As a nonprofit professional, you understand that nonprofit donations tend to occur in cycles, usually based around the end of the year. In fact, research shows that some nonprofits make up to 30% of their total gifts in December! This means nonprofits need a strategy to keep the donations coming in reliably the other 11 months of the year.
Recurring donations provide a rock-solid foundation. Building a reliable base of these gifts 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:
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?
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).
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:
We will explore each of those tips in just a moment.
Recurring donors can also increase overall revenue. In recent years, their increased popularity has increased monthly online giving 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.
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:
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.
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 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.
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.
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:
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.
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, a nonprofit's responsibility for manually tracking changes can get overwhelming 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.
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.
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:
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.
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.
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.
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?
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?
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:
Our largest clients have leveraged technology to achieve industry-leading collection rates. By implementing systems that maximize collection, they've significantly increased their funding.
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:
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!
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.
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:
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!