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For Nonprofits, Web Is a Windfall

Still searching for organizations that have actually made money on the Web? Look no further than the nonprofit sector.

A surge in online donations left tech-savvy charities with a combined windfall of tens of millions of dollars last year, according to data released by two Internet services firms this week.

By Amit Asaravala

Story location: http://www.wired.com/news/business/0,1367,62201,00.html

The figures suggest that charities without a Web presence could be missing out on much-needed funds during the economy’s slowest recovery in 60 years.

"2003 was a watershed year," said Convio CEO Gene Austin. "More and more people are getting online and that’s enabling nonprofits to make more money to give to their causes."

Convio, http://www.convio.com/site/PageServer which provides software and services to nonprofit and educational organizations, announced http://www.convio.com/site/News2?page=NewsArticle&id=2600935&news_iv_ctrl=1164 Thursday that it had processed $40 million in online donations for its clients in 2003 — a tenfold increase over its 2002 figures.

Earlier in the week, San Diego-based competitor Kintera said http://www.kintera.org/site/pp.asp?c=9qLQKYNGE&b=6442 it had processed $53 million in 2003, a sixfold increase from the year before.

Convio and Kintera serve some of America’s most prominent nonprofits, including Mothers Against Drunk Driving on Convio’s side, and the American Red Cross on Kintera’s.

While a portion of each company’s transactions can be attributed to new clients, Austin said existing clients were responsible for as much as 70 percent of Convio’s increase — an indicator that the volume of online donations did in fact rise significantly from 2002 to 2003.

A possible reason for the surge is that the populations likely to donate are becoming more and more Web savvy.

"Clients are starting to see the demographics change," said Austin. "College grads want to be talked to over the Web. And the fastest-growing segment of Internet users is the 55-and-older crowd, a group that traditionally donates the most."

One of the organizations that benefited the most from groups such as these was the Jewish National Fund, which raised more than $1 million via the Web last year.

In comparison, the organization raised $663,000 online in 2002 and just $325,000 in 2001.

"To not have a Web presence in today’s world is ridiculous," said CEO Russell Robinson. "Our website has helped us reach 57,000 new donors over the past two or three years. We had no idea who these people were until then."

Other organizations that fared exceptionally well in 2003 include the American Society for the Prevention of Cruelty to Animals and presidential hopeful Howard Dean’s Dean for America.

The ASPCA increased its online revenues by 110 percent while the Dean for America campaign brought in a whopping $11 million during a six-month period, according to Convio.

Such results have made many in the nonprofit-services industry bullish about the future of online donations.

"With the Internet playing such an important role in everyone’s life, online giving will become more the norm," said Kintera CEO and chairman Harry Gruber in a statement.

"Over $241 billion in total donations were given in 2002," said Gruber. "We estimate that more than $1 billion of those donations were made online, and that is just the tip of the iceberg."

It’s unclear just how much of that iceberg lies under the water, however.

For instance, Robinson points out that, of the $42 million that the Jewish National Fund plans to raise annually by 2008, only 10 percent is likely to come from online donations. "It’s not going to be a major part of our fund-raising," he said.

"E-philanthropy is never going to replace face-to-face solicitation," added Howard Horowitz, the Jewish National Fund’s marketing director.

Still, both executives agree that even a 10 percent increase in donations is well worth the cost of having a Web presence.

That’s money the organization wouldn’t have had access to otherwise, Robinson said. It’s an argument that few nonprofits have the luxury to ignore.

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