Monthly Giving Part 1–Why Bother?
Editors’ Note: This is the first in a three-part — and hopefully practical — series aimed at encouraging small, large and mid-size organizations to pay serious attention to the benefits of building a monthly giving or sustainer program.
We’ll deal with the question of ‘why’ monthly giving? Highlight some practical resources on getting started and setting goals while focusing on some practical barriers like record-keeping and easy-to-use systems.
Chuck Longfield, founder of Target Analytics and chief scientist at Blackbaud, is one of my favorite fundraising analysts and observers. He preaches a lot about retention and how monthly giving programs relate to it.
For years Chuck has urged organizations to get about the business of building monthly giving or sustainer programs without delay. That’s because if you can communicate with someone monthly and receive a contribution from them every 30 days or so they’re among the most likely donors to stick with you.
Chuck fervently believes sustainers are so important that he’s labeled the imperative to enlist them as “fundraising’s last land grab”. By this he means that, like the Oklahoma Land Rush, there’s only so much land and only a limited number of donors out there likely to make a monthly commitment to a limited number of organizations.
Although ‘normal’ donors may give to 5 or even 10 organizations a year, a monthly donor will usually limit her or his giving to 2 or maybe 3 organizations. Thus, Chuck’s admonition to get there first.
Unfortunately, not many American organizations seem to recognize this concern. Or, more fairly, not many seem to be able to do much to protect their position in the donor land grab race. The Canadians, Europeans and now Asians are way ahead of the Yanks.
Why? Some excuse-prone or misinformed American fundraisers blame it on America’s banking system. The U.S. equivalent of direct-debit elsewhere in the world is the more cumbersome Electronic Funds Transfer System or the old-fashioned U.S. credit card system.
To use the American banking system or poor record keeping programs as an excuse is nonsense. Fact is, most American nonprofits lack both the skill and the patience to invest in building meaningful monthly giving programs, failing to secure their future.
Those U.S. groups that have demonstrated the skill and staying power — groups like Greenpeace, The Southern Poverty Law Center, and ASPCA, to name a few — are rockin’ and rollin’ in committed monthly donors. [For a good discussion on all this see my earlier post — Why Chuck Longfield Is Worried — and note especially the comments of Matthew Sherrington, the British fundraiser who built the highly successful U.S. sustainer program for Greenpeace.]
If you care about retention … if you care about sustainability … significant net income and, eventually, massive bequest income, it’s time to invest some of yourself in mastering at least the basics. With this information you can hopefully convince your CEO or CFO into getting some of fundraising’s beach front property before it’s all gone.
Here are the principal reasons to give serious thought and internal discussion on launching and building a monthly giving program:
- Improve Retention. The average U.S. retention rate is 43%. Recurring or monthly donor programs generally have retention rates in the 60%-80% range. Most monthly donors stay with an organization between 5 and 7 years; often much longer.
- Improve Net Income. Monthly donors give more annually on average than ‘normal’ donors. I’m not speaking of mid-value or major givers, but smaller gift donors who on average make 1.6 gift a year averaging $50 each. Compare this with monthly donors who give between $120 and $600 a year depending on the organization.
- Improve Predictability of Cash Flow. Monthly giving programs produce a predicable flow of income making it easier to forecast revenue.
- Improve Donor Experience. A well-run monthly giving program is not only convenient for most donors, it provides a way to contribute more to advance the mission through small but more frequent gifts. Importantly, a properly designed program provides the donor with a constant flow of information and updates on what she has made possible.
Please Do Some Homework.
In preparing this basic ‘how to get started’ guide I’ve relied heavily on the work of Erica Waasdorp, a long-time practitioner and evangelist of monthly giving. Erica has produced terrific results for both small and large organizations and her approach deserves detailed attention.
Just as you probably wouldn’t visit a strange city without a guidebook or a map, I urge you as a first step in your exploration to order a print copy or e-book version of Erica’s Monthly Giving: The Sleeping Giant from Amazon today.
If ever there were a step-by-step cookbook on monthly giving that contains winning monthly giving recipes, this is it. Erica has taken the seminal work of Canadian fundraiser Harvey McKinnon — Hidden Gold — the basic primer on monthly giving, and updated it with the latest techniques, including the use of social media.
Erica is not a Janie-Come-Lately. She won her direct response spurs at Readers Digest years ago, went on to perform great work for the International Fund for Animal Welfare in Europe, and now runs the fundraising firm A Direct Solution.
But back to ‘Why’ you should not only be buying Monthly Giving but building your understanding and know-how before it’s too late.
As Harvey McKinnon alerted fundraisers a generation ago: “Monthly giving appeals not only to younger donors who find it convenient and easy, but also to older donors, who are more likely to live on a budget. But, regardless of their age monthly donors will often give for decades, are more loyal than even the most consistent annual donors and are far more likely to leave bequests.”
Here’s some simple arithmetic from Erica that should motivate any fundraiser (or CFO) considering tackling monthly giving:
“Beginning with a $25 gift in 1983, a generous individual made a total of 279 monthly gifts of $25 or $30 for a total of 279 monthly gifts over a 22-year period. The donor passed away and one year later organization received a $25,000 bequest. Total value of these 280 gifts. $31, 250!”
Whatever you call them — monthly givers, committed givers, sustainers, direct debits, Friends of…, Circles of…, Champions, Partners — the point is to get started. Now.
Drawing on her own experience plus that of pioneers like Harvey McKinnon, copywriter great Jerry Huntsinger, strategist Daryl Upsall and a score of fundraising’s household names, Erica also outlines the basic numerics of monthly giving with which you need to become familiar:
- Conversion rates. [Expect from 0.5% to 5%]
- Branding or naming the sustainer program. [Don’t go crazy over it]
- The use or non-use of Premiums [Depends on the type of premium and type of organization]
- Targeting best prospects. [Plenty of ‘how to’ advice in her book]
- Giving/Asking Levels. [Again, lots of practical advice]
- Channels — mail, face-to-face, radio, tv, ads and inserts, events, and SMS. [Loaded with examples on the most effective use of channels]
You’ll discover the pros and cons of various channels. Direct Mail. Telemarketing, both inbound and outbound (including sample scripts) and DRTV.
Erica even deals with the oft-troublesome issue of data base management for sustainer programs. A “barrier” for many fundraisers that I’ll deal with in Part 3 of this series.
Monthly Giving: The Sleeping Giant contains copy samples, financial models, and case studies and I urge you to have it readily available on your desk.
Tomorrow in Part 2 I’ll cover Getting Started and Setting goals.
Please don’t hesitate to share your insights and favorite resources that have helped you with your monthly giving program.
This article was posted in: Breaking Out of the Status Quo, Communications, Direct mail, Donor retention / loyalty / commitment, Nonprofit management, Telemarketing, Uncategorized.
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