The Real Costs of Online Fundraising

Come on, you know there’s no such thing as a free donation.

September 2008 By Steve Kehrli

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What are the real costs of e-philanthropy? Coming from a direct-mail background, my experience has taught me that every, single component has a specific return on investment and is measured for value. Unfortunately, the words “return on investment” ring hollow in many development conference rooms these days. If one more person says, “Just send an e-mail — it doesn’t cost anything,” I’ll scream. Wake up and smell my energy drink — it costs plenty.

As I started to pull my notes together for this article, I went to what was safe — let’s see — five costs that every fundraiser needs to consider for e-philanthropy. The list was obvious, quick and yet painful to make.

1. A powerful e-commerce platform fully integrated with your database of record.
2. A creative team that can create copy that sings, images that move and video that streams.
3. A production department that inherently knows Gmail still sucks and needs to standardize its e-mail rendering.
4. A list of online prospects that not only agree to talk to you but to also, eventually, send you money.
5. And finally, consultants and analysis that provide actionable recommendations.

Then I started to talk to colleagues at other nonprofits and realized there are so many other hidden costs that are more interesting to dive into than what was on this list. Don’t get me wrong — each one of these pillars of your e-mail program deserves its very own article. The amount of resources I have seen groups put toward an online platform, consultants, writers, artists, third-party list buys and back-end analysis is amazing.

But that’s all expected — and it’s what makes a solid foundation to any program. Here, then, are the five (other) costs you really need to consider as part of your online endeavors:

Correspondence
At the point you’re pushing “send” on your latest e-mail campaign or e-newsletter, have you thought through to the next thing that happens other than the much anticipated donation?

What about the hundreds of e-mail inquiries that well-intentioned donors will send back? Did you think through the fact that you’re going to want to reply to these valued donors with something more than a form letter?

Did you really know that Bernice in St. Cloud was that connected and that you are now her only resource at the organization to talk to? Your correspondence team is a hidden cost to your online fundraising efforts. Its thoughtful replies are going to make Bernice remember that you care — and that you’re more than just another open hand looking for a year-end donation. What your correspondence team members say and do is critical for the future of your organization. Do not skimp on this resource or talent — factor it in!

Staff training
So, you listened to the sales pitch and decided you really had to buy that new e-mail platform that can do all those amazing things. But did you really expect Suzie to jump ship a month later to go on that personal quest she secretly waited for her entire life? Now you have a fancy platform, and you’ve spent your training dollars on a person who’s currently walking with a stick through the north of England.

To get the most out of what you pay for, do not be shortsighted with the training. Get that replacement off to training — yesterday! While you’re at it, send two other people as well — one from marketing and one from major gifts. They’ll come back with a broader experience and appreciation for what it takes to run an e-campaign, and you’ll have the makings of a Plan B.

Even if you’ve had that platform for a while, plan with your existing staff members. Have them write standard operating procedures for everything they do, and then take the time to read each one and ask questions. Keep a directory of these SOPs, and update them regularly.

Staff development
This goes hand in hand with training. Well, sort of. You have Jim. He’s brilliant at what he does with your Web site, but he still believes that message boards are going to overtake e-mail soon as the preferred method of donor communication.

Do not waste another minute! Sign him up for a Nonprofit Technology Network conference and a couple Direct Marketing Association Nonprofit Federation conferences. Seriously … you must get these people out from behind the screen and get them networking with their peers. Who knows? It might create a little healthy competition both internally and externally.

But don’t stop there. Have them come back from the conferences and lead a development/marketing team meeting to share what they’ve learned.

Marketing budgets
Do whatever it takes to get your marketing team versed in the cost of bringing on a new donor. Ask what they need to get your site or blog ranking moved up 10 percent to 25 percent — then help them find the investment dollars to make it happen. It will return generously in your future development efforts.

Research and development
Finally, you should consider a cost for the hours you’ll spend learning and growing. The salesperson who has the latest and greatest Web plug-in/feature/tool that promises to revolutionize fundraising as we know it today will come knocking. You’re going to want to peek behind the curtain and see what he’s talking about, so factor in the cost of your time. Do it now by budgeting a few hours a month for R&D time for these new projects. And remember that your time is money!

What an exciting journey we’re on with our online fundraising programs. Every day we’re out there innovating and helping our donors find purpose and fulfillment while strengthening our causes. The opportunities and challenges we face are intense in the online medium, and they take hidden resources that make it clear there are no free donations.

I would love to hear any additions you might have to this list. Send an e-mail to stevek@peta.org and tell me your favorites. Oh, and how you measure these investments — that’s a whole different article. FS

Steve Kehrli is development director at PETA.

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