With donor fatigue and attrition on the rise, non-profit organizations and advancement offices have to come up with new and innovative ways to replace lapsed donors.
Or do they?
Too many organizations overlook the opportunity for a stable revenue stream that's right under their noses: their existing donor base.
Converting one-time donors into recurring donors is an excellent way to secure future funding and keep your supporters engaged.
Recurring giving programs aren’t just good for your organization, they’re good for your donors too. By signing up for a modest but regular recurring donation, your supporters can still make a significant gift to your organization but spread the financial burden out over time.
In this post, we’ll talk about what you should know about recurring giving. Far from being “just another” fundraising tactic, recurring giving programs are a lot more effective than you might think.
The Power of Recurring Donors
Recurring Donors Give More
You might not realize it, but a smaller donation every month adds up to more than the average annual gift from most donors.
Research shows that recurring donors give 42% more per year than one-time donors.
Small gifts are big gifts in disguise.
It may seem counter-intuitive, but signing up a smaller proportion of recurring donors may give you a larger donation pool. ActBlue almost doubled their donations when they tested a one-time request for donations against a recurring gift.
Why is recurring giving so effective? Because it works for donors too.
Think about it. Would you rather make a one-time $100 donation, or donate $12.50 a month? Giving $100 at once might seem intimidating, but giving $12.50 a month feels a lot more manageable. And that $12.50 per month adds up to $150 over a year — 50% more than the original request.
Making smaller, regular donations is easier to plan for and easier on the wallet than a larger one-time ask. Small, consistent contributions to an organization have a larger impact over the long term than you might imagine.
Recurring Donors Stick Around Longer
Donor attrition is a real problem for every non-profit. The average donor retention rate is just 46% — less than half the people who donate to an organization or institution make another donation the next year. That means that those organizations have to replace 54% of their donors in one year with new donors the following year, just to break even!
Recurring donor programs, on the other hand, fare much better. They have an average retention rate of 65% — and their retention rate increases as giving levels rise.
Part of that is the convenience of recurring donations. With the advent of online giving, setting up a recurring gift has never been easier (most online donation forms include an option for this route). Donors can set it and forget it.
Because the donation is automatic, not donating requires an explicit decision (and action) from the donor to cancel it. As long as they feel that their gift is appreciated and that it’s making an impact, recurring donors are more likely to keep giving.
What’s more, as donors get older, their incomes tend to go up — so the recurring donation feels easier and easier to make.
Recurring Donors Are More Engaged
Donor engagement is key to sustainable fundraising. You put a lot of effort into making sure that your message and your mission are relevant to your donors — be they alumni or parents — to keep them engaged beyond individual fundraising campaigns.
By definition, recurring donors are more engaged than one-time donors. By agreeing to support your organization on an ongoing basis, they're expressing a belief in your mission and a commitment to your goals.
Monthly giving leads to stronger relationships with your donors. How so? Well, for one thing, you don't need to keep asking them for money. This means that you can focus on stewardship and showing the value of their gift.
It should go without saying that you do need to keep communicating with your recurring donors. They are some of your most loyal supporters, and you should never take them for granted. Receiving communication from you that doesn’t involve a request for money can help keep them connected to your mission, especially when you share the impact of their ongoing gift.
The more engaged your donor base, the more likely they are to volunteer and even advocate for your organization. And because of their sustained monetary support for your organization, recurring donors are excellent prospects for upgrades to major gifts and even endowments down the road.
Recurring Gift Programs Are More Cost-effective
Recurring giving programs lower overall fundraising costs.
The cost of acquiring new donors is much higher than the cost of retaining existing ones. Think about how many points of contact, across how many channels, you have to make to secure a single new donation. That’s money your advancement office doesn't have to spend when you convert a donor to a recurring giving plan.
As more donors sign up for ongoing giving plans, you can stop spending money on soliciting them for donations. And because recurring donors have higher retention rates, you don't have to spend as much money and effort to recover from donor turnover each year. This all adds up to lower administrative costs and allows your team to focus on more high-leverage activities, like donor stewardship and program growth.
With the right technology in the back end, the cost of processing automatic gifts is lower, from payment processing to notification of credit card expiry. Add to that the reduced burden on your team of constantly chasing new donors to compensate for the churn in lapsed donors, and the benefits are even greater.
Too many organizations put their energy into acquiring new donors to shore up their revenue. But the key to stability is right under their noses: existing donors who can convert to recurring donors.
Recurring Donations Provide Stability
As any non-profit professional knows, fundraising tends to be cyclical.
It's common for non-profits to get injections of cash at specific points during the year, usually around major fundraising campaigns. The problem is that operational costs are pretty much steady month over month. When donations spike and dip, the inconsistent revenue levels make it hard to plan and invest in future activities. You can do some planning based on historical donation data, but it's not as reliable as a committed stream of revenue from recurring donors.
Predictable revenue is critical for long-term planning. If the lion’s share of your organization’s funds is coming from one-time individual gifts, it’s hard to plan big initiatives. And with the average donor retention rate at 46%, you’d have to find new prospects to replace 54% of your current donors every year, just to maintain current program levels.
Recurring donations solve that problem. Knowing that you have a steady stream of revenue coming in to cover your operation costs means that you have more breathing room to brainstorm those bolder initiatives — whether that’s launching a new program or hiring a new staff member. A reliable and predictable view of your incoming funds lets you plan all of your activities more strategically.
Alumni Giving Program Strategies
Establishing a robust alumni giving program that emphasizes the benefits of monthly giving can provide ongoing connection and support among graduates. Leverage the institution's alumni database to identify potential donors and tailor communication strategies that highlight the impact of recurring donations on educational resources, scholarships, and the overall student experience. Encouraging alumni donors to join monthly giving programs not only strengthens their ties to the alma mater but also contributes to the sustainability of the institution's mission.
Matching Gifts: Amplifying the Impact
Utilizing Matching Gift Programs
One effective strategy to boost recurring donations is to incorporate matching gifts into your fundraising efforts. Create a matching gifts database to identify companies that offer such programs and educate your donors about the possibility of doubling their impact through employer matches. This can be particularly enticing for both existing and prospective monthly donors, as it magnifies the influence of their contributions. Implementing a seamless process for donors to check their eligibility and submit matching gift requests enhances the appeal of your monthly giving programs.
Strategic Communication for Monthly Programs
Engaging Prospective Donors
Attracting new monthly donors requires a targeted approach. Conduct thorough prospect research to identify individuals with the capacity and inclination to make regular contributions. Craft personalized messages that emphasize the long-lasting impact of their support. Use various communication channels, including email, social media, and the institution's website, to reach a diverse audience. Highlight success stories, testimonials, and the tangible outcomes of monthly donations to showcase the positive influence these contributions have on the community, ensuring prospective donors feel a genuine connection to the cause.
Navigating Capital Campaigns with Recurring Giving
Integrating Recurring Gifts into Capital Campaigns
When embarking on a capital campaign, integrating recurring giving programs into the fundraising strategy can significantly enhance the campaign's success. Clearly communicate to donors how their monthly donations contribute to the campaign's objectives and overall mission. Ensure that the online donation form for the campaign includes an option for recurring gifts, making it convenient for supporters to commit to ongoing contributions. Highlighting the role of monthly giving in achieving specific milestones and project goals creates a sense of collective accomplishment and encourages sustained support throughout the campaign.
The Gift That Keeps on Giving
A smaller monthly gift lets your donors spread the financial impact of their gift over an entire year, instead of absorbing it all at once. The flexibility and convenience of recurring giving programs often make giving more manageable for donors.
For fundraisers and advancement offices, recurring giving programs make revenue more predictable, and fundraising efforts more cost-effective in the long run. And you can get off the hamster wheel of constantly having to find new donors to replace lapsed ones.
Recurring gifts are a win-win for both donors and the organizations they support.