Monthly Giving: Everyone Should Be Doing It
According to the 2015 M&R Benchmarks Study, online monthly giving grew by 32 percent in 2014, compared to just 9 percent for one-time giving.
If you’ve ever wanted to build a predictable monthly revenue stream and create donor loyalty for your organization ... If you’re looking to lower your fundraising costs while simultaneously reducing donor attrition ...
Monthly giving is your answer.
A longtime staple of fundraising programs throughout the world, monthly giving finally is gaining traction in the U.S. Nonprofits are realizing that it’s a potential gold mine, especially for smaller organizations.
Since I've been so focused on launching my latest “Basics and More” course, and have monthly giving on my mind, I thought I’d share my interview, recorded back in 2010, with Harvey McKinnon, author of the classic monthly giving primer, “Hidden Gold.” In it, McKinnon shares why, for even the smallest nonprofit organization, beginning a monthly donor program makes all the sense in the world.
The majority of my members, course participants and subscribers are from the roughly 55 percent of U.S. nonprofit organizations with annual budgets of less than $1 million. That said, they’re usually one-person marketing and development shops. Given their limited resources, how can they best introduce monthly giving to the mix? Can we start with your seven great reasons—I love this part of your book—to start a monthly giving program now?
Harvey McKinnon: Absolutely. Well, the best reason I think is you’ll dramatically increase your annual income. Since “Hidden Gold” came out, we’ve analyzed probably hundreds of files and looked at how much donors were giving before they became monthly donors and how much they were giving afterward. And, generally speaking, on an annual basis, each person [who] converts to monthly giving gives two to three times more money, some of them even more.
So even in an annual program, you will see from the people who will give more money, because it’s just easier to give $20 a month than two checks of $120 a year. You also build better relationship[s] with your donors because every interaction isn’t just asking them for money. You’re usually reporting back on how their gifts have made a real difference to the program and the mission of the organization.
One of the most important things is that donors will stay with your organization longer. When people collect monthly gifts, either by credit card or what’s called electronic funds transfer (EFT), where the money’s automatically transferred from [the donor's] bank account into the charity’s bank account, they tend to go on forever and ever, and it depends on the channel that recruits them whether it’s the person-to-person solicitation or monthly giving. But, generally speaking, once someone signs up on the program, they will stay on your donor base and give you money every year or at least three times on average longer than the person who is giving you single gifts currently. And that’s pretty magical, because that coupled with the fact that people upgrade their income[s] each year means that you are going to get more income, usually eight to 10 times more income.
We just did analyses for one of our clients from Marmot Recovery Foundation, a small charity. The Vancouver Island marmot is the most endangered animal in North America, or was till we raised a lot of money to build breeding centers. They’re still threatened, but [the breeding centers have] made a huge difference. But we were analyzing [the foundation’s] file and discovered that people who became monthly donors gave six times more on average in a given year, and you can imagine that, because [its] attrition rate—meaning people who drop out from monthly giving—is only about 8 to 10 percent a year, compared to anybody who was in the donor file. This is probably up in the 20-to-30-times-more-valuable range over time.
Another great reason is that it’s predictable. So for many small organizations especially, you know that your money comes in when you contact your donors. Occasionally there will be a big grant, whatever. But if you can depend on X-thousands of dollars coming in every month, whether it’s a summer month or a month where everybody’s on vacation, that’s incredibly helpful cash flow, and it helps predict what’s going to come in the following year. We can usually predict within 1 or 2 percent for every one of our clients—and these include some really large clients—how much [donors] will give for monthly giving, because there’s so little attrition on these files, especially if they’re direct-mail-recruited monthly donors. Easy to predict, and even if you’re recruiting from television or face-to-face, you can usually predict with a fair degree of accuracy what the attrition rates are. You’ll also lower your fundraising costs.
Once you mail six times a year to your donor’s solicitation, [he or she] become[s] a monthly donor, you don’t have to contact [that person] nearly as often. If [the individual] start[s] giving electronically, [he or she] will still give, and that’s pretty important. So once you build up a large file that means you can actually save a fair bit of money. Again your income can also grow over time because, in addition to the fact that people stay longer and give more each year, it’s easier to upgrade donors. So if you have somebody giving you $15 a month, and … say 10, 11, 12 months after they [have] been on a program, you send them an appeal or make a phone call saying, “Could you increase your gift by just $3 a month? That’s just 10 cents a day. Would that be possible?” Well a lot of people do that. For many of our clients, the average is somewhere around $5 for upgrading. And even if only 10 percent of the people do it each year, that’s a phenomenal number of extra dollars over the course of the donor’s lifetime. In addition to that, the upgrades often make up for all the money lost by anybody dropping out of the program.
And, lastly, the seventh reason is convenience. It’s easier for charities to manage these programs, and it’s also easier for the donor. And the donors like the fact that it’s easy for them. No organization will get 100 percent of the donors signing up monthly. But if you have 1,000 donors, and 10 percent of them sign up … and you know that they’re going to give you three to six times more money per year, that’s the equivalent of getting lots of new donors.
Pamela Grow is the publisher of The Grow Report, the author of Simple Development Systems and the founder of Simple Development Systems: The Membership Program and Basics & More fundraising fundamentals e-courses. She has been helping small nonprofits raise dramatically more money for over 15 years, and was named one of the 50 Most Influential Fundraisers by Civil Society magazine, and one of the 40 Most Effective Fundraising Consultants by The Michael Chatman Giving Show.