Why Monthly Dollars Are the Best Dollars
I am a sucker for those ads that feature dogs and other four-legged creatures in cages. The organizations that I contribute to on a regular basis include the following: ASPCA, The Humane Society, Farm Sanctuary, AARF and PAWS. Even if you aren’t familiar with some of the acronyms, you get the idea. In fact, I am a “subscriber” to several of these organizations (to use for-profit lingo). And, is it appropriate to compare the monthly giving to subscriptions?
Let’s examine monthly giving first. For my nonprofits, I am the best kind of supporter—I give to some of these groups monthly via an automatic deduction to my debit account. According to “M+R's Benchmarks Study,” revenue from monthly giving grew by 23 percent in 2016, compared to 13 percent growth for one-time giving. Monthly revenue growth outpaced the growth in one-time gift revenue for every sector except public media, which saw a decline in monthly revenue. Monthly giving accounted for 16 percent of all online revenue in 2016.
I spoke with Vickie Lobello, Turnkey’s chief strategist, about why monthly giving is one of the hot button issues right now among development directors. I asked her what she is telling Turnkey’s consulting clients about why and how they should be creating a cadre of monthly supporters.
"Monthly giving is the fastest growing revenue stream for nonprofits that invest in creating a program to support this effort. Creating a strong strategic plan for monthly giving will improve donor attrition rates and strengthen long-term relationships with donors and the lifetime value of support. In addition, it will aid nonprofits in forecasting cash flow more effectively and will engage with donors in the way that they want to engage. The key elements of the strategy include a framework for action on nurturing, acquisition and methods to increase support from donors."
Those of you who read this blog regularly know that we are big proponents of adopting tools and techniques used in the for-profit sector to drive nonprofit giving. Automated marketing is one of these tools, as we wrote about in a recent blog.
Likewise, monthly giving is another strategy that has been vetted and validated by for-profits. For-profits call monthly giving the “subscription model.” Interestingly, of the organizations that I subscribe to via my monthly donations, most only communicate with me directly via email once a year—when they send me an IRS receipt that I can use to claim a tax deduction. My for-profit subscriptions talk to me a lot more, frankly.
What is the driving philosophy behind the subscription model? It is what author Robbie Kellman Baxter describes in her book, “The Membership Economy.” Here’s a quote:
“Organizations that build their businesses around people’s needs to belong, to be connected and to be admired, that are focused on relationships over products, are winning in today’s economy.”
Exchange the word “businesses” with “nonprofits” and you have a formula for attracting and keeping donors that can be used by any nonprofit in the U.S. The parallels to constituent engagement are also strong. Membership means more than being a record on the organization’s donor database. Being a subscribing member involves “being formally engaged with an organization or group on an ongoing basis.”
For-profit executives and investors like the membership model for the same reason nonprofit development officers like monthly giving—it reduces uncertainty in their revenue. In addition, it builds a direct relationship with the customer that strengthens the brand. Finally, that interaction creates an ongoing data stream that can be used to understand how to better serve the customers’ needs.
Developing a strong core of supporters for nonprofit missions involves providing people with a sense of connection. There is some irony that for-profits have developed a business model based on their customers desire “to gravitate toward community,” as Baxter says.
Taking the subscription model—the whole thing and not just the “give me money monthly” part—could transform nonprofit fundraising. Monthly donors have opened the door to a relationship with them. They have said “yes” to us in the best way they can. They want to be part of our community. They are begging for more of a relationship. iTunes, one of my for-profit subscriptions, communicates with me about more than what I pay them for each month. They also tell me what is going on with that organizationand with the members of the iTunes community. My monthly nonprofit subscriptions could do the same, but they don’t. They just send me a tax receipt, and maybe the occasional newsletter. I want to be part of their community.
Otis Fulton, Ph.D., spent most of his career in the education industry, working at the psychometric research and development firm MetaMetrics Inc., Pearson Education and others. Since 2013, he has focused on the nonprofit sector, applying psychology to fundraising and donor behavior at Turnkey. He is the co-author of the 2017 book, ”Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising,” and the 2023 book, "Social Fundraising: Mining the New Peer-to-Peer Landscape," and is a frequent speaker at national nonprofit conferences. With Katrina VanHuss, he co-authors a blog at NonProfit PRO, “Peeling the Onion,” on the intersection of psychology and philanthropy.
Otis is a much sought-after copywriter for nonprofit fundraising messages. He has written campaigns for UNICEF, St. Jude’s Children’s Research Hospital, March of Dimes, Susan G. Komen, the USO and dozens of other organizations. He has a Ph.D. in social psychology from Virginia Commonwealth University and a Bachelor of Arts from the University of Virginia, where he also played on UVA’s first ACC champion basketball team.
Katrina VanHuss has helped national nonprofits raise funds and friends since 1989 when she founded Turnkey. Her client’s successes and her dedication to research have made her a sought-after speaker, presenting at national conferences for Blackbaud, Peer to Peer Professional Forum, Nonprofit PRO, The Need Help Foundation and her clients’ national meetings. The firm’s work is underpinned by the study and application of behavioral economics and social psychology. Turnkey provides project engagements, coaching, counsel and staffing to nonprofits seeking to improve revenue or create new revenue. Her work extends into organizational alignment efforts and executive coaching.
Katrina regularly shares her wit and business experiences on her and Otis Fulton's NonProfit PRO blog “Peeling the Onion.” She and Otis are also co-authors of the books, "Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising" and "Social Fundraising: Mining the New Peer-to-Peer Landscape." When not writing or researching, Katrina likes to make things — furniture from reclaimed wood, new gardens, food with no recipe. Katrina’s favorite Saturday is spent cleaning out the garage, mowing the grass, making something new, all while listening to loud music by now-deceased black women, throwing in a few sets on the weight bench off and on, then collapsing on the couch with her husband Otis to gang-watch new Netflix series whilst drinking sauvignon blanc.
Katrina grew up on a Virginia beef cattle and tobacco farm with her three brothers. She is accordingly skilled in hand to hand combat and witty repartee — skills gained at the expense of her brothers. Katrina’s claim to fame is having made it to the “American Gladiator” Richmond competition as a finalist in her late 20s, progressing in the competition until a strangely large blonde woman knocked her off a pedestal with an oversized pain-inducing Q-tip. Katrina’s mantra for life is “Be nice. Do good. Embrace embarrassment.” Clearly she’s got No. 3 down.