The rise of e-philanthropy

Electronic donations have been possible through the widespread use of Internet technology. Trends in the not-for-profit fund raising industry are similar to the music industry. Music industry’s mainstream revenue stream now comes from online selling rather than from traditional music stores [Anderson, 2006]. This disruptive change that transformed the music industry, may be seen in the not-for profit fund raising industry very soon.

Tapping into this change, many charity organizations has been into online charity products lately. However these organizations raises significant amount of funds through the traditional givings like events and charity shows than its online donations. Thus the traditional offline products such as events and charity shows act as a substitute to their online products. However the online products have capability to produce economies of scale as they have access to larger audience. Just as it happened in the music industry, it may be assumed that e-philanthropy will raise more funds in future than the traditional givings. Thus, these organizations should configure its online offering to create a totally new market for itself. They should understand the value involved in traditional givings and add those values to the online products combined with the advantages of online donations.

The advantage of online donation products is that they replace time and resource consuming practices those are involved in the traditional givings. According an article by Journal of Strategic E-Commerce, there is a different set of performance attributes of online donation products than the traditional one. Online donations provide more trust and privacy to donors while traditional givings are more participating, involving and established [Lee, Berniker, Wyhe & Johnson, 2005].



The above figure plots value curve for online products versus its own substitute, its traditional method. The figure also plots the ideal value curve.

The traditional givings often involves high level of participation and involvement. Traditional givings have been used since long and are proven approaches. It also involves one to one interactions and thus has a “human touch” that increases the emotional value of traditional products. As traditional processes involve paper trails they are relatively slow and has high cost per transaction.

The current online products of most charity organizations lack substantial participation and involvement. Including online chartrooms and message boards and harnessing the power of online communities into the marketing strategy may increase participation and mass involvement. Participating in websites like iVillage.com would definitely increase the visibility of organizations in online events. The organization also lacks online presence on websites such as Justgive.org and NetworkForGood.com that facilitates one to many interactions. “Blogs” are new way for Internet marketing. The organizations should use these upcoming tools to create visibility and increase participation. This would pull the participation element of “Current Online” to the “Ideal Online”, as shown in the above figure.

Many organizations currently share information though weekly newsletters, which are emailed to donors. These newsletters are one to all and do not distinguish donors on any parameters such as donated amount or age of the donor. An article by William McLeRoy from Fort Worth Business Press reveals that donors may like to know more than they are currently being told by the organizations. Many new companies such as www.guidestar.com have evolved that analyses nonprofit's charitable status. Association with such a company can open another channel of information sharing with donors.

Adding emotional value to online products has been a challenge. Current online products lack emotional value and human touch. To increase the human touch, an “Online Relationship Methodology” should be implemented that should connect the organization donors on regular basis, create a “healthy dialogue” and “interaction” and “appeal”. Emailing emotional videos and stories at regular interval to donors can do this.

Implementation of above recommendations might lead to a slight increase in cost per transaction for the organizations, however cost per transaction of the consumer should still be low as shown in the figure. Harnessing the power of the Internet and implementation a totally new business model for online products will help charity organizations to prepare for future competitions, that will supposedly on online offerings.

© 2008 Awaneesh Shatmanyu

References:
[Anderson, 2006] from book “The Long Tail” authored by Chris Anderson publication in year 2006

[Lee, Berniker, Wyhe & Johnson, 2005] from article “e-commerce disruptive innovations in charity and non-profit fund raising” by Chung-Shing Lee, Eli Berniker, Glenn Van Wyhe and Kenneth J. Johnson and Pacific Lutheran University