The Nonprofit Monthly Giving Program - Pros and Cons
Monthly giving - the modern donation program.
Nonprofits need money, like any for-profit organization, in order to keep itself afloat. What separates them is the fact that by keeping their doors open, they are able to do what they do best: help, make a difference, and effect change in their own way and for the groups they have selected as their mission. We previously discussed various funding options available to nonprofits in our article “7 ways to fund your nonprofit,” which included grants, sponsorships, and, of course, donations. Under the umbrella of donations, though, is one of the most lucrative forms of funding: monthly donations. While a monthly giving program seems like something that should be a part of every nonprofit’s funding repertoire, other nonprofits (particularly smaller ones) might not have one in place, let alone be ready to take one on. For those nonprofits and for those others who want to do a bit of light reading on the subject, we outline the pros and cons of a monthly giving program below.
Consistent and dependable source of income.
According to HubSpot, “75% of your new donors will not give next year.” This may be a startling statistic for some, while others will say it’s just the name of the game. However you take it in, the fact still remains that majority of one-time givers will not give again, let alone remember your nonprofit a year from now. Donations make up the core of your financial planning, without it the system falls apart. Having a monthly donation program in place will bring in some fixed and calculable income to your nonprofit.
With guaranteed funding that you can depend on each month, your nonprofit can feel more comfortable drawing plans for programs, campaigns, events, marketing, etc. The funds gained from the program will cover specific programs and needs, with other funding covering fundraising and other costs. It will also boost your nonprofit’s yearly income, giving you the opportunity to plan for the long run, at least for the coming months or the year ahead, if your monthly donor base is large enough to support it.
"No end date."
As said by Joanne Fritz of About, monthly giving programs typically don’t have a clear end date. The monthly giving program doesn’t end unless your donor decides to stop giving and cancel with your nonprofit. Because donors commit to giving from a month to month basis, potential to secure their support for many years to come is very high; this will open up opportunities to raise more money for your cause.
But you can also offer options, Fritz suggests, if your find that some donors are still a little unsure about making the commitment to give monthly, such as letting them participate in the program on a one or three-year basis. Bear in mind, though, that having this option may be a gamble for your nonprofit, says Sumac (a company that helps nonprofits with their CRM needs), where “while donors that require constant renewal rarely make it past 2 years, monthly donors keep giving for 10 years plus.”
Having no established end date means that the amount of donations your nonprofit could gain has the ability to flourish over time, with smaller donations later becoming larger donations. Generally, according to Network for Good, donors “often respond positively to the idea of giving more over time via smaller, budget-friendly amounts.” This especially rings true with Millennials, which is one of the biggest groups your nonprofit should be targeting. Securing their support and contribution because they can grow over time would be beneficial to your nonprofit.
Suggest upgrades to monthly donors who have a solid track record of giving in their amount tier, allowing them to grow their donation as they see fit. The everyday lives of your donors already revolve around bills and monthly payments; giving the amount they have chosen to your nonprofit will not faze them, making upgrades a solid possibility.
Deeper relationships with donors.
It goes without saying that donors who are part of your monthly giving program should be treated as a group all their own and separate from other donors. Because those taking part in your monthly giving program are giving on a regular basis, the tone of your communications with them has to shift, moving away from appeals to secure donations. You already have their consistent support; communication has be about the impact monthly donors are making, what their continued support does for the cause. Monthly donors will make up the crux of your donor base; because of that, the relationships you build with them will be even more personal and intimate, “these donors becoming real advocates for the cause.” We’ll discuss how you can foster that relationship and communicate effectively with your monthly donors in another article, “Constructing your Monthly Giving Program (tentative article title).”
Cost-effective with high reward.
Carrying out a monthly giving program is in keeping with the growing trend and normalizing of online giving for nonprofits. Although it does require a bit of investment on your part, once things are set up and running, everything is automated and done electronically, making the need for a large staff minimal. Because it is primarily done online, costs for postage, marketing, and administration are kept lower, according to Sumac.
It is also an easy task to inject promotions for your monthly giving program through your nonprofit website, newsletters, emails, direct mail, and social media channels. Additionally, depending on what donor management software your nonprofit is using, it could also keep track of monthly donors and take note of their recurrent giving status.
Donors benefit too.
Your nonprofit isn’t the only one getting something out of this monthly giving program. Your donors gain a thing or two as well from giving monthly.
- Convenient and even eco-friendly: Giving automated payments per month require little effort on the part of your donor. They can give monthly without having to check up on it unless they need to. Since everything can be done online, there’s no need to issue checks and deal with direct mail. Additionally, according to Frank Barry of npEngage, “With fewer direct mail pieces and acknowledgements going back and forth, recurring giving has a legitimate argument of being better for the environment.” Donors will not only feel like they are giving to a cause they believe in, they’ll also be doing their part for Mother Nature.
- Affordable and adjustable: Donors can upgrade their giving amount without much strain and at their own discretion. They also get tax receipts of their donations yearly.
- Kept in the loop regularly: Donors feel secure that their donations are going towards specific projects or needs, that their contributions are making a direct impact on the cause or mission. Because they are giving regularly, it eliminates the need for certain types of constant communications like telemarketing or appeals through email and other channels.
- Investment: These particular donors understand your nonprofit’s need for a sustainable income in order to bring about real and long-lasting change for your cause. They care about your nonprofit’s mission and believe in it enough to make the commitment to consistently contribute to help make things happen. They become a big part of your nonprofit.
Some obstacles to consider.
A monthly program is not without its own snags. There are a few drawbacks to consider as you sit on the idea of a monthly giving program for your nonprofit.
- Lack of resources: “The biggest challenges for organizations,” according to Simon Scriver, Director of Total Fundraising Ireland via Pamela Grow of GuideStar, “is to shift their mindset to monthly giving and get in the habit of asking potential donors to become monthly givers.” A monthly giving program can’t get off the ground if your nonprofit doesn’t have the right mindset to pursue it. Nonprofits are so hyper-focused on securing donors in general that a monthly giving program may seem too expensive and too much of a commitment that it can scare off donors.
- Irregular stewardship: Another common problem Scriver highlights is the possibility that nonprofits may overlook managing their monthly giving program. Thank you letters, notes, and phone calls are “neglected because they don’t always immediately turn into a donation.” What nonprofits need to realize is that “stewardship IS fundraising” and that giving your monthly giving program less than the amount of attention and detail it needs is guaranteeing its failure.
- Ensuring donor peace of mind: This is can be an easy fix for your nonprofit, says Joanne Fritz. If your nonprofit practices transparency and has “all of its technological ducks in a row” then securing monthly donors should not be as difficult. It is dependent upon how well your nonprofit brand has been managed, something that is extremely imperative, which we discuss in our article on why branding is important to your nonprofit.
- Substandard communications: There is no right answer to how often you should be communicating with monthly donors. Pamela Grow instead says “As often as you have something. And I mean something really good” you should say it. Don’t communicate or send updates just because that is what should be done. The kind of commitment that your monthly donors make in giving month to month should be matched by your nonprofit. Letting communications with your monthly donors slip can breed indifference in them, which will lessen their dedication to continue giving.
- Insufficient planning: Having no plan in place is another way of guaranteeing that your monthly giving program will fail. Your nonprofit needs to have a strategy in place for any and every monthly giving situation, most especially how you will keep your monthly donors happy and encourage them to keep on giving. Scriver notes that what also becomes problematic is not having a plan to handle cancellation spikes, which typically occur due to changing seasons, such as January in the beginning of the year and then at the beginning of summer. These are usually brought about by bad publicity or press or an economic slump. When this does happen, Scriver suggests, work with your donors by reminding them that there are other options available to them: a “lower donation amount, a one-month break, annual donation, etc.” Don’t just write them off if they cancel, maintain communication to see if there is something that works better that will encourage them to maintain their giving one way or another.
- Making the commitment: Lastly, nonprofits are unwilling to make the commitment. When things shift within the organization, such as a change in Executive Director, board members, or staff, dedication to the plans for monthly giving begins to drop. If you do decide to pursue a monthly giving program, you have to be realistic and stick to it! Like outlined above, although it is a considerable and potentially risky investment to make, it will have high reward, but only if you are committed to making it work.