the blackbaud index of online giving

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ContentsThe Blackbaud Index of Online

Giving . . . . . . . . . . . . . . . . . . . . . . .1

Analysis by Nick Allen . . . . . . . . . . .2

The Blackbaud Index of Online

Giving — Large Organizations . . . .3


Giving — Medium Organizations . .3


Giving — Small Organizations . . . .4

A Closer Look at The Blackbaud

Index of Charitable Giving and The

Blackbaud Index of Online Giving . .5

How Will the Indices Change Over

Time? . . . . . . . . . . . . . . . . . . . . . . .6

The Blackbaud Index of Online GivingBy Steve MacLaughlin, Director of Internet Solutions, Blackbaud

Welcome to the first edition of The Blackbaud Index of Online Giving, a counterpart to The Blackbaud Index of Charitable Giving that was launched in June, 2010. The growth and importance of online giving makes this Index a valuable resource for organizations across the entire nonprofit sector. The Index represents the largest and most diverse regular analysis of online giving trends available today.

The Blackbaud Index of Online Giving is comprised of 1,787 nonprofits representing close to $400 million in 12-month online revenue. The Index is based on actual revenue statistics from nonprofit organizations using a variety of fundraising systems, both from Blackbaud and other vendors. It is reported as a three-month rolling average to smooth out month-over-month fluctuations in fundraising revenue that frequently occur in the nonprofit sector.

The 23% increase in the May findings in the chart below cover March, April, and May 2010, compared to the same time period in 2009. Disaster relief giving is one such spike that the Index attempts to smooth out while still accounting for the impact of significant events. The 230% increase for the three months ending March 2010 compared to the same period in 2009 illustrates the impact of online giving towards the Haitian earthquake relief efforts.

The Blackbaud Index of Online Giving represents 1,787 organizations with $399 million in 12-month online revenue. The chart represents the change in revenue for the three months ending in May 2010, as compared to the same period in 2009.

A tremendous amount of work has gone into building the analysis model for the Index and making sure the data meets strict requirements. This includes collecting more than 12 months

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The Blackbaud Index of Online GivingJuly, 2010

“Blackbaud has been engaged

with supporting online giving for

nonprofits for more than a decade

now . The Blackbaud Index of Online

Giving is the next step in sharing

trends and insights into what is

happening in the nonprofit sector .”

— Steve MacLaughlin Director of Internet Solutions

Blackbaud


June July August September October November December January February March April May-30%

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The Blackbaud Index of Online Giving

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of online giving data with no gaps, checking and rechecking for anomalies, classifying each organization by sector using the National Taxonomy of Exempt Entities (NTEE) code, matching and retrieving reported total revenue information, and applying statistical expertise to create a three-month rolling average.

Now, for the first time, you have the ability to get up-to-date information about online giving trends on a monthly basis. We will continue to add organizations to the Index over time and do include adjustments to gifts. As a result, you may find that Index values change slightly from month to month, as we obtain newly-adjusted data from each organization.

One important aspect of the Index is a breakdown by the size of the organization. Organizations are grouped into three categories: total annual revenue less than $1 million, total annual revenue between $1 million and $10 million, and total annual revenue exceeding $10 million. This is based on recorded revenue in their fundraising systems, reported revenue in IRS Form 990 data, and matching done through the National Center for Charitable Statistics.

Blackbaud used the Index data from the past year to look at percentage of total fundraising revenue that came from online giving. We looked at total giving for almost 1,400 organizations of varied size and found that, on average, online revenue accounted for 5.7% of their overall fundraising revenue. What was more interesting was that small-sized organizations had 7.3% of total revenue come from online giving. Mid-sized nonprofits were at 7.0%, and larger organizations were slightly below the average at 5.1%.

This helps to illustrate the growing importance of online giving as part of an organization’s overall fundraising strategy. These small- and mid-sized organizations are finding it to be not only a more cost effective channel, but also a preferred choice among a growing number of younger donors. Larger organizations with well-developed direct marketing programs have traditionally been the leaders in online giving. The sector analysis is showing that organizations typically focused on major gift fundraising are increasing their use of online giving to support annual fund programs.

Blackbaud has been engaged with supporting online giving for nonprofits for more than a decade now. The Blackbaud Index of Online Giving is the next step in sharing trends and insights into what is happening in the nonprofit sector. Over time, the Index will continue to grow, and we will use it as a basis for more in-depth analysis and trend reporting. We welcome your feedback and questions to help improve the Index and its value to nonprofit professionals.

Analysis by Nick Allen, Chief Strategy Officer, Donordigital

The 23% increase in online fundraising revenue revealed by the first edition of the new Blackbaud Index of Online Giving provides some good news in a generally dismal fundraising time.

The Index of Online Giving shows a 23% increase in March to May 2010 revenue over the same period in 2009 across the 1,787 organizations tracked, with large organizations (revenue over $10 million) showing a 28% increase.


Steve MacLaughlinSteve MacLaughlin is the director

of Internet solutions at Blackbaud

and is responsible for leading

how the company provides online

solutions for its clients . He has

spent more than 14 years building

successful online initiatives with a

broad range of Fortune 500 firms,

government and educational

institutions, and nonprofit

organizations . Steve serves on the

Nonprofit Technology Network

(NTEN) Board of Directors and

supports its focus on both the

growth and professionalism of

the nonprofit technology field as

well as building knowledge and

information sharing capacity

throughout the sector . Steve’s

thoughts on leveraging the

Internet were published in the

book People to People Fundraising:

Social Networking and Web 2.0 for

Charities, and most recently in

Internet Management for Nonprofits:

Strategies, Tools and Trade Secrets .

Steve earned both his BA and

a Master of Science degree in

Interactive Media from Indiana

University .

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The Blackbaud Index of Online Giving — Large Organizations represents 422 organizations with combined online revenue of $278 million. The chart represents the change in revenue for the three months ending in May 2010, as compared to the same period in 2009.

Smaller groups also increased their online revenue, but not as much, with a 21% increase for medium-sized organizations, and 13% for small groups.

The Blackbaud Index of Online Giving — Medium Organizations represents 727 organizations with combined online revenue of $94 million. The chart represents the change in revenue for the three months ending in May 2010, as compared to the same period in 2009.


“The 23% increase in online

fundraising revenue revealed by the

first edition of the new Blackbaud

Index of Online Giving provides

some good news in a generally

dismal fundraising time .”

— Nick Allen Chief Strategy Officer

Donordigital


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The Blackbaud Index of Online Giving — Large Organizations


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The Blackbaud Index of Online Giving — Medium Organizations

466 .7%

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The Blackbaud Index of Online Giving — Small Organizations represents 638 organizations with combined online revenue of $26 million. The chart represents the change in revenue for the three months ending in May 2010, as compared to the same period in 2009.

What’s more, while this March-May data reflects an upsurge in online giving probably triggered by the outpouring of online gifts for Haiti, most of the Haiti donations came in January and February. The massive outpouring of donations for Haiti caused a 467% increase in large organization revenue for the earlier January-March 2010 period compared to the same time last year.

So what does this mean for fundraisers and senior management? First, invest in building your online fundraising program because it can grow much faster than your mail/phone program, even in a poor economy. Your online program acquires higher value donors, and it attracts some of those younger donors you’re seeking, typically the 35-to-50-year-olds. While online fundraisers have not done a good job in making acquisition ROI data as transparent as it is in mail programs, going online is clearly a good investment. Acquisition gifts are typically twice as high or more than mail gifts, and lifetime value is much higher, too. And every Haiti-type disaster and “Idol Gives Back” promotion drives millions more Americans to get a taste of online (and now maybe mobile) giving. Facebook® is next!

There is also some additional new data from other Blackbaud analysis showing that retention of online-acquired donors is almost as good as retention for mail-acquired donors. While most organizations have seen a drop in average gifts both online and offline due to the recession and consumer anxieties, as well as increased difficulty in mail acquisition, online acquisition has continued to grow as a percentage of new donors for many organizations (especially large ones with a strong brand and high level of investment in building their online programs). For the 14 organizations that convened last month for the Target Analytics donorCentrics™ Internet Benchmarking group, online acquisition in calendar year 2009 accounted for a median of 9% of new donors, though some groups recruited 20% or more of their new donors online. The online donors joined with a gift two or three times higher than new mail-acquired donors! First-year


Nick AllenNick Allen is founder and chief

strategy officer of Donordigital,

which helps organizations build and

manage large online fundraising

and advocacy programs . Nick Allen

was co-editor of the first book

on online fundraising and leads

workshops for the DMA, the AFP,

and the International Fundraising

Conference in the Netherlands .

Nick has 25 years of experience in

building nonprofit organizations,

raising money, organizing, and

media and public relations . He has

worked as executive director (and

founder) of Neighbor to Neighbor,

and Washington director of the

Fenton Communications public

interest PR firm .


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online donor retention was 22%, compared to 30% for direct mail donors. While there is still a gap, the retention rate for online donors is improving.

Visit www.blackbaud.com/blackbaudindex for monthly updates on The Blackbaud Index of Charitable Giving and The Blackbaud Index of Online Giving.

A Message from Chuck Longfield, Chief Scientist, Blackbaud

a closer look at the blackbaud index of charitable giving and the blackbaud index of online giving

Each month, we draw actual revenue statistics from the databases of thousands of participating organizations using a variety of fundraising systems to determine how much revenue was raised in the prior month. We include revenue from all sources of fundraising activities: direct mail, telemarketing, face-to-face fundraising, email, online giving, mobile giving, small- and large-scale events, and major and deferred giving. We do not include the unfulfilled portion of pledge gifts, but we do include the donated value of in-kind and stock gifts. We include giving from individuals, corporations, and foundations, but do not include giving by individuals or corporations to private and community foundations or other intermediaries. To include these gifts would double count the revenue when those organizations subsequently make grants to other nonprofits. We do not currently exclude the value of goods and services provided in exchange for gifts (e.g., the cost of premiums) but hope to in the future. And lastly, we do include adjustments made to gifts (e.g., bounced checks and refunds) to provide a more accurate accounting of real revenues. As a result, you may find that indices’ values change slightly from month to month, as we obtain newly-adjusted data from each organization.

Each organization is then categorized by one of eight sectors using its National Taxonomy of Exempt Entities — or NTEE code — as reported on its 990 tax return. These sectors are Arts, Culture, and Humanities; Education; Environment and Animals; Healthcare; Human Services; International Affairs; Public and Society Benefit; and Religion. Religious organizations are currently excluded from the Blackbaud Index of Online Giving, as we don’t believe the data set we have for this group is representative at this time.

We report both indices as a three-month moving average of year-over-year percent changes in revenue. What exactly does this mean? Each month, we add up all of the revenue for the prior three months and compare this total to the same three months one year earlier to calculate the annual percent change. Why do this? Many organizations have big campaigns (events or mailings) that occur at roughly the same time each year. However, if an event was in late April one year but early May the next, the change in monthly revenue might be significant, while the change in revenue over a three month period might actually be the same. An index based on a moving average is less sensitive to these small timing issues and will serve as a more practical decision-making tool. However, one downside to a moving average is that the “smoother” index will dampen large fluctuations caused, for example, by disaster relief giving.

We also adjust the indices to be representative of the nonprofit industry, by size of organization and by industry sector. There are nearly two million nonprofits in the United States, and we didn’t want the indices to be skewed by organizations or sectors where Blackbaud had greater representation. Using the 990 data, we determined the relative representation of fundraising


Chuck Longfield Chuck Longfield became

Blackbaud’s chief scientist in

January 2007 and is the founder of

Target Software, Inc . and Target

Analysis Group, Inc . Chuck has

extensive experience designing

and implementing national as

well as international constituency

databases that address the

fundraising information needs

at many of the world’s largest

nonprofit organizations . Prior to

founding the Target companies in

1992, Chuck taught math to middle

and high school students . He was

honored by FundRaising Success in

2007 with a lifetime achievement

award for his contribution to

the nonprofit sector . He holds a

BA in mathematics and an MEd

from Harvard University and has

more than 25 years of experience

helping nonprofits automate their

fundraising operations .

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© July 2010, Blackbaud, Inc .

This white paper is for informational purposes

only . Blackbaud makes no warranties, expressed or

implied, in this summary . The information contained

in this document represents the current view of

Blackbaud, Inc ., on the items discussed as of the date

of this publication .

All Blackbaud product names appearing herein are

trademarks or registered trademarks of Blackbaud,

Inc . The names of actual companies and products

mentioned herein may be the trademarks of their

respective owners .

About BlackbaudBlackbaud is the leading global provider

of software and services designed

specifically for nonprofit organizations,

enabling them to improve operational

efficiency, build strong relationships,

and raise more money to support

their missions . Approximately 22,000

organizations use one or more

Blackbaud products and services for

fundraising, constituent relationship

management, financial management,

website management, direct marketing,

education administration, ticketing,

business intelligence, prospect research,

consulting, and analytics . Since 1981,

Blackbaud’s sole focus and expertise

has been partnering with nonprofits

and providing them the solutions they

need to make a difference in their

local communities and worldwide .

Headquartered in the United States,

Blackbaud also has operations in

Australia, Canada, Hong Kong, the

Netherlands, and the United Kingdom .

For more information about Blackbaud

solutions, contact a Blackbaud account

representative . In the United States and

Canada, call toll-free 800 .443 .9441 . In

Europe, call +44 (0) 141 575 0000 . Visit

us on the web at www .blackbaud .com .

revenue by size and sector and adjusted our results accordingly. As such, the resulting indices will be more representative of both specific sectors and the industry as a whole.

how will the indices change over time?

As mentioned above, we will adjust the indices monthly to reflect updated data. Similarly, we will adjust the indices as new organizations join in or others drop out. Over the coming year, we plan to release additional indices. Along with the launch of The Blackbaud Index of Charitable Giving and The Blackbaud Index of Online Giving, we are also releasing additional data that segments organizations by size. After all, the trends in giving at a small nonprofit that raises $100,000 a year may very well differ from one that raises $100,000,000 a year, even if they are in the same sector. And we hope to produce separate indices for each sector, as well as for various channels. Knowing how an organization compares to similar cohorts by size, mission, techniques, or other shared attributes can be invaluable when trying to determine if it was strategy, implementation, economies of scale, or donor behavior that drove results.

I’m sure many of you who share my passion for the nonprofit sector will have great ideas for other directions in which we can take these indices. My team and I look forward to your suggestions and hope you find these initial indices useful.

Please share your feedback at bbindex@blackbaud .com .

the blackbaud index of online giving

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