“We Grow Too Soon Old, and Too Late Smart”
That Dutch proverb popped into my head as I read our friend Erica Waasdorp’s piece Is the Interest in Recurring Giving Really Growing?
It’s not just because Erica is Dutch, nor because she’s an expert in monthly giving. It’s because her reading of the just-released Nonprofit Pro’s 2021 Nonprofit Leadership Impact Study correctly raises legitimate concerns about just how seriously folks are about improving fundraising.
Here are the disappointing/ worrisome/ damning stats that Erica cites from the Study:
- 41% of nonprofits believe their biggest challenge is acquiring donors.
- 10% of nonprofits believe that their biggest challenge is retaining donors!
- Only 21% of nonprofits believe that monthly giving/memberships is their top revenue-producing fundraising strategy.
- Only 29% of nonprofits are engaging donors through monthly giving recruitment efforts.
- Only 16% of nonprofits are prioritizing an increase in recurring gifts in 2021.
Erica poses the “obvious” question (apparently far from obvious for far too many):
“Why focus on acquiring new donors if you don’t have any plans in place to keep them?”
Of course one of the most effective ways to retain donors is to bring them into a monthly giving program. In my book Retention Fundraising I named it one of the “Five Easy Retention Wins”.
Yet, when you look at Nonprofits’ Top Priorities for 2021 as reported in the Study only one third of the organizations are assigning high priority to recurring or monthly giving.
There really is no excuse for ignoring the power of monthly giving. You’ll find at least three dozen posts on the subject in the Agitator… both Erica and Harvey McKinnon have written terrific books to inspire and guide you through the process (here, here and here)…and, if nothing else the sudden cash flow terror of a year ago when the pandemic hit should sure inspire the weatherproofing of recurring gifts.
Don’t be a fundraiser who grows too soon old, and too late smart.
Roger
9 responses to ““We Grow Too Soon Old, and Too Late Smart””
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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I think the line “just how seriously folks are about improving fundraising” says it all. We talk to fundraisers all the time who are ok with the way things are in their organizations. They do what they do over and over and over again and achieve the same “ok” results. And rarely wanting to shake things up or invest time and resources in new strategies. Same old same old. Not sure fundraisers are even thinking about how to improve. Too focused on filling the bucket. If the bucket is full, life is good. 🙁
Unfortunately, the rewards for being bold and succeeding via new strategies at most nonprofits are far outweighed by the penalties for being bold and not reaching the previous status quo.
Until this is mindset is changed by governing boards, the scenarios outlined in your post will continue. However, progressive change does seem to be a hot topic at most board meetings. especially those with executive committees and no term limits…
Maybe these groups are spending too much of their time trying to turn their volunteer board members into fundraisers than focusing on work that matters.
Yes, retention should be top of all lists. That is a no-brainer.
But a few other thoughts: I like to stress that it isn’t the “monthly” part of recurring monthly giving that produces the higher retention, it’s the “recurring” part… that donors don’t have to make a decision each month about their giving because it happens automatically.
And, it doesn’t surprise me that “Only 21% of nonprofits believe that monthly giving/memberships is their top revenue-producing fundraising strategy” because it is probably not. As our work and analysis of organizations have revealed time and again, while small donors may be great in number, they are a small percentage of total revenues, especially when those organizations have larger streams from government grants and contracts, foundation grants and larger donors. Sadly though, we find that too many nonprofits do little to no math to project what types of investments will produce the results they are looking for.
Absolute truth: The money isn’t in acquisition (though, of course, you need to start somewhere to have donors to retain). And while it’s true the lion’s share of revenue for most orgs comes from major donors, recurring giving programs often grow small donors into larger and larger ones over time. Plus these folks are excellent prospects for legacy gifts, because by virtue of making this loyal, continuing committment these donors have essentially adopted your org as a member of their family. People take care of their families, today and tomorrow. It’s interesting to me that recurring giving is so much more popular in the U.K. than the U.S. Spreading the gospel can potentially change the culture.
Claire,
Recurring giving has been more popular in Europe since I worked at Foster Parents Plan in the 1980s. Our European counterparts could not understand why we had retention rates in the 70s when their retention rates were in the 80s or higher. At that time with aggressive marketing, our automated donors were about 23% of our base (about the reverse of for our Dutch colleagues). To get to that number we had to make sure donors understood and trusted that we couldn’t raid their bank accounts if they used EFTs and that they could stop the automated payments any time. We had the same high retention rates for our automated giving donors as our Euro counterparts were experiencing. 35 years ago the US was just beginning to roll out paying for items on debit cards and online banking was brand new. Maybe we underestimate just how hard it is for cultural change to happen?
Interesting survey results and proverb Roger. My question would be:
How can my nonprofit attract resources rather than compete for them?
BTW, did any of you see the NYT’s report on the Trump campaign’s direct mail this fall where the donor had to opt out of recurring giving after wading through the fine print, which then subsequently became WEEKLY gifts. Talk about giving recurring giving a bad name. https://www.nytimes.com/2021/04/03/us/politics/trump-donations.html?campaign_id=2&emc=edit_th_20210404&instance_id=28845&nl=todaysheadlines®i_id=54115655&segment_id=54856&user_id=6a44bcdea3628e8ce52c97f8996a95fe
yes Gayle, thanks for sharing that Trump report…
it’s the exact reason why it’s absolutely important for donors to positively opt into monthly giving (no prepopulated tick boxes on forms) and why I never recommend automatic upgrades or automatic monthly gifts… makes for a really bad donor experience. You want to make it easy to find but the donor must actively opt-in to the frequency and amount and also must find it easy to contact someone if they have questions.
Finally, to your earlier comment, if we look at the donors who made so many gifts last year, it’s the smaller donors especially. A monthly giving/recurring gift is a great way to allow someone to make a gift with an amount they’re comfortable with and then cultivate them to higher levels. Some donors start small, and give more often, some donors start big, as fundraisers, we need all types. I think that the reason why monthly giving has been so slow to catch on here is because historically fundraisers have had the major gift mentality… to add another Dutch expression: “He who doesn’t value the small, isn’t worthy of the big.”
Love that Dutch expression, Erica. So perfect for donor gratitude.