Communication technology is rapidly advancing, bringing with it more and more consumers who choose to shop and conduct their business online. Statistics show that almost half of all Canadians now use the Internet and more than 3 million have purchased something online. The business sector continues to capitalize on this potential source of revenue, and in recent years charities have also turned to the Internet, hoping to attract online donors. However, many organizations fail to realize that online fundraising must be tied into the overall fundraising strategy, otherwise it will not succeed. Simply adding a ‘donate now’ button to a charity’s web site is not online fundraising, any more than having a phone number is telemarketing or having an address is direct mail.

Build a solid foundation

Online fundraising involves a three-tiered strategy: e-mail information, online transactions, and program extensions, such as discussion groups. E-mail provides the foundation for a successful online strategy. If you aren’t collecting e-mail addresses yet, start. It’s fast, cheap, and ubiquitous. Once you have collected some addresses, start communicating with your most important audience via e-mail. Regular communication helps to build your credibility and your ‘brand’. Use simple technology (no attachments, no HTML) and focus on genuinely useful content rather than always asking for a gift. This is an important first step before moving on to the second tier, and something that many organizations don’t spend enough time on.

You must also accept the fact that you can’t be everything to everyone, so try to determine what your organization wants to achieve with its online strategy. A few questions to consider:

• Who are your three most important audiences (donors, volunteers, board members?)
• Do these audiences use the Internet?
• What do they want from your organization? (information about programs, financial accountability, location/contact information)
• What do you want them to do? (donate, contact the organization)
• What kind of online transactions do you need/they want? (credit card donation processing, pledges, auctions, membership registration)

Remember that people don’t surf online – they hunt. Are you offering what they are hunting for? They probably aren’t online simply looking to give money away. It’s about relationship building and the old maxim still applies: people who know more about you will give more, and more often. Wherever possible, give people the information they want in the manner they want, and be consistent.

Consider your options when setting up online transactions

Once you identify your target Internet audience and build an e-mail relationship with some of your potential donors, you will be ready to move to the second tier: setting up online transactions. When doing so, there are three main donation processing options to consider. The first is setting something up in-house. This is a huge undertaking, which requires a high degree of technological expertise and which can cost hundreds of thousands of dollars. While it does have some advantages, unless you expect to generate a few million dollars a year in online donations it is not really feasible for most organizations.

The second option is to use a portal, such as Charity.ca or Canadahelps.org. In this case, the portal company does all of the ‘behind the scenes’ work of processing the donation and then forwards it to your organization. It is an easy and inexpensive (often free) way for a charity to get started in online fundraising but it doesn’t allow the organization to interact with, or learn more about its donors, nor does it allow donors to learn more about the organization, thereby making it difficult to build a relationship with your online donors.

Finally, you can sign on with an application service provider (ASP), which for a fee, allows an organization to access software online rather than buying it (very expensive) or developing it in-house (more expensive). A similar analogy would be subscribing to voicemail rather than buying an answering machine. The ASP handles the back-end technology while the organization customizes the online interface according to its needs and the information it wants to convey to potential donors.

What you need to be ‘ready’ for an ASP

When you are ready – and that’s a big ‘when’ – service providers can have your online transactions capabilities up and running in as little as four hours, though the normal window is about two weeks. However, before you approach an ASP you must have several things in place:

• Sufficient technology – high speed Internet connection and appropriate hardware/software.
• Clear data collection objectives – both front-end collection and back-end reports.
• A list of customization needs for the user interface – logos, text, campaign options, etc.
• Credit card merchant account (if necessary).
• Requirements for donor database integration (if necessary).
• Charitable tax receipt numbers – if using online receipt issuing.

When your organization is sufficiently prepared and you begin to shop around for an ASP there are several important factors to keep in mind.

1. Product capabilities and features. Does the application only process donations or is it capable of donor management, auctions, receipting, etc. Does it integrate with existing applications? How often is the product being revised or upgraded?
2. Supplier qualifications. How many clients does the ASP currently have and who are they? Does the ASP understand the nonprofit sector? How are staff involved with the sector? Who is on their management team and who are their financial backers?
3. Supplier trust. What are the ASP’s privacy policies concerning the charity and its donors? Is customer information shared with other companies? Is the data read by ASP staff?
4. Security and data protection. How secure is the system? How often is data backed up? Are back ups stored offsite? Will additional security be needed on the organization’s computers?
5. Contract issues. How are services priced – per user/per transaction, per user/per month? What services are included? What is the length of the contract? Are there penalties for cancelling?
6. Training and support. Do you offer around the clock support? What is the average response time? What kind of up-front training is provided? What kind of online help or training is available?
7. Exit issues. What are the exit options if the charity is not happy with the service? What data will they receive when they leave? What is the process for transferring data to another service?

The most important thing to remember is to integrate your online strategy into your overall fundraising plan and focus first on audience needs and building donors. Finally, stop waiting for online fundraising to arrive ª it’s already here!

Based on a presentation by Maggie Leithead, president of CharityVillage, at the 2002 Alberta Fundraising Conference. For more information e-mail maggie@charityvillage.com.