A decade ago, the notion of recurring donations was a bit of a headache for most NPOs. This was before it was so easy to transact online.
In those (not so) good old days, charities that wanted to pursue this type of donation had their work cut out for them. They had to get donors to agree to make regular contributions via phone or direct mail.
Then, they had to follow up (and follow up again!) to ensure that donors were keeping their promises.
However, the fantastic online transacting tech we have today makes all of this a breeze. Donating online these days is so easy that recurring donations should be a key component of any nonprofit's fundraising strategy. Here's why.
The first and most obvious reason to aim for recurring donations is that they improve your charity’s donor retention and overall contribution rates simultaneously. While regular donors may give a smaller amount than once-off donors, they do so more regularly.
Recent fundraising trends have shown that recurring donors are 42% more valuable than fundraisers. What’s more, they are 440% more valuable than once-off donors!
The more hassle-free the donation process, the better for your donors. The fact that the overall expense is spread out over various months also makes the expense more manageable for most donors. They can work it into their monthly budget and forget about it - until it comes time to claim back their contribution from the taxman.
As such, providing donors with a recurring monthly option also makes things easier for your fundraising team. After all, it's much easier to ask for a small monthly amount than to ask for a big donation once off. It's a much less scary prospect for a new or existing donor this way.
When an NPO is dependent on certain big fundraising occasions in a given year, it can cause financial gridlock throughout the remaining months.
However, if big annual fundraising occasions like balls and online auctions are supplemented by recurring donations, things become much easier to manage. After all, overheads and operational expenses do not ebb and flow like seasonal donations.
Starting up a recurring donation program can take some effort. However, once it's up and running effectively, the data your NPO can glean will be incredibly helpful for future projections.
It’s hard to project when and how much a once-off donor might give, even if they tend to do so annually. On the other hand, when your organization has a variety of recurring donors signed up, things become easier to track.
Aside from hard data on how much everyone donates, you also get valuable feedback in the form of retention rates. You can also test your communication channels on these donor stalwarts. They expect to hear from you regularly so they can be polled, etc.
Consider it this way - recurring donors do not have to be solicited again.
That is true. Once they have been in the mix for a year or so, you might contact them to find out if they wish to increase your recurring donation amount. But, for now, you are freeing up the time of your solicitation team, who can then apply it elsewhere.
Recurring donors tend to get quite involved with the causes they support. After all, they were so sure of the good work the organization is doing that they were willing to sign up to make regular donations. In fact, if you take a look at stats in this regard, you’ll see that many go beyond these recurring donations.
Almost a quarter go on to make one-time gifts on top of it. And, more than half will give to additional campaigns. Those are some very telling numbers. It’s likely associated with the fact that they are signed up to social media pages and other engagement platforms that promote your charitable initiatives and receive regular email communication from your team.
As such, it makes a lot of sense to segment your communication efforts with your donor database. This way, you can reach out to your recurring donor base in a very particular way.
So, instead of receiving a generic email sharing information about a new campaign, you can address and approach them in a different way.
Good day, Mr. Ericson,
We want to take this opportunity to thank you for your recurring monthly contribution. With the support of fantastic donors like you, we are able to continue doing good work in our community.
This month alone, we provided 2000+ meals to vulnerable children in neighborhood XYZ. We cannot explain what a difference this has made to their academic achievement and general well-being.
As we move into the colder months, we would like to increase these efforts and provide even more children with a warm meal after school. As such, we are rolling out our Winter Warmers campaign.
Should you wish to contribute to this once-off annual campaign, please respond to this email using the web form below. A team member will then be in touch to discuss how and when you’d like to donate.
Thank you again for your generous contribution.
Yours truly,
The ABC Charity Team
Setting up recurring donations for your nonprofit makes sense. It improves donor retention and overall contributions, makes things easier and less worrisome for donors, and bolsters cash flow throughout the year.
Additionally, recurring donation data simplifies future planning and keeps operational costs somewhat lower. It also supercharges donor loyalty levels and boosts community cohesion, ensuring you can continue to receive the support your nonprofit needs.
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