In the Trenches: Building a Monthly Giving Program
If Sir Isaac Newton had been a fundraiser, his first law might have read: “A donor at rest tends to stay at rest, and a donor who contributes regularly tends to keep contributing.”
But most nonprofit organizations defy Newton’s Law. Today, most contributors sporadically give small amounts and respond infrequently. They force charities into expensive searches for new low-dollar donors to compensate for the unpredictable contribution stream.
I think Newton would have kept contributions coming by creating a monthly giving program. Often called “sustainers” or “committed givers,” monthly donors provide a predictable revenue stream at very low cost to the organization.
Consider this: A nonprofit with 80,000 donors that can convert 5 percent of its file to monthly giving — with half the sustainers giving $5 a month and the other half giving $10 a month — will realize $360,000 in gross revenue from sustainers alone.
For example, Linda King, the sustaining membership coordinator for the Friends of Iowa Public Television Foundation, indicates that her organization’s current sustainer program generates $234,000 a year with an average annual gift of $138.
“If you’re not offering a sustain[er] program, you’re leaving money on the table,” she says. “Monthly dollars help cash flow and come from donors who make great planned-giving candidates.”
But remember, campaigns waged late in a fiscal year take revenue from converted, single-gift givers and defer a portion of it to the next fiscal year. It’s only a one-time problem, but you definitely should prepare for it.
Prospecting for sustainers
To find sustainers, simply look to your own donor base.
Helen Kennedy, a partner at nonprofit consultancy Lewis-Kennedy Associates, which works with many public broadcasters, recommends soliciting donors who already are on installment programs, give frequent additional gifts and are premium driven.
“Be sure to upgrade them or else you’re just robbing one program to put revenue in another,” Kennedy adds.
Tom McCabe, president of fundraising consult-ancy KMA Direct Communications, which advises many religious charities, reports that his clients’ sustainers come from “frequency giving clubs” — that is, donors who give eight times a year or more. These individuals then are invited to join “annual giving clubs” with a threshold of $1,000 a year — no matter how many gifts it takes to get there.
But where can you promote monthly giving? The Internet, notes Erica Waasdorp, vice president of fundraising for DMW Worldwide.
“You can ask a donor who chooses to give online for a one-time gift or a recurring monthly gift,” she advises. “It’s a perfect vehicle for gaining monthly donors if you can accept credit-card gifts online.”
Selecting payment method
Designating payment options for monthly sustainers is crucial to success. One major animal-protection charity reports a 90 percent retention rate for electronic funds transfer payers — 85 percent for those donors who opt for a monthly credit-card deduction, and only 60 percent who opt for a monthly bill.
Waasdorp, who has raised funds for international organizations in more than a dozen countries, says that EFT is the most popular payment method in Europe but has not caught on stateside.
“However, offering EFT and a monthly credit-card option is a practical choice when soliciting U.S.-based donors,” Waasdorp says. “The old-fashioned method of sending monthly billing statements can be expensive and certainly results in a lower retention rate.”
Once donors feel comfortable with the regular giving relationship, it’s easy to upgrade them.
McCabe says that for one particular program, when a donor has contributed enough small gifts in one year to total $500, he is invited to join a group that gives $1,000 or more. About 10 percent to 20 percent accept the invitation, he notes.
King has observed a similar reaction from donors to the Friends of Iowa Public Television. Last year, 18 percent of organization members responded to a direct mail upgrade appeal.
“This small upgrade mailing now generates an additional $13,140 per year,” she says. “Promote, promote and promote the program.”
It’s a win-win
Most loyal donors easily can grasp the value of a sustainer program, for themselves and the organization. Of course, they also value the convenience of having their contributions deducted from their checking accounts or credit cards each month. (It lowers the charity’s fundraising costs and guarantees regular income.)
But more than just convenience, monthly giving can give your organization a chance to create intimate relationships with your best donors. You and your donor can get to know one another better through online, telephone and mail communication, and the interaction doesn’t always have to end with a request for a gift.
So as you struggle to manage all your special projects, wouldn’t it be nice to have part of your fundraising program slide along in perpetual motion? Newton would approve.
Tom Hurley is president of the not-for-profit division of DMW, a full-service direct-response advertising agency with offices in Wayne, PA; Plymouth, MA; and St. Louis. E-mail Tom at email@example.com.