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Donors warm up to online giving

Giving topped $300 billion in 2007. A small but rising percentage of those gifts came via the Internet.

By Jane LampmanStaff Writer for The Christian Science Monitor / June 23, 2008

Scott Wallace – Staff

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The Web has radically changed the way we shop, conduct our finances, get our news, and participate in politics. And it’s changing the way we give.

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America is a giving nation: In 2007, for the first time in history, more than $300 billion dollars went to charities, according to the annual report of Giving USA Foundation released June 23. While online giving is a small percentage of that total, many signs suggest that e-philanthropy’s time has come.

Traditional means of fundraising – direct mail and telemarketing – are growing less effective and more expensive each year, according to the Chronicle of Philanthropy. Online fundraising in the United States has grown rapidly from $250 million in 2000 to an estimated $6.9 billion in 2006, according to the ePhilanthropy Foundation ($13.2 billion globally).

Not only is online giving favored by tech-savvy younger generations, but 51 percent of wealthy donors in a recent study said they prefer to give via the Internet. “The Wired Wealthy” study also revealed that 46 percent intend to make a greater percentage of their donations online in the next five years.

New websites and technologies that offer donors more immediate and personal forms of giving, including direct engagement with favorite causes and grass-roots projects, are mushrooming. And first gifts given online are 1-½ times larger than first gifts via mail; repeat gifts are also larger.

“The future of online giving is now,” says Garth Moore, managing director of interactive services for Changing our World, a philanthropic-services firm. “Despite the economic downturn, I think we are going to reach $10 billion in online donations by the end of this year.”

Weak economy dims giving picture
But there are clouds as well. Charities are worried about the impact of economic difficulties on overall donations for 2008. Charitable giving generally tracks with the economy, and the $306.4 billion total given in 2007 represents 2.2 percent of the nation’s gross domestic product.

In its annual survey of online fundraising by large charities, released this month, the Chronicle of Philanthropy said the charities continued “to rake in ever-larger amounts of donations,” but that the increases hadn’t been enough to offset declines in direct mail.

Still, some groups fared well. Heifer International, for instance, raised more than 28 percent of its donations online, and the United Way of America brought in $257.4 million via the Web.

The Internet also has been a boon for numerous small charities, providing a cost-effective way to reach people.

“It has opened up new channels for a lot of smaller nonprofits with limited budgets to actually make an impact – and may be one reason there are so many more nonprofits today,” Mr. Moore adds.

Innovative websites have helped boost the growth of giving globally. Kiva.org, a person-to-person microfinance site, enables individuals to become direct lenders to specific entrepreneurs in the developing world. UniversalGiving.org helps donors engage with projects in countries and causes of their choice – projects that have been carefully vetted for quality. “We don’t take any cut in your donation – 100 percent goes to that project,” says Pamela Hawley, founder of UniversalGiving.

The Web service has seen tremendous growth: 85 percent from the first quarter of 2006 to 2007, and 101 percent from the first quarter of 2007 to 2008. She attributes such growth to the “gift packets” they’ve introduced, such as $20 to help provide “a lifetime of clean water” for a family, or a similar amount for eyeglasses to “save the sight of a child.” People can also design their own packets, she adds, like the 10-year-old who is sending soccer balls to youths in Ethiopia.

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