Today, online giving has come into its own, a phenomenon underscored by the events of September 11, 2001 and now the unprecedented surge in activity triggered by the recent tsunamis in South Asia. Shortly after the tsunami destruction began on December 26, 2004, word of the tragedy spread quickly via the Internet. The online community, including news websites, bloggers and other Internet cognoscenti, moved quickly to provide updates on the recovery and relief effort, and to help a stunned world supply much-needed support to the region.

Online giving figured prominently into these efforts. The American Red Cross (ARC) alone reports that nearly 37% of the $228 million raised in its tsunami campaign came via the Internet—more than 12 times the funds it collected online for the entire year of 2004. Notwithstanding this targeted surge of support via the Web, an ARC spokesperson says online giving is generally on the rise at the ARC.

This upward trend is reflected nationally. According to a recent survey by The NonProfit Times, online giving grew by more than 60% from 2002 to 2003. Although the 2004 survey has not yet been conducted, Paul Clolery, editor-in-chief of The NonProfit Times, says there is "every indication" that online giving will continue to grow apace.

In fact, online giving is finally fulfilling its promise. Today, Internet philanthropy is convenient, fast and secure, and it’s helping nonprofits overcome a thorny issue: unfulfilled pledges.

The Ease of Online Giving
Experts say donors like giving online because it's convenient and allows them to see where their money is going. It also provides a degree of financial transparency. Charities benefit by cutting high costs associated with traditional methods like direct mail, and by the data-tracking capabilities the Internet allows. The Web also facilitates better communication by allowing individuals to subscribe or unsubscribe at any time and, in some cases, to select the topics that interest them.

But perhaps the biggest advantage of online donations is the high rate of pledge fulfillment. This has been an ongoing problem in the philanthropy world, especially for disaster-related fundraising. For example, while donors pledged $1.1 billion to help the people of the Iranian city of Bam after it was destroyed by an earthquake in 2003, the Iranian government reports that it has only received $17.5 million. Mozambique received less than half of the $400 million that was pledged to help people after the floods of 2000.

Harry E. Gruber, President, CEO and Chairman of Kintera, a San Diego-based firm that provides Web-based technology to nonprofits and community foundations around the country, has had firsthand experience with increased pledge fulfillment. Within two to three years of launching "Friends Asking Friends," a Kintera program that allows walk-a-thon and bike-a-thon volunteers to solicit donations through their own personalized Web pages, 80% of pledges were coming from the Internet—and charities were collecting the money in advance of the events.

"The money seems very sticky," Gruber says. "People get an emotional benefit from the immediacy of giving online. It's addictive when it's done well."

Indeed, a number of organizations that offer online giving as an option have seen gifts increase. In its 2003 giving survey, the Association of Fundraising Professionals found that 46% of respondents used online solicitations, and 61% of those organizations indicated that they had raised more funds online in 2003 than in 2002.

Kintera reports that, among its clients, over 99% of online donations are collected by the receiving charity. "It eliminates the problem of unfulfilled pledges," says John Hartman, vice president of client services for Kintera. "[Online giving] has brought nonprofits into the real-time world."

The Rise of Online Giving
When did the Internet become such a force in fundraising? Gruber says the movement got its start when Sen. John McCain (R-AZ) raised $3-$5 million online for his 2000 presidential bid.
"No one had seen that before," says Gruber. "John McCain demonstrated to the world that, given the right issue, someone would donate [online]."

More recently, Vermont governor Howard Dean used the power of the Internet to campaign for the Democratic Party’s presidential nomination in 2004. Dean raised $3.6 million online, almost half of the $7.5 million raised by online and offline campaigning efforts.

McCain's success inspired Gruber, who went to work on Friends Asking Friends. He says that volunteers are less shy about asking for money via "Friends", and donors tend to be more generous. The result: more donors and higher pledges.

The real turning point for online philanthropic giving happened after the September 11 terrorist attacks. "There's George Bush saying 'you need to help,'" Gruber says, "'and you need to donate online and here are some websites.'"

Americans answered the call, and the overwhelming support for 9-11 families was a watershed event for online giving. Online donations totaled $200 million. Since then, charities have taken cues from Internet giants such as Amazon and Yahoo!, which tailor content and product offerings to the unique desires and spending habits of individual consumers.

This set the stage for the outpouring of online support for South Asia's tsunami victims, which to date is estimated at $350 million worldwide. Many of the organizations collecting funds for tsunami relief are finding a large percentage of pledges are being made online. Save the Children, CARE USA and Oxfam America are reporting that 31%, 40%, and 80%, respectively, of total tsunami gifts have come to them via the Internet.

Community Foundations and Tsunami Relief
Soon after news of the tsunamis reached U.S. shores, community foundations across the country were fielding calls from people who wanted to help. One of the first foundations to post a tsunami relief link on its website was the Peninsula Community Foundation (PCF) in San Mateo, Calif.

"Immediately, we thought we were going to put up some links to resources on our website," says Ash McNeely, Vice President of Philanthropic Services at PCF.

But as donors expressed a desire for more guidance on how and where to give, the PCF staff decided to go a step further by establishing a fund that would allow donors to transfer funds from their donor advised funds online into a relief fund that would benefit organizations selected by PCF. McNeely says the Foundation chose organizations that already had a presence in the area, were nondenominational, and were addressing both short- and long-term needs. To date, PCF has distributed $380,000 from 100 donors.

"The key value we added for our donors is that we provided a level of oversight," McNeely says. "I couldn't have dreamed that it would have had such a profound response."

The Future of Online Giving
While experts agree that online giving will continue to increase, the Internet will not likely replace other forms of fundraising altogether, but will be used as part of an overall strategy.

One challenge charities will face is how to expand their modest online success into the area of large gifts, which are rarely transacted over the Internet.

"Major gifts are about relationships," says Robert Ashcraft, Director for Arizona State University's Center for Nonprofit Leadership and Management. "They're about building relationships over time. There has to be trust and confidence attached to the technology. And there's not enough history to tell if that's there yet."

Copyright 2005, Community Foundations of America