Monthly giving is seeing double-digit increases in year-over-year growth, and for good reason.
Nonprofits depend on a continuously scalable base of donors and revenue to fund their important missions and services. Among the many options in an organization’s fundraising portfolio, monthly giving offers a more reliable, steady income stream that is resilient to economic ups and downs.
However, for many nonprofits, growing their base of donors is challenging and expensive. While direct mail is a significant contributor and the primary acquisition channel for many nonprofits’ direct marketing fundraising programs, it has become increasingly less efficient.
Combined with the changing habits of consumers and the massive shift to online across industries, it is easy to understand why nonprofits are struggling to fill their donor pipeline.
Nonprofits need a new acquisition tactic in their fundraising portfolio; one that helps them reach current and future generations of donors, many of whom prefer to engage online and in a cost-effective, scalable model.
Consumer Shift to Digital
U.S. consumer media habits continue to shift to online, with a crossover point expected in 2018—when the average daily online media consumption will exceed all offline media (e.g. TV, print and radio). Today’s donors are increasingly digital, with most of the U.S. adult Internet population engaging daily in Facebook (172 million users), watching digital videos (221 million users) and listening to digital audio (121 million users). The smartphone in everyone’s pocket is constantly being used to snap photos, post updates on social networks, text and call friends. Increasingly, consumers are using dual mobile devices (e.g. tablet and smartphone), increasing their consumption of media and interaction online.
Nonprofits are responding to this trend and increasing their commitment to online fundraising.
Merkle’s "2017 Nonprofit Digital Benchmark Report" researched the online practices of 79 nonprofits with annual revenue of $10 million or more. The research discovered that large organizations commit 16.2 percent of overall direct-response budgets to online fundraising to bring in online revenue equal to 15 percent of total direct-response revenue. This is an increase from other industry benchmarks in recent years, which reported online revenue between five and 10 percent of direct-response revenue. The findings demonstrate the increasing role digital is playing in the industry, and that the biggest organizations continue to expand their commitment to online fundraising, in order to meet donors where they live—increasingly online and via mobile—and in an effort to reach younger, more digitally active donors.
Digital Acquisition: Why Monthly Giving?
Donors are online. Yet nonprofits lack a scalable, cost-effective acquisition solution to reach them. But there is a way forward.
Monthly giving offers a solution to solve both problems while building a more stable and sustainable base of donors. It’s among the fastest growing fundraising tactics for nonprofits, and when leveraged with digital acquisition, it can accelerate growth.
• Investment Returns Higher Value Donor: While digital acquisition requires up front investment, focusing on monthly donors drives higher long-term value and return for the dollar.
• Revenue Resilience: Sustaining donors’ annuity stream is resilient through economic ups and downs, providing steady, consistent support.
• Audience Reach: Digital aligns well with the monthly giving audience profile, capitalizing on supporters’ increasing online media habits and preferences.
• Scalability: Digital’s broad reach, addressability and targetability scale efficiently and effectively to increase fundraising revenue and donor growth.
Digital Versus DRTV
Driving monthly donor acquisition at scale can be an expensive undertaking, and more recently, nonprofits have looked to direct-response television (DRTV) as the solution. However, digital marketing offers a comparable, more flexible option for nonprofits to consider and to leverage more effectively.
• Upfront Investment: Digital provides a more cost-efficient solution than DRTV, which requires a significantly higher upfront investment.
• Optimization: Digital optimizes faster than DRTV, providing more immediate response and insights to improve acquisition results.
• Audience Reach: Digital-only provides similar or better audience reach than DRTV.
• Scalability: Economically, DRTV and digital both scale effectively.
• Flexibility: Digital adapts more readily over time than TV to market changes, enabling nonprofits to test offers, targeting and tactics quickly and economically.
• Addressability: Digital increasingly allows for more accurate audience targeting, ensuring that nonprofits are reaching the most valuable, cause-specific consumers for the best return on investment.
As more nonprofits make the investment in monthly giving programs, digital acquisition is becoming a huge driver of new growth, delivering both financial and strategic advantages that fuel progress and innovation. There is real opportunity for organizations willing to expand their digital experience and fundraising portfolio.
Eve Smith is senior strategy director in Merkle’s Nonprofit Group and an experienced fundraiser with over 18 years of nonprofit direct response marketing expertise. Eve brings extensive knowledge and practice to Merkle’s nonprofit clients, including integrated strategy, omni-channel fundraising and marketing, and program innovation. She specializes in scaling up already-successful fundraising programs to raise more funds and crafting new programs that leverage advocacy, peer-to-peer fundraising and social giving to bring in new revenue. At Merkle, her clients have included major national health charities, international relief and faith-based organizations, animal welfare nonprofits, among others. Before joining Merkle, Eve was lead consultant to national cause-based nonprofits and worked with leading nonprofits and foundations to advance their online marketing and fundraising programs.