Charities Spent 4¢ On Advertising For Each $1 Raised Online

April 20, 2016       Mark Hrywna      

Nonprofits are spending an average of 4 cents on digital advertising for every $1 raised online last year and almost 70 percent of those advertising budgets were devoted to lead generation and new donor acquisition.

The 10th annual M+R Benchmarks Study, dubbed “Benchmarks X” and released today, examines 2015 data from 105 organizations across eight subsectors of the nonprofit industry and is compiled by digital consulting firm M+R in partnership with the Nonprofit Technology Network (NTEN). The study analyzed more than 2.8 billion email messages sent to more than 69 list subscribers; $481 million in online donations from more than 13 million online gifts, and 8.2 million advocacy actions.

Overall, a nonprofit that generated online revenue of $1 million last year spent an average of $40,000 on search, banners, branding, and the like.

The highest spending was found among the wildlife/animal welfare group, 14 cents for every $1 raised; environmental, 9 cents; and, rights groups, 8 cents. Not surprisingly, nonprofits with large email lists (more than 500,000) spent the most, at 13 cents per dollar raised, far more than medium organizations, 2 cents, and small organizations (less than 100,000), 1 cent.

“How much to spend is only the first decision a nonprofit must make,” the study’s authors noted. “Just as important is the second question: what to spend that budget on.” The share of digital advertising budgets was dominated by lead generation (38 percent), new donor acquisition (31 percent), and paid search advertising (23 percent).

The study also reveals the increasing growth of monthly online revenue, up 24 percent last year compared with 18 percent for one-time giving. Email revenue was up 25 percent and overall online revenue increased 19 percent. Despite continued growth in recent years, online fundraising revenue still generally checks in at less than 10 percent of all fundraising revenue across the sector, according to most studies.

The numbers are essentially reversed for international sector organizations, with just a 10 percent increase in monthly revenue but 47 percent growth in one-time revenue. The reason for that is likely because international giving tends to be traced to high-profile humanitarian crises. In 2015, news coverage of the Syrian refugee crisis and the Nepal earthquake probably drove one-time giving to groups addressing those situations.

Monthly giving accounts for 17 percent of all online revenue among the survey participants. Only about half of those surveyed even had a recurring giving program a decade ago. Overall, 13 percent of online gifts were made from mobile devices, likely reflecting both user preference, as well as increasing adoption of mobile optimization by nonprofits.

The average monthly gift was $23 overall but highest among education groups at $44 and health organizations, $34. Below the average were cultural and environmental, both at $18, and wildlife/animal welfare, $20.

The average one-time gift was $92 overall with five subsectors averaging more than $100:

  • $266, education;
  • $137, international;
  • $122, health;
  • $118, cultural; and,
  • $102, hunger/poverty.

Open rates, click-through rates, and response rates continue to fall for all types of messages. Email lists grew by 14 percent last year and nonprofits are sending more fundraising messages. Growth was a little slower than the 16 percent in each of the previous two years. List size was up for all sectors, ranging from 4 percent among rights groups to 23 percent in environmental.

The average advocacy response rate was 2.1 percent, down 11 percent from 2014, and the average fundraising response rate was 0.06 percent, down 8 percent.
Almost two-thirds of respondents send a least one dedicated welcome message to new subscribers and the most common welcome series (49 percent) included three messages.

A welcome series has at least one message where the primary ask is fundraising is most common among those that send three or more messages in the series — 89 percent, compared with just 11 percent for a series that contains one or two messages. Other engagement, such as a survey, social share, etc., was equally as common (about 62 percent) regardless of the number of messages in the welcome series.

Groups in the study lost an average of 11.8 percent of subscribers by the end of 2015, with 6.2 percent from unsubscribes and 5.6 percent a result of hard bounces.

For organizations that tracked list changes from 2014 to 2015, churn rates were down more than 75 percent year-over-year. Every group that was able to provide data saw churn decline by at least 25 percent, which the study’s authors attributed to more sophisticated sorting tools, such as Gmail’s Promotions tab. “It’s easier for a subscriber to manage incoming nonprofit messages without unsubscribing due to overload.”

Nonprofits also are keeping inactive users out of the bulk of their messages, to keep response rates high and spam scores low. On average, about 24 percent of subscribers are considered inactive. Sending fewer messages to this audience will tend to keep both hard bounces and unsubscribes low.

For every 1,000 fundraising messages delivered, the average organization raised $44. The cultural sector raised the most by far, $149, followed by rights and international groups, with $97 and $80, respectively.

Website visitors per month increased 8 percent last year and on average, 1.1 percent of website visitors made a donation. The conversion rate was highest for international groups at 2.9 percent and lowest for environmental, 0.6 percent. For a nonprofit’s main donation page, the page conversion rate was an average 15 percent.

Of the average 49 email messages sent by nonprofits, last year, 19 were fundraising appeals, 12 were advocacy, and 9 were newsletters.

Among the top 25 groups with the largest year-over-year growth in total dollars raised online, email is an increasingly bigger part of online fundraising. Some 34 percent of all online revenue for those groups can be tracked directly to an email appeal compared with an average of 27 percent overall.

For every 1,000 email subscribers, nonprofits have 355 Facebook fans, 132 Twitter followers, and 19 Instagram followers.

Cultural groups was the only sector to have a larger audience in a social media channel than on email, with 1,639 Facebook fans for every 1,000 email subscribers.

Organizations posted to Facebook an average of 1.3 times per day and tweet an average 3.8 times per day. Cultural groups were the most active on Twitter, averaging 7.7 Tweets per day. On Facebook, rights and wildlife/animal welfare groups were busiest, averaging two posts per day.

Average engagement rates on social media varied. On Facebook, the average was 5.4 percent compared with 1.6 percent on Twitter.

Download the full study for free at www.mrbenchmarks.com

Editor’s note: The original version of this story was modified to clarify the average percentage spent by organizations on advertising as compared to online revenue.