Online Benchmarking 2019

M+R recently released its Online Benchmarks Study 2019, with lots to inform how we move forward with online fundraising. This year’s study consisted of 135 non-profits, including five Avalon clients (National Museum of the American Indian, National Air and Space Museum, Monterey Bay Aquarium, National Geographic Society, and the National Parks Conservation Association).

M+R breaks the study participants and findings up across seven sectors (including cultural, environmental, hunger/poverty, animal welfare, etc.) and then by organizational size (small, medium, and large)—although its definition of size has changed this year: in prior years, it looked at the size of a nonprofit’s email list to determine size; now it looks at revenue raised.

Some of the takeaways that stood out to me:

Overall

• Online revenue for nonprofits grew by just 1% last year— the first time in 13 years of the study that the average revenue growth is in the single digits. In 2017, reported 23% growth.
• After years of steady increases in online revenue, including record-breaking 2016 and 2017 gains for many nonprofits, 2018 showed a sudden flattening. Why? The working theory is that after year-end campaigns and the presidential election at the end of 2016, and the resulting fundraising boon to many nonprofits, coupled with the tax law, 2017 was an outlier year for online fundraising. Going into 2018 and beyond, nonprofits were unable to maintain that record-breaking growth and we have returned to a more normal pace. If the theory holds up, we would expect to see a return to previous growth in 2019.
• One of the bright spots reported in this study is that revenue from recurring gifts increased by 17% and now accounts for 16% of all online revenue, up from 13% in 2017. This is likely the result of both supporter preferences and nonprofit strategy.
• These numbers as a whole are complicated though, and they’re not due to any one factor, but rather a combination of influences. And looking at the top-line numbers alone masks some interesting findings. In addition to looking at the overall numbers, it’s important to delve deeper into the individual revenue categories to get a better sense of where we’re seeing significant changes in the digital channel.

Social Media

• The vast majority of Facebook revenue in 2018 came via the Facebook Fundraisers tool—which is peer-to-peer fundraising. This accounted for about 99% of all nonprofit revenue processed on Facebook, with the most revenue coming in November. This makes sense, considering the fact that Giving Tuesday fell in November in 2018
• What’s exciting about these numbers is that it’s becoming more clear that nonprofits now have more opportunities to increase revenue, which is especially important as other digital channels are flattening out.

Email Fundraising

• Email revenue decreased by 8% in 2018. It still accounts for 13% of all online giving, but it’s becoming clear that it’s getting harder to raise money through email.
• The open rate was 14%, CTR: 0.44%, Response rate: 0.06%.
• With email inboxes becoming even more crowded (nonprofits reported sending 4% more fundraising messages than in 2017), it’s become increasingly important to focus on monthly giving, which continues to increase. We’re pushing many of our clients to pursue a monthly-first strategy as a way to secure a steady source of revenue.

Digital Advertising

• Nonprofits finding email fundraising more challenging are turning to digital advertising to reach new audiences. Digital ad budgets grew by 144% in 2018, which follows what we’re seeing with some of our clients, who are definitely becoming more and more interested in ads.
• About 55% of nonprofit ad budgets were dedicated to direct fundraising, with an additional 23% going to lead generation and advocacy. And 21% went to branding, awareness, and education campaigns.
• When we break down where nonprofits are placing fundraising ads, most organizations are spending the most on display advertising—those banner ads you see at the top of websites. And social media is the next biggest bucket.
• M+R follows with lots of numbers on the return on ad spends—but we’re taking these figures with a grain of salt, because the picture is complicated by serious issues with gift attribution that the industry at large continues to struggle with.
• Additionally, the return on ad spend numbers don’t capture the long-term value of a donor, who might make additional gifts beyond the immediate donation. And they also don’t capture whether that donor is new to your organization or not- key metrics that Avalon tracks to validate investments across channels.

Mobile Device Fundraising

• In 2018, mobile devices accounted for 48%—almost half—of traffic (an increase of 15%). But note that mobile devices only account for 30% of gifts and 21% of revenue.
• Not only are people more likely to make a gift on their desktop, those gifts are likely to be much higher—$53 higher! And the conversion rate on a mobile device is 12% lower compared to desktop. So just getting mobile users to land on a donation page isn’t enough—we have more work to do to make sure they complete their transaction.

The 2018 numbers show that online fundraising rides the ups and downs of current events, and is maddeningly unpredictable. Will it ever be the panacea that some had hoped—reaching large, targeted audiences at a low cost? To find out, we continue to test and push out campaigns when the timing is right and our audiences are targeted and primed to act. But we also must keep moving forward with new techniques and new audiences to ensure we are engaging supporters where they are.