Can Monthly Giving Through Direct Withdrawls Work?
I was born and raised in the Netherlands where electronic bank payments, or direct withdrawls, were a way of life. Believe it or not, even credit cards there were required to be paid off every month, automatically, from your bank account. Things have changed there, but also here in the U.S.
Now, the question, “can monthly giving via direct withdrawal work here?” has a much more powerful “yes” answer than ever before. While it’s still not quite as common as credit or debit cards, paying through direct withdrawal via ACH it is absolutely growing.
There are several reasons for this:
- Organizations, fed up with donors’ credit card expirations and declines, are more focused on trying to convert existing sustainers and start new monthly gifts off through ACH right away.
- The monthly donor retention rate is highest if the donor gives you their bank account. Donors simply don’t change their banks that often.
- It’s much cheaper for the organization. No credit card fees to contend with, so more money can go to support your mission.
- For those organizations that have recurring check payers now, it’s a relatively easy transition to convert them to ACH.
- Setting up direct withdrawals online has become much easier for the donor and is also easier to deal with for the organization.
- Monthly donors through ACH will give more money: $1,700 vs. $650 in a 12-month period, according to a recent donor study by
By the way, you’ll notice that I’ve used a number of terms, because I’ve used in so many ways: Automatic bank transfer, automatic bank withdrawal, EFT, ACH, direct debit, e-check, direct withdrawal via ACH.
The official NACHA definition is: “Direct withdrawal via ACH is a type of electronic payment in which funds are withdrawn or debited from a donor’s checking or savings account and transferred electronically to your organization.”
Erica Waasdorp is one of the leading experts on monthly giving. She is the president of A Direct Solution, a company serving nonprofit organizations with fundraising and direct marketing needs, with a focus on monthly giving and appeals. She authored "Monthly Giving: The Sleeping Giant" and "Monthly Giving Made Easy." She regularly blogs and presents on fundraising, appeals and monthly giving — in person and through webinars. She is happy to answer any questions you may have about this great way of improving retention rates for your donors.
Erica has over 30 years of experience in nonprofits and direct response. She helped the nonprofits she works with raise millions of dollars through monthly giving programs. She is also very actively supports organizations with annual fund planning and execution, ranging from copywriting, creative, lists, print and mail execution.
When she’s not working or writing, Erica can be found on the golf course (she’s a straight shooter) or quietly reading a book. And if there’s an event with a live band, she and her husband, Patrick, can be found on the dance floor. She also loves watching British drama on PBS. Erica and Patrick have two step sons and a cat, Mientje.