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eCommerce companies helping nonprofits raise money

March 15, 2005

Eighty nine percent of American households give to charity and each year more of that giving is coming from online donations, according to Network for Good, the largest nonprofit processor of online donations.

Founded in 2001 by the Time Warner Foundation and AOL, Inc.; the Cisco Foundation and Cisco Systems, Inc.; and Yahoo! Inc., Network for Good, which is an independent 501(c)(3) nonprofit organization, is also helping smaller charities get in the game.

More than two-thirds of donations made through Network for Good are for charities with budgets of less than $5 million, according to a joint study by Network for Good and The Urban Institute, an economic and social policy research organization based in Washington, D.C. In fact, about a third of the donations are to charities with budgets of less than $500,000.

"The Internet and organizations like Network for Good are leveling the playing field for smaller nonprofits," says Network for Good CEO Bill Strathmann.

He ought to know. Since its inception in 2001, Network for Good has distributed more than $45 million in donations to more than 15,000 nonprofits and also matched more than 150,000 volunteers with thousands of nonprofit organizations nationwide.

To make small to mid-size nonprofits e-commerce ready, Network for Good provides the tools for them to receive donations online.

"We provide a button or a link that they can download from our site. Free," explains Strathmann. "There's no subscription fee. There's no setup fee.

The only cost associated with this link that they pasted onto their own Web site, which enabled them to receive donations through Network for Good, is a three percent transaction fee that covers credit card expenses, VeriSign, and check processing fees, which is comparable to the credit card fees they'd pay anyway because we have a discount with the credit card companies."

For example, if someone wanted to make a donation either through the Network for Good site or a charity with a Network for Good "Donate Now" button, he would simply click on the button and fill out the necessary information online. If the contributor makes an online donation of $100 using a credit card, Network for Good processes the whole transaction and sends a check or an electronic funds transfer for $97.

"We take it out for them," explains Strathmann. "Then the donor receives a receipt from Network for Good, itemizing the donation."

Network for Good sends each charity an email notification when they receive a donation, and provides members with an administrative tool that allows them to go in and see where a donation came from, so they can send follow-ups.

To make the donation process even easier for small and mid-size nonprofits, Network for Good is rolling out several new services in the summer of 2005, including providing a starter Web site for organizations that don't have a Web site already; offering tools that will allow members to proactively engage donors, such as e-newsletters and e-announcements; and giving members the ability to post wish lists for specific items.

"What we're trying to do is three things for nonprofits," says Strathmann. "We're trying to get them to adopt online fundraising tools, because they are low cost and more efficient than other fundraising mechanisms. We're trying to increase their performance, which is where the tools that we're releasing for 2005 come in. And then the last piece is exposure, exposing them to a larger group of donors, through some of the partnerships we have with AOL and Yahoo! and others."

So how effective are these e-commerce organizations at raising awareness - and money - for the charitable organizations that use their services?

"We've seen significant year-over-year increases for organizations that are doing online donations and/or online registration with us," says Active Giving's Mark Kuusik. "Over the past year we've seen, in terms of fundraising campaigns, a 235% increase. Organizations are really increasing the revenue they take in as they are starting to effectively integrate online registration with their fundraising and donations efforts."

Adds president Ronald Pruitt: "Since 2001, if you total up all the revenue generated from all of our clients through systems that we built under the model, they've generated more than a million dollars. That's a good return on investment."

Source: eCommerce Guide

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