3 truths and 1 lie about online donors

New data from Target Analytics, a division of Blackbaud, reveals key insights into online donors. The findings are based on analysis of online and offline giving data from 16 large national nonprofits in the United States during 2016 and represents more than 6.5 million donors. These organizations participate in a donorCentrics Internet Benchmarking Group.

The giving data examines demographic and donation data for donors that only gave online, donors that only gave offline, and donors that made both online and offline gifts in 2016. What emerges is a clearer picture about online donors, and there is an opportunity to separate fact from fiction.

Truth: Online donors are younger

During 2016, 45 percent of donors giving only online were younger than 55 years old compared to just 21 percent of offline donors. By comparison, only 29 percent of online-only donors were 65 or older while 58 percent of offline-only donors are represented in these age brackets. Consider for a moment that according to Target Analytics, the average age of a U.S. donor in 2016 was 62 years old. What about millennials? Approximately 14 percent of online-only donors were millennials compared to 6 percent of offline-only donors in 2016. We also know from the data that donors giving online only gave more than their offline only counterparts at every age level.

 This is not to say that “older” donors don’t give online. This is a shadow belief among many nonprofits that believe their donors won’t make online donations. More than half of online donors are 55 years or older. Seventy percent of donors that give online and offline are also 55 years or older. The good news from all of this is that online donors help to bring the average age of a nonprofit’s donor base down, but it can still be a very viable channel for older donors too.

Truth: Online donors have higher incomes

The data analysis reveals that online-only donors tend to have higher household incomes than offline-only donors. Approximately 42 percent of online-only donors had household incomes over $100,000 in 2016 compared to 28 percent of offline-only donors. Once again, we need to take into consideration multichannel donors. Thirty-five percent of donors with household incomes above $100,000 made online and offline donations in 2016.

While it is true that online donors have higher incomes, it is important to distinguish income from assets. We know that a significant number of donors 65 years and older live on fixed incomes but have higher asset levels than younger donors. This tends to skew income comparisons with older donors across giving channels. These older donors may have lower household incomes that influence giving from disposable income, but their assets play a larger role in planned and major giving.

Truth: Online donors are less loyal

Online donors are younger and have higher incomes, but they are less loyal than offline-only donors. (Two out of three isn’t bad.) First-year donor retention rates for online donors are significantly lower than those of offline-only donors. Donors who were new in 2015 and made only offline gifts have higher first-year retention rates at every age group than online-only donors. Even millennials who gave offline only had dramatically higher first-year retention rate compared to their digital native counterparts.

The sharp drop in first-year retention rates in online-only donors is something Target Analytics has observed for more than a decade now. It’s a trend that often has more questions than answers. Are online-only donors inherently less loyal or does it have more to do with the stewardship they receive compared to offline donors? Do fragmented online giving experiences result in lower retention rates? The visible difference in retention rates probably has more to do with nonprofits pretending online donors are different than offline donors in the first place.

Lie: Online donors are better than offline donors

This might sound true, until you actually look at the data. But nonprofits need to be careful not to confuse the channel of engagement with the channel of the transaction. Online versus offline is a false choice. The reality is that a successful donor engagement strategy involves both online and offline giving. The ideal donor is engaged through a multichannel approach.

Nearly seven years ago, I wrote that “Single Channel Communication is Dead” and yet many nonprofits are still chasing online zombies. In 2010, first-year retention for multichannel donors was 51 percent compared to 30 percent for offline donors and 22 percent for online donors. Since then, the retention rate of multichannel donors has increased another 10 percent, while both online and offline have remained about the same. The best donors are those that give through both channels – not one or the other.

The demographics of online donors are very encouraging, but the retention rates should give everyone in the nonprofit sector some pause. It’s an expensive and vicious cycle to acquire new online donors only to lose 70 percent to 80 percent of them in a year. A focus on donor engagement, stewardship and retention should make use of multiple channels.

It has been nearly 20 years since the first online gifts began flowing to nonprofit organizations. In that time, online giving has grown tremendously. But nonprofits also need to consider that less than 10 percent of all giving happens online. The transition from offline to online is likely to be more glacial than tidal. Giving on mobile devices is certainly accelerating this transition. Armed with the right data, nonprofits can make better decisions about both their online and offline donor engagement strategies.