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Benton Foundation 2001

E-commerce and Nonprofits: Three Case Studies
by July 2000 Recently, Katharina Kopp of Benton's Communications Policy Program, wrote Nonprofits and Electronic Commerce, outlining the ways nonprofits can be affected by and can influence e-commerce policy and introducing a new field of study within Benton's policy program. The article below provides practical guidance and advice to organizations seeking to incorporate e-commerce practices into their ongoing operations, and includes three short case studies of organizations that have adopted e-commerce.

The word "e-commerce" tends to bring to mind Amazon.com and other big dot-com companies selling products over the Internet, and credit card numbers floating through cyberspace. E-commerce technology has come a long way in a short period of time and is now much safer and more accessible to smaller businesses and nonprofit organizations. Nonprofits are responding to these changes, increasingly using the their Web sites to accept credit card donations and to sell memberships, event tickets and other items.

Bringing nonprofit business to the Web

Nonprofits have been using traditional business models to raise money for their organizations for some time. For example, they sell t-shirts emblazoned with their logo, books related to their mission, and gift items and event tickets. Yet, while nonprofits are increasingly using the Internet for activism, educational programs and art exhibitions, organizations have been much slower to bring more traditional business models online.

Is doing so worth the investment? As the lessons learned within this article demonstrate, integrating e-commerce does not have to be an expensive and time-consuming endeavor. However, adoption of e-commerce does require organizational commitment in the following areas:

purchasing and learning new technology (if e-commerce is to be managed completely in-house); creating strong structures (internal or contracted out) to support tracking and fulfillment of online orders; and budgeting staff time to monitor and maintain the e-commerce activities of the organization-- online and off.

Therefore, assessing the organization's needs and completing careful planning are key.

Thinking like a business can help a nonprofit prepare for e-commerce. Knowing and understanding potential "customers" will help an organization decide what products to offer online. Nonprofits must also make sure that their audience knows how to find them online. Just because an organization sells products, tickets, or memberships through their Web site does not mean that supporters will come to the site and buy them. Like any project, continued promotion of an e-commerce site is very important to its success.

Getting started with e-commerce for your nonprofit

We interviewed Steve Ladd, of Steve Ladd Media Consulting, who has worked with several nonprofits, to discuss what organizations should know before taking on e-commerce.
  E-commerce has to fit in with your mission
How will e-commerce improve service to your audience or members? Does it make things easier for your organization? If you are creating more work for yourself, is the benefit to your audience worth it in the long-run? Steve advises nonprofits to "plan out how it fits within your mission and how e-commerce is going to be administered or managed."
  It's not that expensive
According to Steve, "a lot of nonprofits presume that it may be too expensive for them to have that [e-commerce] component, but it's not. It's pretty inexpensive and easy to set up, and it's easy to manage once it gets going." One type of shopping cart software that Steve recommends is only $249 per year-- slightly over $21 per month. This service is hosted not on the organization's computer, but on a third party secure server. Some services become more expensive with higher volumes of products and transactions, or by adding the ability to process credit cards online. Some high-end shopping cart services allow you to integrate the online e-commerce data with your own offline membership or product database. Of course, the more you want the shopping cart software to do, the more you have to expect to spend. Steve suggests budgeting in the range of $800-$1500 for the initial set up and configuration of a basic and reliable system. Monthly service and maintenance costs will vary.
  It pays to be a nonprofit
Being a nonprofit increases the likelihood of building loyalty among customers, Steve believes. Nonprofits are often seen as a more trusted source of information than a commercial site, leading many people to buy your products to support your mission if given the choice over a corporate e-commerce effort. But no matter how much they like your organization or your cause, people will not always go out of their way to buy your products. It's important to have a reliable, welcoming and well designed e-commerce program to keep customers coming back.
  Don't expect instant gratification
Steve tells us that unrealistic expectations and lack of planning and promotion are major contributors to dissatisfaction with e-commerce efforts. Don't expect to sell a million books the day you put them online. You will still need to promote the site in your print publications, email newsletters, and everywhere you can. "You have to have a good plan for promoting what you have both initially and continuously," says Steve.
  Legal considerations
If you are moving existing offline sales to the Web, your organization probably already has set policies and practices for dealing with the IRS (but check!). However, if e-commerce reflects a new business venture for your organization, make sure that it is not an unrelated business income (UBI) in the eyes of the IRS. Steve recommends consulting with your accountants and legal counsel before taking on e-commerce. "You also have to think through all of the online order policies, particularly if you are considering international orders," cautions Steve. When selling to individuals in foreign countries, for example, organizations must address issues of customs requirements and exchange rates.
  Like anything on the Web, it's ongoing
That is, you can't just set it up, promote it once, and sit back to watch it grow. Evaluate your e-commerce effort regularly, making sure it works the way you want it to and exploring how it might be improved. "That's one of the nice things about being online -- you can get some pretty quick feedback, and it's pretty easy to evaluate and modify various components to make it more of a success," says Steve.

How other nonprofits are using e-commerce

Many large nonprofits have been successful at e-commerce for some time. Organizations like the World Wildlife Fund, Metropolitan Museum of Art and Save the Children have all been in the news recently about their e-sales. But smaller organizations have benefited from e-commerce, too. The following case studies take a look at how three small nonprofits have embraced e-commerce.

E-commerce on a Shoestring: Drayton Hall
Drayton Hall, a historic preservation site and museum in South Carolina, developed a Web site in 1998 and since then they have been operating a successful museum shop online.

E-commerce as Promotion: Perfect Storm Foundation
A fairly new organization dedicated to furthering education of local children, the Perfect Storm Foundation of Gloucester, Massachusetts has benefited from a Web site and e-commerce since its beginning.

E-commerce in a Membership Organization: Film Arts Foundation
This San Francisco-based membership organization currently offers membership sales and renewals, as well as film festival ticket sales online, but they have plans for much more.

Additional resources on e-commerce

Business Models form Michael Rappa of North Carolina State University. This comprehensive collection can help you think about the different models for e-commerce. Security, also from NCSU, deals with issues of online security and does a nice job of explaining how encryption works. Charitable Groups Find Revenue in Web Retailing, by Bob Tedeschi from the New York Times talks about how nonprofits are using e-commerce. How to choose a Web store from About.com lists some things to keep in mind as you search for an e-commerce solution. See also their Web-Store Software Selector for a side-by-side (but not very detailed) comparison. Webmonkey E-commerce Tutorial walks you through the process of planning then building, buying, or renting an e-commerce solution. World Wildlife Fund Metropolitan Museum of Art Save the Children

Last updated: 3 May 2001 mlw
www.benton.org/Practice/Ecommerce