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Raising Campaign Contributions Online

By Kami Razvan
Click and Pledge

In this age of Internet politics, the challenges of “innovation” and “technology” keep perking up in discussions about raising campaign money online. 

 

As such, conversations among candidates and campaign pros always seem to focus on how best to use the Web for online giving.  But, when asked about doing online financial transactions, political strategists remind me of the parable about the blind men who try to describe an elephant.  Each individual has an impression based on his own perception of a portion of the animal but none has a complete and accurate picture.

 

The one thing we all agree upon is that you better be Websmart in politics.  The internet has taken on a rapidly expanding role as a tool to raise and collect money.  But, as you will discover, it's much more than just a way to accept credit card payments.  So, let's explore the subject and attempt to get a more complete picture of what online giving can be.  I have also offered a few suggestions about how you may approach it. 

 

It's an opportune time to create a great online e-commerce tool for collecting demographic data, building a data base, accepting donations or managing events.  The availability of inexpensive computer hardware, free software and high speed Internet access has created a powerful launching pad from which to build.

 

To date, the most notable online fundraising success has come from the political arena. The online achievements of the 2004 presidential candidates have spurred a revolution in Internet-based fundraising. The internet has proven itself as an innovative new tool for raising money.  It's quick, inexpensive, easy to use and effective.  

 

A parallel experience exists between political donors and donors to higher education. Officials of the 2004 “Howard Dean for America” presidential campaign called the Internet an “intimate medium” that allows campaigns to develop “paced” relationships with potential donors and supporters.  When donors begin to feel personally engaged in a campaign and begin to feel a stake in your cause, they are likely to give more frequently and in greater amounts.

 

This “intimacy” is what's most important.   Donors enjoy gaining a deeper understanding of how their money will be used.  Political campaign fundraisers claim, too, that donors become more emotionally connected to the cause when enabled to “study” the issues in the privacy of their home or office.  The internet facilitates this involvement greatly. 

 

The results of political online giving are compelling. 

 

Donors that give online contribute at a higher rate – about 24%.

 

The cost of raising money online is only about 3 cents of every dollar raised.

 

Online contributions average about three times that of direct mail…$108 compared to only $35 for direct mail.

 

Many online donors use the Internet to make their first donation. 

 

Patrons who go online and seek your website are more committed than most…so taking them to the next step – making a donation – becomes a little easier. 

 

General Internet trends for online financial transactions are encouraging.  For example:

 

Americans donated more than $3 billion online in 2004, up 58% from 2003.

 

Online banking is exploding!  53 million people, or one quarter of all adults use online banking. 

Millions of Americans spend time online, with 20% of the population using broadband.  13 million people donated online for Katrina/Rita aide.  The number of online donors is up 53% since January 2005. 

  

Getting Started.

 

Do your best to define your objectives for online giving.  There are many issues to consider and many vendors to choose from.  Here are a few of the most important items to think about: 

 

Outsource or Do-It-Yourself?   Yes, you can set up an in-house online donation page within your current campaign website.  Most likely, it will perform well and get the job done.  But, there are highly specialized vendors that offer inexpensive e-commerce financial transaction products and services that are designed to serve the needs of nonprofits and political campaigns.   These outsourced software programs are available for a song and they are loaded with features.

 

Beyond that, there's speed, banking services and security.  Outsourcing will get you up and accepting money almost immediately in a safe, secure online environment.   

 

Embrace Outsourcing.  The market for “Software As A Service” (SaaS) or “on-demand” software is exploding.  Simply put, why pay for expensive, packaged software when you can rent it? you only pay for what you use, when you use it.   These types of vendors are called ASPs, or Application Service Providers…and they have never been more popular.  Especially for political campaigns.

 

Why?  Because they substantially increase your online capabilities while reducing your cost of accepting donations and conducting business online.  For example, custom screens are available to assist in complying with Federal and State Election requirements.  Detailed financial reports are available 24/7 in real time. 

 

What's more, pay-as-you-go applications mean no servers for your campaign to maintain, little or no capital for software licenses and no upgrades.  For once, you can stop piling IT costs and banking complexity onto your campaign.  In sum, hosted services will deliver deep functionality with very little maintenance at a very low cost.  Exactly what most of us want and need. 

 

What to look for in an ASP vendor.  There are a number of excellent vendor choices that allow political organizations and campaigns to accept credit card contributions, accept payment of fees, and even manage events, sell tickets, sell and ship campaign products and much more.  But beware.  There are many that are over-priced and unimpressive.  So shop carefully.  

 

When evaluating vendors let common sense prevail.  This is a very young market so brand recognition is not as important as with other technology and products.  Instead, ask how long they have been in business; assess their professionalism; ask for references; be sure the company can scale with your business needs. 

 

Here are the most important issues:

 

 Set-Up Fees.  Set-up fees are common, but some quality vendors waive these entry fees.  Set-up fees range from $250 to $2,000.  Set-up times range from five  minutes to five days or more.

Transaction Fees.  This is how ASPs make money.  You will be charged on a per transaction fee.  These fees range from 4 percent to about 8 percent per transaction.  Other models charge a lower 3.5 percent fee, plus .40 cents per transaction fee.  These fee models vary widely.  Determine what is best for your organization.  Keep it simple. 

 

Merchant Accounts.  This account allows you to process credit cards. You may choose to have your own merchant account or use the vendor's.  Fees are charged for each transaction.  Note: online credit card processing fees are much higher than card present fees.  Don't get these confused.  Most of the vendors that offer credit card processing services offer merchant accounts services that are included in their fee. 

 

Set-Up and Support.  How easy is it to set-up and start using the service?  Is it easy to make revisions?  Is support available via phone, internet and e-mail?  Are they friendly, experienced and helpful? 

 

Security.  This is extremely important.  What will you do if one of your patrons has a credit card stolen or suffers from identity theft following a financial transaction on your website? Ask if the vendor meets the Payment Card Industry (PCI) Data Security Standards.  Not many do.  It is key to find a vendor who is PCI compliant.  Ensure that they are 128-bit encrypted, have a secure socket layer, and use an outside vendor for added security and fraud detection.  Are they global?  Also, it's important to be approved by the Better Business Bureau.  Ask too, about database redundancy, load balancing and fail-over. 

 

Donor Form Appearance: How well can the donation form be tailored to match the website?  Are the forms intuitive, cleanly designed and professional?

 

Ease of Use.  Is the system easy for you and your donors to use? Are you able to make revisions?  This is critical if you want to save time and money.  You eliminate the expense of an outside web developer and, in many cases, avoid further overburdening the campaign staff.  Plus, you will enjoy a higher “close” or “success” rate if the site is easily revised and easy to use. 

 

Other considerations:  Recurring donations; IRS approved receipts; detailed financial records available in real-time 24/7; money distribution; how many different credit cards do they accept?  financial stability of the vendor; foreign currency.  

 

So far, the Web has passed many of the tests in the early going.  But one thing is clear, the Internet has grown into a mighty political tool and can make or break a candidate. Common barriers to entry, like security concerns and the high cost of software, are falling fast.  Consumer confidence in online financial transactions is climbing higher.  And your options for vendors and ecommerce political tools have never been greater. 

 

It appears that the stars are well aligned for online giving, and all that it entails, to play an increasing role in your development campaigns.

 

 Kami Razvan, Ph.D. is founder and chief executive officer of
Click & Pledge, a company that enables political
campaigns to collect contributions online and
other ecommerce solutions. He has over 10 years
of executive management experience in the software field
and can be reached at
Click here to contact this Author


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