Connection Café: Is Online Fundraising Immune from the Credit Crunch?

	Is Online Fundraising Immune from the Credit Crunch?
	Posted by at Dec 11, 2008 06:50 PM CST Categories: Fundraising, Nonprofit Trends

Spend any time on Progressive Exchange or any of the other major nonprofit message boards the past few weeks and you can’t go two threads without tripping over another post asking how the economy is impacting fundraising. Depending on whom you ask the answer is somewhere between, “it’s not that bad” and “the sky is falling.”

To try and answer this question M+R came out this week with a paper studying the economic impact on online fundraising. You can read the entire article here. The short version is that for September and October, 5 really large nonprofits (Easter Seals, Habitat for Humanity International, National MS Society, Oxfam America, and The Wilderness Society) raised 20% more online than in the previous year. While that is a good initial indicator, the critical time for drawing conclusions will be in the next few weeks as most nonprofits raise 30-40% of their total online giving for the year in November and December time period.

Assuming M+R's results about online giving hold true, how is it that online continues to grow while other forms of fundraising have declined? M+R’s hypothesis focuses on the demographics of online donors. Younger donors are more likely to give online, to be comfortable making transaction via credit cards, and during these past few months, less likely to have watched considerable wealth evaporate before their eyes than their older donor counterparts. I’m not sure if I fully agree with that or not, but as theories go it’s as good as any other. Regardless it got me thinking. I wonder if the other shoe is about to drop on nonprofits whose bread and butter donors are the young, fabulous, and over-extended?

The headlines of the past several months have made phrase “credit-crunch” a household word. The news has focused mainly on the rising number of homeowners whose mortgages are either in or about to go into default. This has definitely depressed the prices of homes in almost every area of the country. Without consumer’s home equity to draw from to pay the bills, many experts believe that the next wave of defaults may very well be in credit cards as consumers look for other ways to make ends meet. The problem for online giving is that it is dependent on credit cards to make the transaction work. You can imagine the chilling effect these defaults will have on online giving as more and more consumer’s default on their cards. Even people who historically carry a relatively small balance relative to their credit-limit may not be immune. As credit card companies scramble to limit their risk to a rising tide of defaults, card issuers may reduce consumers’ credit lines in an attempt to limit their own risk. How willing will a donor with a recently reduced credit limit be to continuing their monthly support of your organization?

The bottom line is that regardless of what September and October looked like for your organization the economic crisis is far from over and the variety of ways that it will impact your organization, staff, volunteers, service recipients and constituents remains to be seen. It is possible that the unprecedented actions of our Federal Reserve will reduce or eliminate this crisis before it spills over out of banks and mortgages and into credit cards. Or maybe it won’t. Without any historical context, we’ll just have to wait and see.

Is Online Fundraising Immune from the Credit Crunch?

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