Chaos

A Primer on Online Fundraising for Nonprofit Organizations
by Michael Stein

Helping.Org has a collection of links and resources about online fundraising.

Npower: Cybergifts, what we've learned, and what is ahead. Presentation by Michael Benecke from Npower.

Reflections

Is your organization ready to do online fundraising? How can you organization get ready?
What approach do you think is most appropriate for your organization?
What research do you need to do as part of your planning process?

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