Subscription Donations: 3 Things Your Nonprofit Should Know
A recurring donor can be over 400% more valuable compared to a one-time donor. These donors offer stable, reliable income for nonprofits. Donors in general also have a strong appetite for subscription-based donations. It’s not a huge surprise when you look at the for-profit subscription-based economy, which saw a 437% revenue increase over the past decade.
Below, we’ll talk more about what subscription donations are, as well as three important takeaways your nonprofit should know. Learning how to take advantage of the subscription giving era helps your nonprofit tap into this desirable form of donations through your future or existing recurring giving program.
What Is a Subscription Donation?
Subscription donations are monetary gifts that are automatically billed to a donor at a specified time interval. Donations can be set to be routed from a donor weekly, monthly, quarterly, annually, or at any other frequency, your nonprofit wants to offer.
Historically, we’ve thought of this as a “recurring” donation. While your nonprofit may still consider subscription donations a part of your overall recurring giving program, it’s forward-thinking to reframe the option as a “subscription” gift. Your donors are increasingly familiar with the subscription model and more comfortable signing up to give in that way.
Many people use subscription services daily and don’t even realize it. Think about an electricity bill set up for automatic payments or streaming music services like Spotify. Donors appreciate the ease of subscription services, as they’re one less bill to have to process each month personally. After setting up the automatic payment, the service continues seamlessly.
Try framing subscription donations as a new way donors can offer consistent support in an easy, effortless way for your cause. Likely, more recent generations will quickly connect to the subscription terminology rather than a recurring gift that may take time to explain.
3 Things to Know About Subscription Donations
We recently released our 2021 Recurring Donor Sentiment Report. This research involved a third-party survey of over 1,000 recurring donors in learning what motivates them to give, stay, leave, and more.
Below, we cover three significant findings from this report that can help build a case for subscription donations at your nonprofit.
1. Subscriptions are on the rise in younger generations.
In our research, nearly half (44%) of the recurring donor survey respondents were millennials. This figure becomes over half when including the 11% who were from Generation Z.
Data shows that 71% of Generation Z has a Netflix subscription, more than any other generation. It’s also worth noting that 55% of Generation Z actively chooses eco-friendly and socially responsible brands to support.
The combination of an appetite for subscription-based services and a want to support good causes creates fertile ground for nonprofits looking to tap into younger generations’ support.
In addition, our recent report, The State of Modern Philanthropy 2021, shows that the average monthly subscription donation made through ACH is 55% larger than recurring gifts made with credit cards.
ACH, or Automated Clearing House processing, is available to Classy customers through Classy Pay, our seamless integration with Stripe. ACH fees are lower than credit card processing fees for nonprofits. An expired credit card can’t interrupt a gift with this option. You’d be surprised at how younger donors might prefer giving this way to ensure more money goes toward your cause.
2. Consumer behavior can be parallel to donor behavior.
Consumers are more comfortable with subscriptions, especially during the pandemic when contactless delivery and digital forms of entertainment increased in necessity. There are now subscription services for various streaming platforms, meal delivery kits, coffee, razors, workout programs, and more.
As consumers have become more comfortable with subscription-based goods and services, that behavior can translate to how they relate to recurring giving as donors to your nonprofit.
Our survey found that 61% of recurring donors appreciate the affordability of segmenting their gift to your nonprofit over time. To help you visualize that, imagine if, rather than giving a one-time $120 donation, a donor can better budget for a $10 monthly donation subscription over the course of a year. It’s easier to commit to this structure set forth by many other popular subscription models.
In addition to affordability, subscription donations help 56% of donors feel like they’re able to support your nonprofit continuously. They also leave 47% of donors feeling that their recurring donations make a more significant impact than a one-time gift.
3. Recurring giving is the new subscription gift.
Thirty-eight percent of recurring donors felt more connected to a nonprofit by donating regularly. This creates an opportunity to frame subscription donations as a meaningful gift-giving option.
Rather than a wine subscription during the holiday season, for example, people can gift a subscription donation in someone’s name to a cause with which they align. Nonprofits can encourage this by establishing creative recurring giving programs where these monthly donors will receive tangible benefits over time for their support.
Thanks to recurring donors, these benefits can include swag, discounted event tickets, and stories about specific people your nonprofit helped. Our report showed that 45% of survey respondents appreciated physical swag as part of being a recurring donor and 44% enjoyed exclusive access to cause-related events.
By framing subscription donations as the perfect gift, your nonprofit can encourage thoughtful giving for holidays, birthdays, anniversaries, and more.
Tap Into Subscription Donations to Connect With a Wider, Committed Audience of Supporters
Subscription donations are the future of nonprofit fundraising. By leveraging this increasingly popular way to support causes, nonprofits can connect with a larger audience, including the next generations of donors.
Next Stop: Classy Academy’s Recurring Essentials Course
Attract, Engage, and Retain Recurring Donors
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