When 12 x $100 does not equal $1200
As most of my regular readers know, I’m passionate about recurring giving.
As a donor, monthly giving makes me feel connected with a given nonprofit throughout the year, knowing (via monthly credit card receipts) that I’m helping to sustain that organization regardless of the time of year or a particular program.
For the NPO, my monthly donation is consistent, reliable, and doesn’t turn on or off when there are changes or challenges throughout the year. (Every organization, for-profit or nonprofit, has challenges throughout the year, and if a nonprofit tells you otherwise, they’re lying.)
I’ve written article after article about this: The Holy Grail of Fundraising, A Really Lame Way to Lose a Donor, and Gloriously Predictable, just to name a few, but I find myself continually perplexed at the reticence to think of recurring donors as a critical piece of any nonprofit’s fundraising program.
You might have read my recent post about an organization that didn’t notice that I canceled my subscription/sustaining gift after six months. I think that I now understand why. It’s about basic math.
Just a few months ago, Nonprofit Tech for Good summarized the 2021 Open Data Project’s findings that included these lovely points:
Of the nearly 600 nonprofits queried, 38% actively implement a year-round retention strategy for online donors.
Only 32% send an automatic “Welcome” series to new online donors via email.
Only 23% follow up on expired credit cards for recurring/monthly donors via email.
What the heck, right? Yes, I know, I know. The reason for the above stats is because nonprofits are understaffed, under-resourced, and they must choose where to put their time and energy. And when a donor “only” contributes $100/month, we look at that as a $100 donor. A $100 donor gets classified into the common “under $1000” category, and the resources attached to that donor category typically include lower-level staff, less attention, and, sadly, a relegation into a group of less-important “givers”, so that the focus can be on major donors.
This, in my opinion, is faulty thinking. Look at the three bullets above. All of those issues can be solved by simple automation. None require any significant use of resources. Still, it happens.
And here’s where the math comes in. A $100 donor is a $100 donor and can be put into that “under $1000” category. However, a $100 monthly donor is a $1200/year donor and should be put into the “over $1000” category. But they’re not!
Let’s look at retention rates, too. The retention rate is only about 18% for first-time donors who donate the next year, but the retention rate for monthly donors is well over 50% (Donor Perfect says 90%). These monthly donors are showing loyalty to your organization, and they are far more likely to keep those monthly donations coming, long-term, (simply by not canceling them) than any other type of donor.
Simply put, a $100 donor is a great donor to have, and that donor, like any other donor, should be thanked, appreciated and respected.
A $100/month donor, though, should be treated like gold, or, at the very least, like a $1200/year donor. Think about it, and do the math.
I’m Saving Giving by providing a clear path to success, supported by data, statistics, and interviews. You can find more great newsletters like this one here on Philanthropy 451, in my bestselling book, Philanthropy Revolution, or on socials at Twitter, Facebook, and LinkedIn to learn more.