3 Things I Learned About Recurring Giving From 115 Nonprofits
Brady Josephson is a charity nerd, entrepreneur, digital marketer, professor, and writer. He’s the vice president of innovation and optimization at NextAfter—a fundraising research lab and consultancy on a mission to unleash the most generous generation in the history of the world. Brady lives just outside Vancouver, British Columbia, and you can follow him on Twitter @bradyjosephson.
According to The State of Modern Philanthropy 2018, recurring donors are worth over five times more than one-time donors. They also provide a reliable stream of revenue and represent some of your most dedicated community members (among many other benefits).
Clearly, there is adequate reason to invest in and prioritize a recurring giving program and strategy. Yet when I conduct research in the nonprofit space, particularly in the United States, I kind of get the feeling nonprofits often ignore their recurring givers and spend a majority of their time focused on one-time gifts.
Don’t get me wrong, there are plenty of nonprofits prioritizing their recurring donors and making leaps and strides toward their overall goals because of it. But for any nonprofit still unsure about where to get started, we teamed up with Salesforce.org to conduct a national research study to better understand the donor experience and offer helpful ideas and insights.
What We Did
To conduct our study, we gave three different types of donations—one-time, one-time that converted to recurring in the next month (we call this an ‘upgraded’ donor), and a recurring gift—to 115 nonprofits and tracked the giving experience and communications along the way. We even reported one credit card as lost and the other as stolen to see what kind of systems nonprofits had in place.
We then analyzed all the data points and produced a study to share some of the key findings and provide a few ideas for you to test and optimize your recurring giving program. Here are three things I learned about recurring giving from 115 nonprofits.
1. It’s Not Easy to Understand Why Someone Should Make a Recurring Gift
Throughout the donation process, we looked at how organizations communicated their ‘why’ behind the recurring gift decision or, more specifically, how they answered the value proposition question:
If I am your ideal recurring donor, why should I give to you rather than to some other organization or not at all?
And for recurring donations, the value proposition question you need to answer for donors is actually more like this:
Why should I give a recurring gift to your organization, instead of a one-time donation, and rather than some other organization, or not at all?
And here’s what we found…
Only nine percent of nonprofits used specific value proposition language on their donation page for recurring giving.
Just under three-quarters of organizations used simple, non-descriptive language like “Become a monthly donor” or “monthly gift” when presenting the option to set up a recurring gift:
Now if you’re a donor, what in that donation experience lets you know why you should a) make a donation at all and b) make a monthly gift?
Only nine organizations out of 115 actually tried to answer that value proposition question with something like this:
People need to know why they should give to you, why a recurring donation helps, and what difference their donation will make. It sounds simple, but if you communicate the why, you’re much more likely to receive monthly commitments.
In fact, in our previous research, we observed how adding some/more copy to communicate the why can make a large difference (we’re talking a 150 percent increase in donations) for one-time gifts. The same logic can be applied to monthly gifts. Use copy to let a visitor know not only why they should donate to your particular organization, but also why giving monthly is such an impactful decision.
Here’s one of the better examples we observed in our study from the ACLU which has both:
- Copy to communicate the value proposition of their work
- A sentence to share why recurring giving is important
Your organization can also take it a step further and provide language that explains how a monthly gift does more good for your cause.
Recurring Giving Experiment Prompt
The idea is that a donor, right before they complete their one-time gift, sees a pop-up that presents the recurring giving value proposition and a suggested monthly amount.
To try it out ourselves, we tested one of our client’s pages. Instead of the usual donation process, we fed the donor a prompt that asked them to give 60 percent of their one-time gift and minimum of $15 per month moving forward.
This experiment not only drove a 64 percent increase in recurring gifts, but also had no significant impact on one-time donations. Note that we’re not presenting them with something totally different like buying a ticket to a gala or creating a peer-to-peer page but we’re simply asking them to consider a way to make a bigger impact and actually give less today (pretty good argument).
Key Takeaway: People need to know WHY they should make a recurring gift to you.
2. Recurring Donors Weren’t Treated That Differently Than Other Donors Over Time
We tracked the communications we received across donation type to see how recurring donors were treated compared to one-time donors and upgraded donors (those who start out as one-time and then become recurring donors). Initially, the findings were pretty positive as recurring donors were solicited less and cultivated more:
This makes sense as recurring donors are (most often) giving every month so the need to solicit should go down. And, related, the need to communicate, report, and update these donors (cultivation) should go up.
But when we looked at the communications over time, we saw this:
You can see that by month three, the number of organizations that sent cultivation messages went down and the number of organizations that sent solicitations went up. We saw the same trend for the volume of communications we received (as opposed to the number of organizations displayed in this chart).
This hints at a change in how recurring donors get thanked and communicated with right after making their gift. However, by month three they may be “back to normal” and treated more and more similar to one-time donors.
Recurring Giving Experiment Prompt
Consider creating a specific 12-month communications plan for recurring donors. It’s also helpful to consider what you can do to treat them as the special, valuable, and different donors they are over time.
Another idea here is to acknowledge your donors every month. As you can see in the image above, the number of organizations that were sending out acknowledgments in month three dropped down to nine. Only eight percent of organizations still acknowledged a recurring gift in month three and while there may be some cost or administrative reasons for that, shouldn’t donors who give every month be at least thanked every month and sent receipts?
Here are two ideas for thank-you strategies that your donors might benefit from:
- Your ‘thank you’ doesn’t have to be a pure thank you and tax-receipt. It could be a simple update reminding them of their gift and what it is doing in the world.
- Test it. Split your recurring donors into two groups. One gets thanked/receipted every month, and the others get whatever you are currently doing. Tag them and in a year, or even two, observe the difference in retention and additional gifts or lifetime value.
Key Takeaway: Even if you don’t acknowledge your recurring donors every month, it’s essential to acknowledge them and treat them differently than other donors throughout the year.
3. There Seems to Be a Lack of Systems in Place to Prevent and Recover Lapsed or Lost Credit Cards
One of the biggest challenges to keeping recurring donors is related to credit cards. They can get lost, canceled, or stolen, leading to a lapsed donor even if they didn’t want to stop giving. That’s why we reported one card as stolen in our study and another as lost in an effort to see how the 115 organizations responded. In summary: not very well.
The only slightly good news was that for the lost cards, almost two-thirds of organizations were able to auto-update the card through their donation tool and payment processor meaning there was nothing for the organization or donor to do.
But of the organizations who did not have that type of tool or feature in place, 75 percent didn’t reach out to us at all.
Recurring Giving Experiment Prompt
In order to combat this type of lapse in donor activity, organizations can:
- Stop credit cards from becoming lapsed
- Improve their process for getting lapsed credit card information back
Option one saves organizations the time and hassle of hunting down lost information. If your organization has the option to auto-update credit cards with your donation tool or payment processor be sure to turn that on. Another idea is to offer and accept automated clearing house (ACH) or electronic fund transfer (EFT) payment options for recurring giving.
These types of payment options allow the donor to connect their donation directly to their bank account and thereby eliminate the risk of lapsed credit cards. Yet, only 33 percent of organizations in our study accepted this form of payment.
We actually ran an experiment that improved the lifetime value of recurring donors by 55 percent just by adding the ACH payment option and this had no significant impact on donor conversion rates. Consider presenting the option to make an ACH/EFT payment for your recurring giving program to prevent lapsed cards and boost lifetime value.
Review Your Current Systems
Even with this option, recurring donations made by credit card will lapse for other reasons. In those cases it’s important to have some systems, processes, and infrastructure in place to both recognize when a card gets canceled or a payment is missed, and an outreach plan to connect with the donor, in a personal way, to get the new card information.
Be sure to spend some time reviewing your current systems and consider putting one person in charge of recurring donor retention and lapse prevention to ensure these plans don’t fall into the ‘not my job’ bucket.
Key Takeaway: Use tools and present options to prevent credit cards from lapsing and then work hard to get those that do back if/when it happens.
These are just three of the things that I learned about recurring giving in our larger research study. You can read the full study and get all the insights and ideas at recurringgiving.com. You can also benchmark your organization against the 115 nonprofits in our study to see how you stack up and get inspiration for improving your process. Good luck!
A Nonprofit's Guide to Recurring Giving
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