Report: Nonprofits Forced To Make The Digital Shift

For nonprofits of all types, the last year has been about making the same digital dive that everyone else has.

In fact, while overall nonprofit contributions were up 4.1 percent during the pandemic, online giving grew 12.1 percent, mirroring the digital-first ratio flip that so many business verticals have seen over the past year.

According to the January edition of PYMNTS Navigating Nonprofits’ Digital Payments Shift, it’s a change nonprofits have taken on out of pure necessity as their donors moved online and the web quickly became the best way to forge and maintain a connection to them.

According to the report, 55 percent of consumers said they want to use credit and debit cards online for charitable donations, while another 15 percent stated a preference for PayPal or another mobile wallet offering. Consumers know what they want, and nonprofit players are rushing to provide more tools to get there. The Salvation Army, for example, has embraced the QR code for donations. Instagram has launched a tool to make it easier to host an online fundraiser.

“We have actually seen a significant number of nonprofit organizations opening up their digital channels, especially since the beginning of the pandemic in the last year,” American Express Vice President of Acquisition Partnerships Eva Wang told PYMNTS.

It was a shift that was already underway before the pandemic, she said, but the coronavirus period has created a sense of urgency that had been lacking in the space. In the absence of the galas and other physical events at which nonprofits had centered their fundraising, the need to develop those digital channels became top of mind for nonprofit organizations. That, in turn, made it a priority for many nonprofits to accept digital payment options for online fundraising, often with the support of industry-specific payment facilitators.

Like almost every other sector, nonprofits are learning that the digital shift is likely never going to run in reverse, she said. That doesn’t mean that the physical world won’t be making a comeback — physical fundraisers aren’t going to disappear forever, supplanted by their virtual counterparts. But those physical events will be supported and complemented by the digital campaigns that nonprofits have learned they need to also be running to maintain and expand their donor bases.

Capturing The Context Advantage

Contextual commerce has become something of a popular buzz phrase in the last year as the digital shift has expanded — and retailers have had to think more creatively about reaching consumers who were spending the majority of their time in front of a screen.

“When we talk about contextual commerce and payments we mean if, for example, I saw a T-shirt on a social media platform that I loved — I could pay straight away in a simple and streamlined checkout journey in context, without leaving that specific social media site,” Wang said.

No navigating away, no extraneous steps or stops to enter a new card number — contextual payments mean that as soon as the customer sees something they want, they can pay with minimal friction. The importance of contextual payments is easy to see for commerce and small merchants, as it is a path to creating customer connection. But in the nonprofit and charitable donations space, Wang said, it has proved just as relevant, particularly through social media channels. Donors are seeing the stories of those in need first-hand on social media channels, and in that first moment they are motivated to send a donation.

“I think fundraising is one of those cases that really require a personal and emotional connection to donors,” Wang said. “Many of the nonprofits we work with right now are focused on keeping that personal connection to their donor with online donation methods. And they are recognizing that there are benefits when it comes to a lower cost and better connection. In that context, social media is a very useful tool to help tell the story and help people to connect with the story.”

The Road Forward

Payment choice, Wang said, is a primary factor that cannot be overlooked. Two-thirds of the consumers PYMNTS surveyed reported a preference for one type of digital payment when it comes to charitable donations. Organizations have to be ready to serve that need whatever form it comes in. Donors should be able to pay as easily and as quickly as possible with whatever their preferred method is. Failing to find the payment option they want, adding an additional fee at checkout, or any other steps that could cause friction may send them to another organization.

Nonprofits also need to think more strategically and with more tools in mind when they approach donations. For example, Wang said, asking people for large donations during a financial downturn might be a non-starter for many. But asking for a series of recurring smaller payments over a year, she said, may end up creating a steady stream of funds out of consumers instead of being flatly turned down.

Whatever they do next, however, first and foremost nonprofits need to know they aren’t living in the same world they were a year ago. More likely than not, they are never going back to anything exactly like that, which means embracing digital isn’t a choice — it’s a necessity for those that hope to continue to serve in a post-pandemic world.