As a nonprofit professional, you understand that nonprofit donations tend to occur in cycles, usually based around the end of the year. Research shows that some nonprofits make up to 30% of all gifts in December, meaning that nonprofits must double down during the other 11 months of the year.
This is one reason nonprofits need a rock-solid foundation of recurring donations. Building a reliable base of recurring donations is the best move you can make for your nonprofit's long-term financial health. In this guide, we'll review everything your organization needs to know about recurring donations, including:
- What are Recurring Donations?
- Why are Recurring Donations Important?
- Tips for Securing Recurring Gifts
- 5 Strategies to Strengthen Recurring Donations for Your Nonprofit
Attracting new donors requires time, resources, and money. While one-time donations help, they only contribute so much to the sustainable funding pool your nonprofit needs to fulfill its mission. This is why marketing to the donors you already have to build a reliable base of recurring donations is ultimately better for your nonprofit’s financial health in the long run.
Recurring donations are a buzzword in the nonprofit world, but what do they actually mean?
What are Recurring Donations?
Recurring donations are automatic contributions made by donors on a regular schedule, typically monthly. These donations are often set up when donors complete a donation form on your website and opt to automate their ongoing support. Unless a donor modifies or cancels their giving plan, these contributions can add up to significant amounts over the course of a year (or several years).
Why are Recurring Donations Important?
Nonprofits must regularly guess how their financial situation will deviate from year to year based on previous donation patterns. While one-time gifts can fluctuate, recurring donations provide predictability. Nonprofits with a strong base of recurring donors can make financial decisions with less required guesswork.
Recurring donors provide a built-in retention strategy, preventing this lapse of support from the very beginning.
By focusing on recurring donors, your nonprofit can make the most out of its relationship with each donor, leading to more sustainable fundraising. To start attracting recurring donors, implement these five best practices:
- Accept recurring donations directly from your giving page.
- Offer suggested giving amounts for recurring gifts.
- Allow donors to update their recurring donation profile.
- Get notifications if recurring donations fail.
- Give recurring donors other ways to get involved.
Recurring donors can also increase overall revenue. In recent years, their increased popularity has led to monthly online giving increasing by 46%.
It’s no mistake that online giving lends itself to attracting consistent giving. Many donors are interested in becoming recurring donors if given the option, and your online giving page is the best place to let your supporters know how they can.
A note of caution: Credit card declines can easily cost you up to 30% of your recurring funds. Many nonprofits accept this as the cost of doing business, but it's not inevitable! Payment processors with subscription billing technology can retain that extra 30%. Be sure you ask the right questions of your payment processor so you keep all the funds intended for your nonprofit.
Tips for Securing Recurring Gifts
Converting donors is expensive. Individual donor contributions don’t always outweigh the time and money it takes for your marketing and fundraising efforts to make the conversion. It is more efficient, and more valuable in the long run, to secure more recurring gifts.
Here are some tips that will help:
1. Accept recurring donations directly from your donation page.
By accepting recurring donations from your donation page, you capitalize on your marketing investment by encouraging increased giving over time. If someone agrees to donate $10 per month rather than $100 upfront, you’ll raise an additional $20 per year from that donor while also guaranteeing their continuous engagement.
When you include a recurring donation option directly on your online donation page, you can capture donors during the most critical part of their engagement experience. Converting donors requires multiple steps and consistent and varied communication strategies.
Lengthy donation forms and the requirement to re-enter payment information can lead to donor abandonment. Donors may abandon the donation page before completing their gift. An attractive button or checkbox located directly on your nonprofit's donation form allows donors to easily sign up for a recurring donation plan, saving them the need to fill out another form.
While most nonprofits suffer from low donor retention, they also have low recapture rates, or the percentage of lapsed donors who give again in the future. Instead of investing resources to coax donors back, your nonprofit should encourage its current donors to continue giving upfront. Your website should be as user-friendly to recurring donors as possible to avoid losing one of your most reliable sources of support.
2. Offer suggested giving amounts for recurring gifts.
Giving pages often use suggested giving amounts to provide supporters with context about how much others typically give to your organization. They provide a social cue that supporters use to decide how much to give.
However, when they choose to contribute a recurring gift, asking them to give the same amount in recurring donations as they would in a single gift might seem tone-deaf.
Those who give monthly will give more over time, so they’ll likely be more receptive if you lower the suggested donation amounts for recurring gifts.
Larger gifts obviously benefit your nonprofit in the moment, but regular medium-sized (or even small) gifts add up in the long run to equal one of these larger contributions. As your donors’ financial situations change, they may also be inclined to change their donation tier to the next suggested level.
When you calculate your one-time donation tiers, you should be sure the calculation is informed by your donation averages. If you offer four suggested donation amounts, you might include the average amount as your first or second option, encouraging people to choose the higher options and increasing your average donation over time. It might look something like this:
Displaying the two giving suggestions side-by-side will also give donors more options for how they want to donate. The presence of recurring donation options can push some donors towards giving larger one-time gifts, and large one-time gifts can persuade others into smaller recurring gifts that add up over time.
Offering suggested donation amounts impacts donors’ perception of their giving, which can alter the amount and way they give. When creating suggested donation amounts, take into account that:
- When given options, most donors will choose the second lowest default. Donors want to support you without being seen as cheap, but they also don’t want to break the bank. The second lowest option can seem like a generous but safe choice that avoids doing the bare minimum.
- High minimum suggested donations can turn away new donors. High numbers can intimidate new supporters for both single and recurring gifts, causing them to abandon your page.
- Slightly increased minimums can cause loyal donors to donate more. While new donors shy away from high investments, your recurring donors are already invested and feel confident when giving.
When reaching out to your existing donors, suggest that they increase their recurring donation amount based on the next highest suggested donation tier. For example, you might provide options for someone who donated $15 per month in the past to start giving around $20 or $25 regularly.
3. Allow donors to update their recurring donation profile.
Picture this: Mary has regularly donated $20 to your nonprofit for almost a year. However, one day she loses her credit card and calls her bank to cancel it. Setting up all of her old payment plans for her new card is a hassle, and Mary decides that while she liked giving, contacting a website administrator to change her profile isn’t worth the effort. She’s been stressed out about the credit card and eventually forgets all about her old regular contributions.
Mary’s situation illustrates that your recurring donors’ financial and living situations will change, and support for your organization might disappear in a passive way. If, however, Mary is reminded via email of her past support and can easily access an online portal to update her account, his support will likely return.
Allowing your donors to update their own profiles and information provides two major benefits: It gives your donor control over their gift journey and takes some of the pressure off your organization.
Give donors control over their gift journey.
Your recurring donors have made your nonprofit part of their monthly expenses, and for financial security, they will need a degree of control over their participation as a contributor. Give your donors the ability to change:
- Their gift amount and frequency. Financial situations change both for the worse and the better. Donors may need to skip a month now and then, and giving them the option to change their frequency settings keeps the door open for them to return to their giving pattern once their situation improves.
- Personal information. Donors will move, change emails and phone numbers, and have credit cards expire. These changes shouldn’t mean the end of their donor journey, so give them an option to keep your nonprofit updated on these types of changes.
- Communication preferences. Some of your recurring donors will want to receive regular updates about your nonprofit, while others are happy to donate quietly without participating in events or fundraisers. Let your donors control what alerts they get and how they get them. This makes communication easier for you as well!
Donors appreciate the control and shouldn’t feel trapped in their donor experience. It may seem counterintuitive to give your supporters easy access to cancel their subscription. However, letting your supporters decide when and how they give can instill trust in your supporters and take the pressure off signing up for a recurring donation plan.
Take some of the pressure off of your nonprofit.
If a donor reaches out to change something about their profile, they will want the change to happen fast. While one or two changes can be done quickly enough, the responsibility of tracking changes for donor profiles adds up as your nonprofit acquires more supporters.
Share the responsibility of staying updated with your donors by letting them make the changes they want when they want them to happen.
Before letting your recurring donors edit their profiles at will, be sure to automate the process (or use an all-in-one software solution) so that the changes they make to their front-end profile are also reflected in your CRM. This ensures everyone stays on the same page and no information gets lost in the shuffle.
4. Get notifications if recurring donations fail
Donations fail for all sorts of reasons, such as credit cards expiring or your donors changing addresses. These experiences also often coincide with a stressful point for your supporters. If they’re in the process of moving, your supporters’ first priority will likely be setting up their utilities, not updating their donation profile.
That’s why it’s important you’re also kept in the loop when recurring donations fail. You can reach out to supporters and remind them to continue contributing.
Donors who have kept up their recurring gifts for years are likely to experience a failed payment at some point as they cancel and renew their credit cards. Thankfully, a failed payment isn’t the end of a recurring donation as long as everyone knows when something does go wrong with a payment.
You can automate outreach to your supporters by using your nonprofit’s CRM to enable notifications and emails to donors if a donation falls through. Ensure both your donors and your staff receive a message, so you can reach out if your supporters don’t resolve the problem themselves.
You can also anticipate certain issues, such as changing addresses, by running the donor profiles in your CRM against the change-of-address database. Some CRMs offer features, such as credit card updater services, that automatically update expiration dates to decrease declines.
These types of tools can take the information updating process to a new level of efficiency, getting ahead of potential issues and helping to keep your recurring donors around for the long haul.
5. Give recurring donors other ways to get involved
Recurring donors have a lasting investment in your nonprofit and can be some of your strongest supporters. Avoid making recurring gifts a “set it and forget it” approach by encouraging your donors to get involved with events, fundraisers, and volunteer opportunities.
Stewarding relationships with your recurring donors helps your nonprofit with other objectives while creating connections that can translate to larger donations down the line.
When you’re considering how to get your recurring donors more involved with your organization, consider hosting virtual events and inviting them to participate or volunteer.
You might consider event opportunities like these:
- Peer-to-Peer Fundraising Event. Nonprofits have made use of peer-to-peer fundraising for a few years now due to its incredible effectiveness.
- Talks and Demonstrations. Talks by your nonprofit’s leadership or experts in its field are always interesting, whether they’re in-person or live streamed.
- Virtual Gala. There’s no true replacement for in-person galas, but you can still engage with your supporters and have a bit of fun by encouraging them to dress up, have a beverage at home, and connect online with your nonprofit to toast to their fellow supporters.
- Online Courses. Some people get involved with nonprofits to learn new information or skills. Volunteers are often attracted to learning opportunities hosted by their favorite nonprofits.
Recurring donors are more likely to continue giving if they feel a connection— not just to your mission, but to your nonprofit as a whole. Relationship building means staying in contact and giving your supporters something to look forward to rather than treating them like a monthly ATM.
5 Strategies to Strengthen Recurring Donations for Your Nonprofit
Regardless of how strong your recurring donations are, they can always use a little boost! Here are some strategies CharityEngine clients have used with great success.
1. Turn one-time donors into recurring donors.
Engage your donors often across channels and recognize their loyalty. As soon as they take action, reach out and thank them individually. Show them that their donation is impacting your mission. Make it personal so they want to give again. Repeat donors have proven they care about your campaign, and it’s wise to show them how important they are to your nonprofit.
A self-service portal is a great way for donors to see their cumulative giving. You can tie levels of giving to tangible effects on your mission. For example, Rainforest Trust offers to protect an acre of habitat for $2. In a portal, donors can log in and watch their giving—and their impact—climb, motivating them to give more.
2. Don't let those recurring donors go!
Retention is a calculation of donors that stay around! It looks at how many donors you kept in a given month. A good retention rate is 70% to 90%. If yours is up there, it means you have a pretty healthy sustainer program.
Attrition is the flip side - what we think of as a leaky bucket. Your attrition number is the number of donors who decided to stop supporting your organization or missed a regular payment. You want your attrition rate to be low, preferably under 10%, so the number of donors you have to re-engage is low.
How can you minimize attrition?
- Know it. Calculate your attrition rate and then set a goal.
- Understand it. Did they decide to leave because they lost their job, or did they miss a payment because their credit card expired? How can you respond to try to keep them?
- Measure it. How often are you engaging with your donors? Make it often and across channels. You’ll know why they’re leaving, and you’ll be able to mitigate it.
- Track it. Use technology to track donor and revenue attrition and collect invaluable feedback from your donors.
One other tip: downgrade your sustainers rather than losing them. Do they need to pause their giving with an automatic restart? Can they give less? What’s the minimum they can do to stay connected to your cause?
3. Master billing basics to maximize collection.
CRM systems have evolved to offer integrated payment processing capabilities, streamlining financial transactions for organizations. This integration goes beyond simple billing, with subscription billing emerging as a particularly powerful tool for maximizing revenue collection.
Subscription billing is crucial for organizations, especially nonprofits, due to its ability to secure scheduled payments and maximize collection rates. Here's why it matters:
- Declined Payments: On average, 15% of recurring credit card payments are declined.
- Card Reissuance: 30% to 40% of cards are reissued each year with new expiration dates and security codes.
Our largest clients have leveraged technology to achieve industry-leading collection rates. By implementing systems that maximize collection, they've significantly increased their funding.
4. Let technology do the heavy lifting.
We’re a software company, so of course this is a big deal to us: invest in an intelligent billing system. It doesn’t have to cost a lot, but it does have to work for you, and a good CRM will do just that.
A smart billing system will:
- Automatically resubmit invoices for missed payments
- Automatically update credit cards
- Process batch gifts to reduce fees
- Offer multiple ways to pay, including credit card and bank account
- Let donors choose how often they want to give (monthly, quarterly, annually, etc.)
- Allow donors to pause or downgrade their pledge
- Show donors missed payments with an option to pay them
- Track automated and manual interactions
- Integrate with marketing automation and your CRM
Ensure your system will engage donors who miss a payment, notify you quickly, and work to get the donor back on track. That saves you time and eliminates the inconsistency inherent in manual donor relations.
A good billing system will reduce attrition anywhere from 10% to 30%. Even a modest 1% to 2% reduction can mean thousands—even hundreds of thousands—of dollars recouped. Now that’s a great ROI!
5. Create a culture of ambassadors.
You’ve benchmarked your attrition and you’re measuring monthly progress. You’ve looked at the causes of attrition and you're mitigating them through engagement. You have a great billing system, you’re automating and integrating, and you’re collecting donor feedback.
Now you’ve got a group of donors who will give regularly. They’re committed to your cause, they find giving to be easy and flexible, and they feel as though you’ve cultivated a relationship with them. When it's time for a year-end giving campaign, they're your front line.
Encourage them to advocate on your behalf. Give them tools to talk about your mission; send them a t-shirt or bumper sticker or add a button to your donation page that lets them post about their support on social media. When they feel valued and appreciated, they will promote your mission to the community.
Additional Resources
Recurring donors empower your nonprofit to make forward-thinking plans by providing a dependable monthly revenue stream. This sustainable funding allows you to strategically plan future spending, growth initiatives, and campaign efforts.
Donors may stop giving for various reasons, but effectively leveraging your CRM and website can prevent common issues like payment failures or outdated contact details. Simplify the process of becoming a recurring donor and keep donors engaged by maintaining communication and hosting meaningful events.
Want to learn more about managing and retaining donors? Explore these helpful resources:
- The Essential Guide to Nonprofit Fundraising: Dive deep into strategies for recruiting and engaging donors. Remember, an engaged donor is a retained donor!
- The Ultimate Guide to Nonprofit Events: Discover tips for planning memorable events with free downloadable worksheets to make the process seamless.
- 12 Best Fundraising Tools for Nonprofits: Explore tools for planning innovative campaigns, like peer-to-peer fundraising, where donors become your nonprofit’s ambassadors.
These resources are designed to help you build lasting donor relationships and ensure the long-term success of your nonprofit.
Are you ready to explore a CRM that can maximize your nonprofit's recurring donations? Request a demo of CharityEngine's software today!
