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Their accustomed fundraising wells running dry, cash-parched nonprofits are making an exodus to the web — and online fundraising startups are seeing a boom in business.
Until last fall’s fiscal crisis, the biggest obstacle to cMarket Inc.’s customer-acquisition efforts was a sense of complacency among risk-averse nonprofit organizations that make up its client base, said Jon Carson, CEO and chairman at the 6-year-old online benefit auction provider.
“What’s happened is, the complacency has been drained out of the system and has been replaced by fear,” he said. “Everyone understands if they don’t do something different this year, they’re not going to replicate last year’s numbers.”
Two other Boston-area startups are seeing the same trend. Somerville-based Firstgiving Inc. provides support for personal online fundraising pages used in events such as marathons or winter cold-water plunges. Cambridge-based Good2gether Inc., a nonprofit advertising company, places contextual fundraising ads in online news outlets.
Going digital
For 20 years, the Hopkinton Parent-Teacher Association has depended on a spring auction to raise its annual budget of $50,000 to $60,000 to support extra programs and materials for the town’s public schools. This year, the organizers saw the writing on the wall, said PTA member Pattie Hunt Sinacole: The live auction alone wasn’t going to cut it.
“It’s a tough market for fundraising,” she said. A donor who in past years reliably put up a $500 auction item this year may be limited to a $200 item. “They’re saying, ‘We can’t do the whole Red Sox package, but we can do a pair of tickets,’ ” Sinacole said.
So for the first time they added an online component to their annual event, through cMarket, which will contribute items donated from corporate sponsors and will expose the Hopkinton PTA auction to a wider audience. Sinacole said she’s hoping the association will do better this year than it has in the past.
Of course, cMarket takes a cut — a $595 upfront fee plus up to 9 percent of the online auction proceeds. But Carson said cMarket’s customers are raising funds far above what they could without the online service.
Firstgiving takes a more modest share — 5 percent of donations, plus credit card processing charges. After the ninth annual Santa Speedo Run used Firstgiving last December for the first time, organizer Jonathan Ianelli said he felt the funds raised were well worth the fees.
In the past, organizers had taken donations for the event by hand. This year, its first online, the number of runners in the one-mile, costumed Back Bay dash rose from 400 to 600, but donations doubled — from $90,000 in 2007 to $180,000 in 2008.
“Before we even ran the run, we had raised over $100,000,” said Ianelli, who every year organizes the event to benefit a different Boston-area charity that works with children. The 2008 event benefited Cradles to Crayons.
Events like the Santa Speedo Run are Firstgiving’s bread and butter, said COO Frank Days. Other customers include polar plunges run by local Special Olympics chapters, and nonprofits that raise funds through runners in the Boston Marathon. Now, Firstgiving is seeing an influx of new customers who are looking to tap the potential personal fundraising networks that their supporters may have.
“We are seeing charities who are coming to us saying we’ve got to make up for this gap,” Days said, “and online is an opportunity we’re not taking advantage of.”
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