eMarketer reports that growth in online sales is tappering off and is forecasting flat online sales in 2009. New research by The Chronicle of Philanthropy shows that the online habits of consumers and givers is pretty similar. According to the Chronicle's findings, median growth rates for online donations were 45% in 2006 and 42% in 2007, but just 28% in 2008. A consulting company quoted in the article noted that many of the charities they work with are not experiencing an overall drop in donations, but rather just a slow down in the growth of this revenue source.
At Charity Navigator we are seeing a similar trend in the online donations flowing through our site to the charities that we rate. Looking just at first quarter results, the number of online gifts made on our site (via our partnership with Network for Good) increased 65% in 2008, but just 37% in 2009. At the same time, the average gift size dropped 24% and 16%. Thankfully for the charities, the increase in the number of online donations was enough to compensate for the shrinking size of those gifts. Just as the consulting firm in the Chronicle's article noted, the total given online at our site grew by 29% in 2008 and 14% in 2009.
Although there is much discussion in the nonprofit sector about online donations and the potential of social media applications (such as Facebook and Twitter) to raise money, the Chronicle's study points out that the typical charity still generates just a fraction of its total donations via online sources. In this particular survey of 203 charities, online gifts accounted for 0.7% of total gifts.
Finally, eMarketer's analysis determined that consumers are spending more time researching purchases. Given the popularity of Charity Navigator's charity ratings, we can surmise that this is also true for online donations. With less discretionary funds available for philanthropic activities, donors are going to greater lengths to ensure that their donations are going to well-run and efficient charities.