Online donations increased in 2012

Online donations to nonprofits increased more than any other type of gift in the U.S. in 2012, according to a study from The Chronicle of Philanthropy. Between 2011 and 2012, among the 115,000 that used online donation services studied, giving rose 14 percent to reach $2.1 billion. Fundraising increased in large nonprofits as well.

Larger charities reached out to potential donors on the Internet in online advocacy forums or by sending direct mail to encourage individuals to make monthly gifts. However, despite the increase in online gifts, this source still accounts for a small portion of overall donations. Some organizations are attempting to maximize this source. For example, the American Lung Association reported 30 percent of its donations come from the Internet.

Some nonprofits reported perceiving online donations as the preferred platform among gift givers. Nearly three-quarters of charities said they're aiming to make online giving account for 10 percent of total donations in the next few years.

Online donations on the rise
In 2012, the average size of an online gift was $146, up from $132 in 2011, according to NP Engage. These donations tended to be larger than traditional fundraising gifts, especially compared to those acquired through direct mail.

Among different sectors, education institutions had the largest average online donation of $269. Online gifting also varied widely across seasons, with a spike in donations occurring in December. The average gift size more than doubled during the holiday season. Organizations should account for variations throughout the year and modify their online donation form ask amount during certain months.

Biggest challenge for nonprofits
Although online donations increased overall last year, organizations struggled to encourage repeat donors, The Chronicle said. In particular, international relief donations experienced a drop. Some charities are coping with this by encouraging donors to make quarterly or monthly gifts. Six organizations surveyed reported half of their online revenue came from donors who committed to monthly gifts.

"You talk to any nonprofit organization that relies on fundraising, and they'll tell you online monthly giving is the most reliable giving," said Scott Nilsen, vice president for development services at Young Life, a Christian charity that serves teenagers. "They're the least likely ones to stop giving."

The Internet gives nonprofits a way to reach new donors and expand awareness. Some organizations encouraged people to ask their friends and family to donate to the cause, and allowing donors to give online can make payments easier. Organizations can gain more fundraising revenue from online donations.

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