Monthly Donor Program Can Increase Nonprofit Revenue | CharityHowTo

This is a guest post by Erica Waasdorp

I’m a total convert on the topic of monthly donors. I’ve seen its power and how it has kept an organization going after a major disaster. I’ve seen how it generates 50 percent of an organization’s revenue. I’ve seen that even small tweaks to organizations’ communications can make a difference.

The good news is that fundraisers’ lives have become so much easier with new systems that support generating monthly, recurring donors and sustainers.

So, if you have a monthly donor program, congratulations! If you’re just starting out, wonderful! Keep it growing! But, if you’re still not convinced or if you need “ammunition” to spend a little bit more time and resources on your monthly donor program, here are some great reasons why you should jump on that monthly donor bandwagon today!

First, let me tell you about a small rescue organization. Their president contacted me a while back and told me: “We have 2,500 donors and about 300 of them are monthly donors. How can we grow it?”

Let me share this (mind-blowing) statistic with you:

Their 300 monthly donors generates almost $90,000 a year!

The president was very eager to grow their program. He was a financial whiz and saw its tremendous power. He did not need any more convincing. Just think, what could you do with the funds raised if you could grow your monthly donors to that level or even higher? You can hire more staff. You can provide more services.

Here are the three major reasons why monthly donors are so powerful, even though these donors seem to be so small (at first):

• Reason 1: Monthly donors will give more money.
• Reason 2: Monthly donor retention rates are much higher.
• Reason 3: Generating monthly donors has become much easier than before.

There’s research that shows monthly donors give three times more money than one-time donors. I’ve looked at the few studies that exist on monthly donors (or sustainers). The 2016 Target Analytics™ Sustainer Benchmarking Study is truly the most thorough study done in our industry on sustainers. It’s important to note that organizations have to have at least 4,000 sustainers to be included. The 2016 results are based on 36 unique organizations, with a combined $1.97 billion in revenue and 16.3 million donors in total.

Two highlights to note:

1. From the 36 organizations in the study, 15% of active donors were recurring, generating 19 percent of their annual revenue.
2. What’s even more pertinent is to look at their 5-year median change in revenue from recurring donors—a 55.2% increase. Over the past year alone, the median change in number of recurring donors increased by 16 percent. The number of one-time donors for these organizations has decreased in the past year, but the number of monthly donors has increased.I looked at a second study from Third Space Studio— the Individual Benchmarking Report. This report was based on 199 organizations raising $2 million a year or less and showed that smaller organizations with monthly donor programs see 14% of their income come in from recurring donations. No matter your organization’s size, you’ll be able to identify with them. So let’s address these reasons one by one.

Monthly Donors Will Give More Than One-Time Donors

You can see that those donors who were acquired in 2013, as single-gift donors, generated $139 after 4 years. Those that were acquired as monthly donors right away generated $429, so three times more than one-time donors.

This earlier study also looked at those donors who gave one-time gifts in the year and how much they generated once they became recurring. Again, we see that they generated twice as much money compared to those one-time donors.

This trend still holds true 2 years later. The average gift is $23 per month or $276 per year, which is so much higher than any one-time donation. Web/digital donations generate the highest monthly gifts.

From Third Space Studio’s report, we learn that those organizations with recurring donors generate an average of $754 annually compared to one-time donor’s average of $208, so again, you’ll raise more money.

Monthly donors generate two to three times more revenue than one-time donors.

Monthly Donors Retain At Much Higher Levels

It’s all about donor retention. How can you get donors to retain at higher levels than what we’re seeing now, which is 46 percent overall (via 2016 Fundraising Effectiveness Project)?

If you convert your donors to give monthly, your donor retention rate improves!

Generating New Monthly Donors Has Become Much Easier Than Before

Many years ago, when I started generating monthly donors, online barely existed.

Systems were complicated. Boy, that sure has changed. Now, you can direct donors to donate monthly with a simple click! Monthly donation payments are often handled automatically without ever having to do manual entry. There is no excuse not to offer monthly giving through your website. There’s no easier way to direct donors to give monthly than by email and other social media platforms. A link can direct donors to the monthly giving page.

Now, direct mail, telemarketing and web/digital platforms are still favorites in generating new monthly donors. Bigger organizations can afford to invest money in other channels—direct-response television, face-to-face fundraising and door-to-door fundraising—as ways to generate monthly donors.

But from Third Space Studio’s report, we see that $1 in every $5 comes in online. So, as long as you have your monthly donor donation page organized—and there are now many options to do this affordably and easily—you have the tools to start generating monthly donors, regardless of your organization’s size.

You can start growing monthly donors using web/ digital and expand to other channels later.

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I hope these reasons help change you or your boss’s mind about how small donors can become so tremendously powerful once you convert them to give monthly.

If you are not already looking at implementing a program for your organization, I would highly advise you to truly make a monthly donor program one of your priorities this year.