Double-digit response: Obama's campaign did it, when will you?(FUNDRAISING)

While online giving continues to grow at double-digit rates, it still represents a small percentage of overall giving for most organizations. Online giving represents as much as 11 percent of revenue for a few organizations. But, those are organizations that are actively engaged in online programs. For most organizations, the total online revenue is much, much less.

Direct mail is still the workhorse in fundraising, but the trends are troubling. The days of relying on traditional single channel direct mail and telephone for fundraising are quickly nearing an end. Consider some recently-reported facts:

* According to the latest Target Analytics Quarterly Index of National Fundraising Performance, the number of donors of the more than 70 national charities tracked in the survey fell a median 3 percent from 2007 to 2008. Donors have been declining consistently for the past three years. The index has not experienced positive year-to-year donor growth since the 2005 hurricanes.

* Donor declines are due primarily to declines in new donor numbers, which fell 6.9 percent from 2007 to 2008, after a drop of 4.4 percent the previous year.

* The United States Postal Service's (USPS) financial condition continued to deteriorate during the first five months of fiscal year 2009. And, the USPS expects its financial condition will continue deteriorating for the rest of the fiscal year. USPS's updated fiscal year 2009 projections suggest the magnitude of the challenges it faces. USPS projects mail volume will decline by a record 22.7 billion pieces (11.2 percent), creating a record $6.4 billion net loss that will be even greater if not for $5.9 billion in cost cutting it hopes to achieve.

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In addition, USPS projects its financial difficulties will continue in fiscal year 2010 and result in an even greater cash shortfall. Given the growing gap between revenues and expenses, USPS's business model and its ability to remain self-financing might be in jeopardy.

Change is happening so fast that business as usual will no longer suffice as an acceptable growth strategy. It took 71 years for the telephone to reach 50 percent of the U.S. households, but it only took four years for the iPod to get past the front door

Fundraisers have been profiling traditional, direct mail generated charitable donors for decades and the age has remained relatively stable at 65 and older. While this is unlikely to change in the near future for most organizations, the method of giving for the new generation of donors (i.e., the Baby Boomers) will change. Baby Boomers have very different values and beliefs from their parents that will influence which organizations they support and how they do it. It is vital to offer channel choices for this generation so they can give when and how they choose, not just when they receive a direct mail piece.

Direct mail fundraising is moving in the direction of the catalog industry. In the old days--as in 2000--90 percent of catalog orders were placed by mailing the order form. Today, just nine years later, that number is less than 5 percent. Catalogs are still snail mailed, but the customer responds through other channels. That same shift will be seen in the nonprofit industry during the next 10 years.

An early example of this change is the Obama fundraising machine, which achieved unprecedented success. Here are some specific facts:

* The organization sent 1 billion emails;

* It acquired 3.9 million donors; and,

* It captured 13 million email addresses.

While the campaign raised a record $730 million, the truly amazing number was that 50 percent of the total giving was generated online.

At some point in the future, off-line direct marketing efforts and online giving will each comprise 50 percent of total direct response revenue. Today, that average is estimated at 11 percent. John Greco, president of the Direct Marketing Association (DMA), has predicted that this intersection will occur around 2013 in the for-profit sector. Based on an analysis of current trends, the nonprofit sector can expect to achieve this in 2016.

But, it will only happen for organizations that aggressively engage supporters online. According to research from the Nielsen Norman Group, there are significant deficiencies in nonprofit organizations' Web site content, which often fails to provide the information people need to make donation decisions.

In fact, most online initiatives don't even get the basics right. Nonprofit managers need to develop specific strategies that address these questions about their online efforts. Such as:

* Is there integration with offline initiatives?

* Does our Web site effectively capture and grow the email database?

* Is our site optimized for search?

* Is our mission and how contributions are used clearly stated on the home page?

* Is it easy to donate?

Getting the basics right means developing strategies and measurable objectives for each of these questions.

Digital media is growing in importance, direct mail trends are concerning, and today's donors are responding in different ways. Direct mail will have a significant role for years to come, but the method of response is going to change rapidly.

Focus on innovation and remaining relevant to your supporters and you will thrive in this new and exciting fundraising environment.

Chip Grizzard is chief executive officer of Grizzard in Altanta. His email is cbip.grizzard@grizzard.com

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