Monthly Giving Programs Identify Your Most Loyal Donors

It is an old saying, to be sure, but what fundraisers don’t know can indeed hurt them. While they understand that a well-balanced revenue portfolio is a prerequisite for the financial health of their organization, many overlook three proven fundraising methods — monthly giving, peer-to-peer giving and face-to-face giving — because of misunderstandings about what they are best used for and how to manage them successfully. All three are effective ways of asking, but is your organization ready to benefit from them?

Over the next few blog posts, I’ll be looking at each of these three methods in detail. I’ll start with monthly giving.

What monthly giving is

As the name implies, it is the act of donating a fixed amount of money to a nonprofit, either automatically through direct debit or electronic funds transfer, by credit card or by check. Not only does monthly giving increase retention rates and the average gift size, but it also helps reduce revenue volatility and improve long-term planning. Research has found that the annual value of a monthly donor can be significantly greater than that of single-gift donors, and many monthly donors will give for 20 years or more.

What monthly giving is not

Despite the recurring nature of the gifts, a monthly program is not time-consuming to maintain, says Rosemary Oliver, fundraising director at Amnesty International Canada in Toronto. “It doesn’t take a lot of additional resources,” she explains. “Just a little time up front to strategize.” If your nonprofit is able to process credit card gifts, you already have everything you need to handle monthly gifts. The process is automatic, requiring only occasional attention, such as when a donor’s credit card expires.

To find what works best for your organization, Oliver recommends testing the waters with a few hundred monthly, small-gift donors to build confidence. “Your organization may need to learn to walk before it runs,” she says. “That’s fine. It’s about finding your own level of efficiency.”

Oliver points to her organization’s success with monthly giving as an indicator of what can be done when starting from a humble beginning. Twenty years ago, Amnesty International Canada had a modest monthly giving program with 7,000 donors that generated less than $1 million. Today, more than 35,000 monthly donors give $8.8 million a year in monthly gifts ranging from $1 to $1,000, which accounts for 65 percent of its annual revenue. Furthermore, up to three-quarters of Amnesty International Canada’s legacy gifts come from monthly donors. “As you can see, it is worth taking the time to steward those $10-a-month donors,” Oliver says. “They really add up in the long run.”

What monthly giving does best

As Oliver’s experience suggests, a monthly giving program is an effective tool for identifying your most loyal donors for further stewardship. “People who give monthly really care about your mission deeply,” says Gail Perry, CFRE, founder of Fired-Up Fundraising in Raleigh, N.C. “They’re often prime major-gift prospects.” She recommends strengthening donor loyalty by recognizing them with thank-you calls and letters and singling them out in newsletters and on your website. Establishing a monthly giving club is an effective way to motivate board giving as well, Perry notes. Even so, it takes time to build a cadre of loyal monthly donors. “Organizations often lose heart because of the initial results,” she explains. “But if you keep promoting, it will gradually build. You need to make a long-term commitment.”

How to succeed with your monthly giving program

According to Harvey McKinnon, president of Harvey McKinnon Associates in Vancouver, British Columbia, the single largest obstacle to a successful monthly giving program is buy-in. Because it is a long-term strategy, a monthly giving program does not always compare favorably with fundraising methods that provide more immediate revenue, such as direct mail and online giving. A successful monthly giving program requires leadership and staff to take the long view, nurturing and growing the program slowly but steadily.

“Assess how much you’re willing to risk in terms of money and organizational commitment,” McKinnon advises. “Look at how many donors you have and what the likelihood is of converting them to monthly donors.”

Successful conversion requires a balanced suite of revenue channels that identify prospective monthly donors and feed them into the monthly giving program. (The two exceptions to this are direct recruitment of non-donors to monthly. The primary methods for this are face-to-face and direct response television [DRTV], both of which are very expensive to start.) McKinnon recalls a client that generated more than 50 percent of its revenue through monthly giving but stopped investing in single-gift donors and instead put money into high-attrition streams, such as DRTV. “If they had continued to build the single-gift channel as well, they’d have a higher net income and a larger pool of donors to convert to monthly giving,” McKinnon says. “Any organization can convert a percentage of its donors to monthly, but it does take leadership.”

Next week: Peer-to-peer giving

This post was adapted from “Power Tools: How Monthly Peer-to-Peer, and Face-to-Face Programs Can Be Powerful Tools in Your Fundraising Tool Kit,” by Paul Lagasse, Advancing Philanthropy, Winter 2017 (reprinted with permission). You can read the whole article here.

Author: Paul Lagasse

Paul Lagasse provides expert-to-expert communications services to nonprofit, business, and government clients in the metro Baltimore-DC area. Specialties include science and medical writing, technical report editing, and content marketing.

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