Mar/Apr 2009

Going Against the Grain – Benchmark Study Indicates Online Growth Despite Economy

by Quinn Donovan, Analytics Manager, Convioand Vinay Bhagat, Founder & CSO, Convio

The Chinese have an ancient saying, “May you live in interesting times.” We are not sure if the events facing many nonprofits and their constituents in 2008 were what they had in mind. A presidential election, several major natural disasters around the world, a tightening of donor’s purse strings in response to unprecedented economic actions, financial scandals, and the accompanying loss of wealth for many individual and corporate donors all played a role in what will probably be remembered as the most interesting financial year in our lifetime. 

Despite the chaos of the last several months, the Convio Online Marketing Nonprofit Benchmark Index™ Study indicates that online engagement — whether it is fundraising, advocacy or building a constituent database — continues to see positive growth even in a down economy.

For the third year in a row, Convio has conducted the annual study to allow nonprofit marketers and fundraisers to evaluate themselves against their peers and develop strategies to maintain and/or improve performance. Each year, the data set has grown, and this year’s results come from nearly 600 clients representing millions of online interactions and transactions from Convio’s Software-as-a-Service (SaaS) system. The study aggregates the results into benchmarks that nonprofit organizations can compare against the industry as a whole, as well as 14 nonprofit industry subgroups, or verticals.

New in this year’s study are two new verticals providing a comparison for Team Events and Jewish organizations, as well as an in-depth look into the fourth quarter that analyzes the impact the economy had on year-end nonprofit performance. Although many nonprofits are experiencing negative growth via traditional channels, the online channel is playing a vital role in complementing offline strategies to acquire new supporters and nurture constituent relationships. For many organizations online remains a growth engine.

Key findings of the study include: 

• Positive Year-Over-Year Growth in All Areas of Online Success – Web traffic grew at a 20 percent rate and email file growth was 28 percent year-over-year. Generally speaking, these results bode well for many organizations; the larger an organization’s communication reach, the more constituents who are available to help them achieve their goals, whether that is raising more money, mobilizing more advocates, or simply increasing awareness.
• Increase in Number of Gifts Driving Robust Online Revenue Growth – Despite a challenging economy by end of year, a robust 14 percent growth in online revenue was achieved. For the first quarter through the third quarter, the growth rate was 18 percent.  Revenue growth was fueled by an increase in the number of gifts nonprofit organizations received in 2008. The impact that the economy had on the average gift was felt in the fourth quarter. The fact that we are seeing more donors, even though the sizes of the gifts are flat is still promising for the future. Organizations must focus efforts on stewardship and engagement so that these individuals remain committed as we come out of the economic downturn.
• Special Consideration: Fourth Quarter 2008 – Overall nonprofits experienced a three percent growth in online revenue in the fourth quarter of 2008 compared to an 18 percent gain for the first quarter through the third quarter. While the economy had a significant impact, the efficiency and effectiveness of the online channel compared favorably to other channels with many groups reporting a decline in fourth quarter direct mail giving.
• Large Organizations Outperformed Smaller Organizations – Large organizations seem to be faring better in the recession as seen by the fact that they raised  seven times more money on average during the entire year and 11 times that of smaller organizations during the fourth quarter of 2008. This is not to say that smaller organizations are not seeing growth and a solid return on investment, but rather the strong brand, resources and higher levels of sophistication in online marketing techniques of the larger organizations are an advantage in a bad economy.

From this data, we hope that nonprofits can gauge their performance, better determine what strategies will work well for the future, and better position themselves for success as we come out of the economic downturn. We’ll be sharing more about this in-depth study on the Connection Café blog, as well as hosting webinars on the highlights and implications of this year’s report. By downloading the executive summary of the study, you’ll be invited to the webinar in the coming weeks.