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.
“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.
Katrina VanHuss and Otis Fulton have written a new book, Dollar Dash, on the psychology of peer-to-peer fundraising. Click here to download the first chapter, courtesy of NonProfit PRO!
Katrina VanHuss is the CEO of Turnkey, a U.S.-based strategy and execution firm for nonprofit fundraising campaigns. Katrina has been instilling passion in volunteer fundraisers since 1989 when she founded the company. Turnkey’s clients include most of the top thirty U.S. peer-to-peer campaigns — Susan G. Komen, the Cystic Fibrosis Foundation, the ALS Association, the Leukemia & Lymphoma Society, as well as some international organizations, like UNICEF.
Otis Fulton is a psychologist who joined Turnkey in 2013 as its consumer behavior expert. He works with clients to apply psychological principles to fundraising. He is a much-sought-after copywriter for nonprofit messaging. He has written campaigns for St. Jude’s Children’s Research Hospital, The March of Dimes, the USO and dozens of other organizations.
Now as a married couple, Katrina and Otis almost never stop talking about fundraising, volunteerism, and human decision-making – much to the chagrin of most dinner companions.
Katrina and Otis present regularly at clients’ national conferences, as well as at BBCon, NonProfit Pro P2P, Peer to Peer Forum, and others. They write a weekly column for NonProfit PRO and are the co-authors of the 2017 book, "Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising." They live in Richmond, Virginia, USA.