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Charities gear up to tap online donations

Although few charities and nonprofit organizations have raised significant funds to date, many are beginning to see the Internet as a way to tap into potential donors.

The next trend in e-commerce may not be about losing lots of money, but about giving it away.

Charities and nonprofit organizations are heading online, hoping to ride the e-commerce wave to tap into potential donors. Although few have raised significant funds to date, many charities are beginning to see the Internet as their future.

"This brings us into contact with a whole new set of shoppers and donors," said Christine Nyirjesy Bragale, spokeswoman for Goodwill Industries International.

Earlier this week, Goodwill Industries announced that it has teamed with GreaterGood.com to create a co-branded Web site. Five percent to 15 percent of the amount consumers spend at the site, named Goodwill.greatergood.com, will go to Goodwill.

Meanwhile, Charitableway.com, which allows users to donate funds via its Web site, announced this week that it has received $35 million in second round venture funding, led by Technology Crossover Ventures.

The online efforts by these charities and Net start-ups come as the pool of Internet users and revenues grows. Forrester Research estimates that consumers spent some $20 billion online last year, and it projects that number will grow to $184 billion by 2004.

But it remains to be seen if consumers will donate to charity online, and few numbers have been released from charitable organizations. Goodwill, which launched its online auction site Shopgoodwill.com in August, has raised just $100,000 through the site, a drop in the bucket compared to the organization's $1.5 billion in annual revenue. Prominent charities such as the national office of the United Way do not yet accept donations online and are still exploring options for raising funds online.

Charities that have raised significant funds via the Internet are still the exception, said Mark Rovner, senior vice president of Craver Mathews Smith, a consulting firm for charities. "Organizations that are raising more money than they are spending on their Web presence are still a minority."

Despite the slow start, the Internet represents a huge opportunity for charities, Rovner said. Already, the pool of potential online donors is larger, younger and more diverse than charities have traditionally found.

According to a recent study commissioned by Craver, some 16 million online users would be willing to donate money to nonprofits over the Internet. The study also found that the average age of a donor who responded to direct mail solicitations from a charity was 66, while the average age of a potential online donor was 42.

Charities are still trying to figure out how to tap into that potential and are exploring a number of options for raising funds online. The American Red Cross, for instance, allows consumers to donate directly to the organization through its online site. Meanwhile, third-party sites such as GreaterGood.com are trying to become online shopping malls, promising consumers that each purchase they make will benefit their favorite charity.

But with e-commerce and other Net companies spending millions of dollars on online advertising, observers say charities run the risk of getting lost in the shuffle. Some have tried to take advantage of all the dot-com advertising by teaming with well-known players.

Yahoo, for instance, has donated some of its advertising spots to nonprofit organizations. Amazon and other e-commerce sites also have arranged deals with various nonprofits to dedicate a portion of certain sales to charities.

Such Internet companies are developing symbiotic relationships with nonprofits, driving traffic and dollars both ways, said Bill Massey, president of the National Charities Information Bureau.

"E-tailers are going to build consumer loyalty by being able to associate themselves with nonprofits, by affiliating themselves with worthy causes related to the demographics of their customers," he said.