Generosity. The Subscription Economy. And the Future of Fundraising.

Originally Published December 16, 2014 in NTen Change Journal.

Inspire them once. Get them giving forever.

The most important supporters of any nonprofit are the committed donors that give each year. Today, most repeat donors are acquired in an expensive process of online and offline stewardship, involving periodic communications and cultivation, followed by an annual ask. And every year, 40-50% of these past donors fall away.

Technology is enabling nonprofits to reverse this dynamic with subscription giving: to focus on celebrating, thanking and sharing impact with a donor whose gift is in hand every month. Subscription – sometime called recurring or monthly - donors have to find reasons not to give, and must actively take steps to stop being generous. This goes against one's basic instincts, and results in long-term retention of subscription givers.

The Rise in the Subscription Economy

It’s not surprising that recurring giving is on the rise. Its growth mirrors one of the hottest trends in the economy: the growth in subscription buying.

You may be familiar with subscription startups like Dollar Shave ClubBirchbox,Love with FoodPact Coffee, and even big companies like Microsoft and Adobe that now sell software through low-cost monthly subscriptions, as an alternative to one-time purchases. These companies recognize the value of subscription buyers in terms of recurring revenue, loyalty, ongoing marketing and higher lifetime value.

Growing momentum in Nonprofits

Nonprofits are getting in on the action. Subscription giving is the fastest growing segment of online giving, up 27% in 2012 across all nonprofits in Blackbaud’s study, and up 73% in Higher Ed, one of the largest philanthropy sectors.

Rapid growth will continue into 2015, although a dedicated recurring giving program is still a small segment of overall nonprofit fundraising. The good news is that the increasing prevalence of subscription purchasing, combined with a growing number of successful nonprofit programs and a proliferation of technology options, makes it a realistic strategy for even the smallest nonprofits.

Why Focus on recurring givers now?

Across the Network for Good community of 100s of 1000s of donors, we've seen first hand the benefits of recurring givers. Here are the most important reasons to devote resources to inspiring recurring givers:

  • Drive increased giving. The average recurring donor gives 42% more than one-time donors. In a recent Stanford Social Innovation Review article, the average annual donation from recurring givers totaled $625.
  • Provide a stable flow of funds. Organizations can count on the funds month after month.
  • Build deeper relationships. Each month there’s an opportunity to inspire, cultivate and celebrate donors when they are thanked for their gifts.
  • Recurring givers are high potential prospects for major and planned giving because of their sustained commitment to the organization.
  • Recurring givers stay with you. According to the Nonprofit Times, retention among donors giving one-time gifts ranges from 41-50 percent, while recurring donors are retained 70-80 percent of the time.
  • Appeal to younger donors. According to the Millennial Impact Report 2013, 52% of millennials are interested in giving monthly. Young people like the low monthly cost, and big annual impact, of a recurring gift.

What makes a recurring giving program work?

There are five fundamentals we see produce results across all successful campaigns.

Campaigns dedicated to attracting recurring givers. It’s not enough to have a message on your checkout page to “make this gift recurring.” A strong recurring giving campaign is focuses on inspiring donors to be sustainers of your organization through their monthly commitment.

Make the commitment so small that donors feel they can’t say “No.” The classic example of this approach is the famous quote from an international aid organization that, “for less than a cup of coffee, you can provide food for a hungry child.” The image below shows an example from Heifer International.

Make sure your online giving page mirrors the campaign message. When a supporter is ready to make a gift, the online giving page should reinforce the messaging, and have suggested amounts that correspond to the recurring giving campaign.

Recognize subscription givers as special. All points of contact with subscription givers should acknowledge them as a special group who power and sustain the organization. Identify them as members of a cohort, with a unique identity or brand. Here are a few examples of branded recurring giving groups:

The 1000 Women Campaign of the Women’s Fund of Central Ohio

Pipeline of Charity: Water

Humane Heroes of the National Humane Society

Red Cross Champions

Talk about IMPACT. When recurring givers are thanked for their monthly donation, reinforce the impact of their contribution, and keep feeding their “helper’s high.” Share stories and images of those affected by their donations. Put a face on their investment in the organization.

A strong recurring giving program takes planning. Here’s a checklist to get you started.

Whether your staff is large or small, follow these steps to run a successful program..

 Build the organization’s commitment to launch the program.

 Brand your Monthly Giving society.

 Test and measure. Try several campaign themes with segments of your donor base to determine which campaign motivates the most donors.

 Simplify the best theme down to a compelling message, like ‘$25 a month provides meals for one child,’ and a branded image that can be used everywhere, like the ASPCA image here.

 Make donating easy and mobile-ready.Technology that makes recurring giving simple and easy, from any device, is critical.

 Develop a target list of potential donors. Start with existing annual givers; they are strong prospects for increasing donations with a monthly program.

 Plan a starting “ask”of a monthly donation that is 15-20% of your average annual gift. So if your average annual gift is $200, plan an average target monthly donation of $30-$40.

 Market your monthly giving program in all channels.

 Write a welcome letter or series acknowledging the donor’s special status as a sustainer of the organization.

 Communicate with monthly givers about the impact of their gift when each monthly payment is received.

 Make a plan to deal with credit card decline notifications

 Celebrate your passionate and growing base of supporters!