Why Nonprofits Lose 15% of Monthly Sustainer Revenue

Whether you realize it or not, you’re likely entrenched in the subscription billing economy. From Spotify and Netflix to your local Equinox gym to software like Adobe, paying a weekly, monthly, or yearly fee in exchange for access to a product or service over time is increasingly common.

This trend shows no sign of slowing. According to recent studies, the Subscription Economy Index is growing 3.7 times faster than the S&P 500. Mature companies in this index can count on existing subscribers for 70% to 80% of their annual recurring revenue.

In the nonprofit world, subscription billing is called monthly giving, recurring giving, and sustainer revenue, and it matches the growth trend for-profit companies are seeing. Recurring giving is a critical component of your nonprofit’s growth.

But would it surprise you to learn that for every dollar pledged by sustainers, you’re only getting 85 cents? Recovering that missing 15 cents on every dollar can add up to hundreds of thousands—or even millions—of fundraising dollars.

Why You’re Losing Money on Recurring Gifts

We speak with clients often about the importance of recurring giving and how a strong program can form the most solid fundraising foundation for nonprofits. Double the Donation’s 2024 statistics show that 57% of donors are enrolled in a recurring giving program (up from 46% the previous year). This proves that donors appreciate the convenience of monthly gifts. Nonprofits are the beneficiaries.

But is your nonprofit maximizing the value of those donations?

To answer this question, we must look at the financial tech industry. We all understand that nonprofits need a payment processor to collect and process payments. When payments fail because the expiration date hasn’t been updated, or the card has been reported lost, or just because someone hit their credit limit, there isn’t much any payment processor can do to recover those payments.

According to Mastercard and Visa, an average of 15% of all recurring payments are declined. The 15% you lose is chalked up to churn, and it’s accepted by nonprofits because they hear the same story from every payment processor.

When a credit card is declined, you’ve lost a donor. Only the most committed donors will call or visit your website to update their credit card information. Most, though, won’t. Once you lose a donor, you either replace them or live with the lost revenue.

And the revenue can be significant. Let’s look at the passive churn impact on organizations:

• A nonprofit with 500 or fewer sustainers can lose up to $300,000 in two years.
• A nonprofit with 5,000 or fewer sustainers can lose up to $1.3 million in two years.
• A nonprofit with 10,000 or fewer sustainers can lose up to $2.5 million in two years.

Technology to Recover Payments

Any payment processor your nonprofit uses—including Stripe, Paypal, Authorize.net, Blackbaud, etc.—can process monthly donations. What they cannot do is recover the revenue missing due to failed payments.

To recover that revenue, you need more than a payment processor. You need highly specialized technology called subscription billing technology, and payment processors don’t have it. Nonprofit e-commerce companies don’t have it. Software companies don’t have it.

In fact, only one company serving nonprofits does have it. There’s one company that built a unique solution, combining the power of a payment processor, a robust fundraising platform, and billing technology to maximize donor retention.

The only payment processor in the nonprofit industry that offers subscription billing software is CharityEngine.

In fact, our clients have some of the largest monthly giving programs in the world, and their sustainer collection rate hovers around 98%.

This is a critical point: if you are not a CharityEngine client, you collect, at most, 85% of your recurring revenue. If you are a CharityEngine client, you collect up to 98% of your recurring revenue.

One of our clients is one of the top 50 nonprofits in the nation. They evaluate all their vendors every few years, and they’ve tested CharityEngine’s sustainer retention and billing software against companies that support for-profit commercial giants like HBO and AT&T. We outperform every competitor, every time.

This means that these clients are keeping tens of millions of dollars each year because they use CharityEngine.

To clearly illustrate the benefits of these two different technologies, let’s take a quick look at what each offers:

With payment processing, you can expect:

• Secure online donation processing
• Ability to set up and manage recurring donations
• Automatic credit card updating
• Multiple giving options
• Fraud prevention
• 85% collection of sustainer pledges

Because CharityEngine is a payment processor, we offer those same benefits. But with CharityEngine, you get additional technology that no other payment processor has. With CharityEngine and subscription billing, you can expect:

• Analysis of failed payments using algorithms based on billions of payment data points to determine the cause of failure
• Automated action to intelligently determine how to resubmit failed payments to turn them into successes
• Sophisticated integration with multiple systems to turn potential donor friction into a positive experience that retains donors
• A collection rate that can be as high as 98%

If you’d like to collect up to 98% of your pledges instead of just 85%, you need CharityEngine.

The CharityEngine Difference

CharityEngine’s technology cut its teeth on health and fitness companies about 20 years ago. We learned about the subscription economy back then and built our platform to include the most sophisticated subscription billing technology. We moved our focus from the commercial to the nonprofit world and brought everything we learned from gyms to help nonprofits make and keep more money.

CharityEngine is the only fundraising platform that combines the very best payment processing with subscription billing technology to create the most effective solution for collecting revenue and retaining monthly donors.

When you dive into the specifics of our fundraising software, you’ll quickly see that this is only one of many features that CharityEngine offers to help nonprofits succeed. We are also the only authentic all-in-one fundraising platform, meaning that all our tools are natively built into our platform. At any point, you have a 360-degree, real-time view of your donors. No other nonprofit CRM vendor can say that.

We’re committed to helping you succeed and keep funds for your mission. Did you know, for example, that online e-commerce products charge fees on top of the actual payment processor? These fees are often double what the nonprofit would be paying with a system like CharityEngine. And, because all our modules, including payment processing, are native to our system, your financial data isn’t bounced around multiple systems. When that’s the case, having a data trail is impossible. When you use CharityEngine, transactions are contained in our system and data trails are built in. Our system tracks all your donor data in real time, making reporting accurate, swift, and easy.

Put Us to the Test

Call your payment processor and ask what percentage of sustainer revenue they collect. If they say it’s more than 85%, it’s not true. Payment processors alone cannot collect more than 85%.

Then, calculate an additional 15% in your fundraising. What does that look like? Is it an amount that could make a difference to your mission or your organization?

If so, contact us and let us learn about your nonprofit. Our team is happy to run numbers for you and tell you how much you can increase your fundraising using CharityEngine’s subscription billing technology.

Put us to the test, and you’ll see what a valuable partner CharityEngine is.