Local Government Innovation & Redesign

To support local government redesign efforts and recognize the innovative work already underway, the Public and Nonprofit Leadership Center has partnered with state associations to create the Local Government Innovation & Redesign Guide and host a yearly Local Government Innovations Awards ceremony.

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Easy come, easy go

A newly issued report on online giving describes the challenges that some organizations face in acquiring and retaining donors online. Over a three-year period (2006-2008), the authors analyzed giving data from a nationally representative sample of large nonprofits.

This key finding caught my eye:

"Online donors give larger gifts and, as a result, have a higher overall long-term value than donors to more traditional giving channels like direct mail, but they are less loyal in terms of repeat giving. Higher average gifts mask the lower retention rates of online donors, which may present an opportunity for improvement at many organizations." (emphasis mine)

But electronic giving is so easy! In fact, one of the purported advantages of engaging donors electronically is that regular, repeated gifts can be automated. "Set it and forget it" (apologies to Ron Popeil)--e.g. the very successful efforts of Thrivent Financial and partners, among others.

There are surely many plausible explanations for this somewhat counter-intuitive finding. I'd offer one that may hold more generalizable lessons for organizations seeking to engage stakeholders online.

At the risk of over-simplification, consider this finding through a collective action lens. In some sense, philanthropic contributions to an organization are an expression of collective action--the pursuit of a goal by a set of people. Collective actions have start-up costs--both to the organizing body and to the prospective member. Fixed costs of giving (time and opportunity costs, envelopes, stamps, etc.) can be reduced by offering donors a way to contribute online. Reducing these entry costs may attract a wider population of donors. However, one must not overestimate donors’ true commitment. Minimally engaged contributors may not commit significant additional resources to the organization beyond their initial “joining-up” gift.

To be fair, it's not all gloom and doom for first-time online givers. The report notes that:

"...although offline donors do not generally migrate to online giving, online donors do migrate to offline channels in large numbers. In addition, online donors tend to downgrade when they move offline, further evidence that online donors are not cultivated to their full potential."

Easy come, easy go? I'm not quite sure how else to make sense of this at first glance. How do you interpret these findings?

Download the full report here.

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