Monthly Giving Can Help Nonprofits Weather Economic Uncertainty. Here’s How to Do It Well.
A few months into the new year, tech layoffs, concerns about an economic slowdown, and a bank failure have topped the news cycle. In an environment filled with uncertainty, charities can sometimes find it difficult to secure donations. One area nonprofits should consider for a steady stream of income during economic uncertainty is recurring donors.
“I think monthly giving is a program that is just often underutilized. A lot of nonprofits just don’t think about it,” says LeAnne Lavender, donor and content manager at Water for Good, a charity with a longtime monthly donor program.
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A few months into the new year, tech layoffs, concerns about an economic slowdown, and two bank failures have fundraisers on edge. In an uncertain environment, charities can sometimes find it difficult to secure donations. In times like these, however, organizations should work to beef up their monthly donor programs.
“Monthly giving is a program that is just often underutilized. A lot of nonprofits just don’t think about it,” says LeAnne Lavender, donor and content manager at Water for Good, a charity with a longtime monthly donor program.
Monthly donations are an important financial cushion during tough economic periods, says Genevieve Shaker, associate professor of philanthropic studies at the Indiana University Lilly Family School of Philanthropy. “Recurring giving can provide a predictable and reliable source of income for a nonprofit.”
To do monthly giving well, it’s important to make donors feel like they’re part of a community, communicate with them in a way that recognizes the strength of their support, and offer a personal touch.
The Myriad Advantages of Recurring Gifts
There are a multitude of reasons why nonprofits should start or bolster monthly giving programs. Chief among them: high retention rates, reliable income, and the opportunity to encourage supporters to become major donors over time. Research from Classy, a software company focused on fundraising, found that 52 percent of organic growth in donations at organizations raising $50,000 or more annually came from recurring givers. At the largest organizations — $50 million or more raised annually — 37 percent of total revenue came from recurring gifts.
While there’s not a ton of research, one small study showed recurring gift programs had retention rates around 90 percent, according to Shaker. “It’s a much higher recurrence rate than when you are making a new gift from year to year,” she says. “Another study showed the mean gift size was $63 a month. That’s telling you that the average gift size was $750 a year, which is high.”
And recurring givers don’t just stop with their monthly donation. They’ll often give more if asked, says Michelle Boggs, executive nonprofit industry adviser at Classy.
“It’s not like you say, ‘Oh, they’re giving to us monthly. We don’t want to ask them to also sponsor an event or buy a ticket to a gala,’” Boggs says. “We have found that they’re actually more likely to support in other ways if they’re already a recurring donor.”
How to Do It Well
Putting a few simple principles in place can help recurring donors stay connected to the organization and give more over time. These ideas can help charities that are just starting monthly giving programs and organizations that want to give their existing programs a boost.
Veteran fundraisers say it’s critical to create a sense of community: A simple way to do that is to name the program. Water for Good, which brings clean water to the Central African Republic, calls its monthly givers Rainmakers. A charity called She’s the First, which works to educate and empower girls globally, calls its program the Front Row. Both groups maintain a roughly 90 percent retention rate.
“I try really hard to make them feel like they’re in a club,” says Water for Good’s Lavender.
Fundraisers should also connect differently with monthly givers than with one-time donors. “Have a different stewardship and communication strategy,” Shaker says, “one that recognizes the kind of support they’re providing and their really deep level of trust and commitment to your organization.”
Rainmakers receive monthly updates via an email newsletter called the Liter, which Lavender describes as a “deep dive behind the scenes” that offers information such as how much water is pumped or well-maintenance reports. Rainmakers also can participate in quarterly video calls, which run about 30 minutes and discuss the group’s work, often including updates from program staff and the group’s leaders. After a year of support, each Rainmaker gets a photo book with pictures of the good work the group supported during the year, and last year Lavender sent personalized holiday notes.
Jasmine Beckles, development manager for She’s the First, agrees that communication that recognizes monthly donors’ relationship with the organization is important. “We do videos with updates,” she says. “We also do anniversary postcards to congratulate them on, ‘Hey, it’s been eight years since you joined the Front Row.’”
Stewardship that explains how those monthly donations are used is crucial, says Boggs, the adviser at Classy. She recommends that organizations use language like “Because of your continuing support, we’ve been able to plan X project” or “We’ve been able to invest in X program because we know we can count on you.”
“The messaging needs to be around that loyalty, what that loyalty is providing to the organization, and how powerful that is,” Boggs says.
Don’t Be Afraid to Ask
Many organizations that run monthly giving programs are looking for donors who will eventually give bigger gifts. Veteran fundraisers say that’s a valid goal, but it can help to have a low entry point. Both Rainmakers and the Front Row allow donors to join at $5 a month.
“The key is to get them in and to get them started,” Lavender says. “Then they trust you and see a benefit in it.”
Once they’re in, they tend to stay. Beckles notes that some students start supporting her organization at $5 a month during college and up their donation when they move into the working world. After donors trust the nonprofit, they’re often happy to give more if asked. Some nonprofits make the mistake of not asking.
“If the organization doesn’t have a plan and a strategy to ask these donors to upgrade their gifts, then it can be a lost opportunity to find potential major donors,” Shaker says.
Water for Good asks donors to increase their contribution after a year of monthly giving. She’s the First also asks for bigger gifts but is more fluid on the timing, sometimes pegging the upgrade request to other events or projects the organization is taking on. Beckles says the group is also exploring ways to encourage longtime monthly donors who meet other criteria — such as how often they give, the size of their gifts, and their levels of engagement — to make larger gifts in the “five-figure” range.
Personal Touch Matters
Giving monthly donors the tools they need to take control of their contributions and form deeper connections with the program can help solidify their commitment to the organization. She’s the First finds that donors really take ownership over their giving because of the technology the organization uses to capture those gifts. Monthly donors get accounts they can log into and manage.
“They can come back and increase that amount,” Beckles says. “They can pause their giving and then reactivate it. That’s something that we have seen several donors use — especially during the holidays or with the economy. We have seen them pausing their donations and then returning all on their own, unprompted, and restarting them.”
Providing monthly donors with a specific person they can contact with questions is another way to strengthen their ties with the organization. It’s something that both Water for Good and She’s the First do.
“Everyone wants to feel connected in an organization, and it’s hard sometimes to know who you’re supposed to talk to or reach out to when you have questions,” Lavender says. “When you join as a Rainmaker, you now have like your own concierge service — your own person that you can contact with any questions. So if you need your tax form, e-mail LeAnne. If you need this, e-mail LeAnne. One-time donors don’t necessarily get that.”
4 Pitfalls to Avoid in Recurring Giving Programs
Charities may be doing lots of things right in their monthly giving programs. However, making four key mistakes could undermine that work, warn experts on the subject.
It’s important to consider how monthly giving programs work in practice, says Genevieve Shaker, associate professor of philanthropic studies at the Indiana University Lilly Family School of Philanthropy. “Think about the whole picture of the donor experience when it comes to that type of giving.”
For example, all fundraisers know donors need to be thanked for their gifts. But how that happens may need to be different for monthly givers. Using personal experience as an example, Shaker says she became irritated after getting the same formula thank-you letter every month for a recurring gift.
“That was too much,” she says. “I said, ‘Please, I don’t need that much. I would rather have less acknowledgment that’s more meaningful and maybe different engagement opportunities, rather than just the same thank-you letter sent 12 times.’ That’s an example where the whole gift structure hasn’t necessarily been thought through by the nonprofit.”
Two mistakes nonprofits make involve website errors. First, organizations fail to clearly and prominently display the monthly giving option to donors, says Michelle Boggs, executive nonprofit industry adviser at fundraising-software company Classy.
“We look at nonprofit websites all day long, and we’re always surprised to see that [the monthly giving option] is not at the forefront,” Boggs says. “There might be a ‘donate’ button, but few were making it really clear: We want you to be a recurring donor and here’s why. Here’s the incredible impact it’s going to have on the organization.”
Second, as simple as it sounds, nonprofits sometimes mistakenly assume everything’s working fine once they set it up on the website.
“Test it yourself and see what it’s like as a recurring donor, and if it provides the options and information and experience that you would want someone to have,” Shaker says. If it doesn’t, get your website up to snuff, because this is where you might lose potential donors.
Finally, nonprofits often fail to be proactive when it comes to common, expected issues. For example, some monthly givers use a credit card, but many charities don’t track when that card will expire.
“In one study, they observed only a limited number of the nonprofits contacted [cardholders] to try to get the new number,” Shaker says. “They weren’t looking ahead at what’s the expiration date on this credit card and ‘How do I start talking to the donor in advance of that so that we don’t lose them?’”