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What You Can Learn About Recurring Giving Communications from 115 Nonprofits

Published by Brady Josephson

What You Can Learn About Recurring giving from 115 Nonprofits

Finding new donors, particularly recurring new recurring donors can be tough. People don’t wake up the morning saying, “I’d sure like to give some money away” (well, not most people). And even fewer think, “I’d sure like to give money away each month.” So when you are successful in acquiring a recurring donor, you need to take care of them (after you high-five your co-workers and thank the crap out of the donor, of course).

This means communications and customer service!

Roger Craver, in his research for Retention Fundraising, figures that ‘fundraising’—the campaigns and appeals asking people for money—accounts for only about 20% of a donor’s lifetime value, with the vast majority of the value coming from communications and customer service.

And that’s why we didn’t just stop at the donation experience for this study but tracked all the communications we received—emails, mail, phone calls, and texts—and reported a card as lost and another as stolen. Here’s (some of) what we found.

1. Recurring giving communications don’t change too much between one-time, upgraded, and recurring donors.

Recurring donors give to organizations each and every month, often for multiple years. You would think that these high-value, committed, and engaged donors would get communicated to differently than those who give one-time gifts here and there and, most likely, not again in the future. But while we did see some differences, they were not as different as we thought.

38% of nonprofits make no change to email strategy for recurring donors, and 58% no change for direct mail.

When you also consider that email was the only channel used by every organization and accounted for just about 80% of all the communications we received, the donor experience of a recurring donor compared to a one-time donor is even less drastic on a per-touch point basis.

But there were some differences.

Recurring donors get 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 over time, thanking/receipting goes way down, cultivation dips, and solicitation goes up.

This hints at a change in how recurring donors get thanked and communicated with right after making their gift but even by month 3, they are ‘back to normal’ getting cultivated 23% more and solicited 11% less than one-time donors.

The lesson is: you should create a separate communications plan for recurring donors for a whole year, not just for the first 30 or 60 days.

2. Communications can be more personal and tailored to each donor

Just sending something out isn’t the goal of communications—although 9% of organizations sent out nothing so I guess there’s something to be said for sending anything. That said, it’s about engaging with a donor to both make them feel appreciated for the support they are giving and plant the seeds for how they could potentially support even more in the future. This can be by giving more, giving again, volunteering, or advocating on your behalf. But that’s not quite what we found and experienced.

59% of communications were cultivation focused…

The fact that a majority of communications are focused on cultivation is good. It’s hard to say if a roughly 2:1 ratio of cultivation to solicitation is ‘good’ but that means every third touch point is a direct ask to give again.

But by month three, solicitations are trending up and cultivations are trending down…

Again, this hints that the thanking, stewardship, and communication plans for recurring donors are very short-term focused.

And 13% of organizations didn’t send any cultivation content to any of the donors.

This is obviously not good. To give and not have any other communication beyond a receipt and getting asked to give again—especially if you made a longer-term commitment like a recurring gift—is very poor.

When emails were sent, they were mostly from organizations and brands.

Just 1 in 5 organizations ever sent a message from an address representing a real person. This can lead to even the ‘warmer’ cultivation messages and asks for appeals coming across as more cold and impersonal.

Text and phone were underutilized.

These more personal channels can be labor-intensive, but with the high value of recurring donors, we wondered if we’d see a marked increase for phone (calls and texts). We did not. This is also partly due to only 75% of organizations collecting the phone number in the donation process so even if some wanted to they simply did not have the information.

3. Customer service can be improved (and more personal too)

Much of the value of recurring giving programs is in their long-term, or lifetime, value. This relies on donors sticking around (and they often do). But, in addition to the communications, the transaction method and simply being able to process donations on a recurring basis poses some systematic and customer service challenges. And, based on our findings, there’s some definite room to improve in this area.

Just 9 organizations sent email or print receipts by month 3.

As I highlighted earlier, as time goes on the cultivation communication goes down and solicitation goes up but, surprisingly, very few organizations were still acknowledging a recurring donors gift in month 3.

Now, this could be due to saving paper, systems, and consolidating receipts, but I think that what it means in practice is that donors aren’t getting thanked and acknowledged for recurring donations every month.

Almost a quarter of lost cards (24%) and almost half of canceled cards (47%) received NO communication at all.

 

Cards will get lost, stolen, and go expired. Don’t let your nonprofit miss out! Credit card changes are one of the biggest factors in losing recurring donors. So, one solution is to accept and encourage more EFT transfers—only 33% of organizations accepted it—or another is to use modern tools to help automatically update the cards—like 68% of organizations in the study did. Barring that, you’re on your own to reach out and contact donors and these rates show significant room for improvement to simply contact donors of lost and canceled credit cards.

62% of lost card communication and 82% of canceled card communication was automated or transactional.

When we were contacted by organizations about our credit cards, the majority of communications, and the vast majority for the canceled card were transactional or system-generated email.

Keep in mind the commitment and value of recurring donors here. IF you get contacted it’s cold and automated. Not great.

And even if the goal was to just reach the donor, we found that ALL of the personal communication that was actually sent (for canceled cards) reached the donor inbox (as opposed to spam or promotions). So more personal communication also gives you a better chance to reach the people you want (and need to) in the first place.

Nonprofit Communications with Recurring Donors Summary

The communication strategy didn’t change that much from one-time to recurring donors even though their support (amount and frequency) are quite different and should be treated as such. The communication we did receive wasn’t very personal and there is plenty of room on the customer support side to improve and optimize to keep your (valuable) recurring donors around even longer.

That just scratches the surface of what’s in the report, so here are a few other findings may be of interest to you:

  • The upgraded donor was the only one to be contacted by every organization
  • 329% more emails were sent per organization than direct mail
  • 1 in 4 organizations did not ask for another donation from any donor in the 3 months
  • Just about two-thirds of all emails we received went to the Promotions tab in Gmail

Nonprofit Recurring Giving Benchmark StudyThe Nonprofit Recurring Giving Benchmark Study

Get all the statistics and insights to improve your nonprofit fundraising with your free copy of The Nonprofit Recurring Giving Benchmark Study here.

This was originally published on the Salesforce.org blog and can be found here.

Recurring giving is essential to online fundraising growth. But real growth can only happen if you can empathize with your donor. In this free recurring giving study, you’ll see the donor’s perspective on recurring giving – gleaned from a comprehensive analysis of 115 nonprofit organizations and their recurring giving programs.

About the author:

Brady Josephson

Brady Josephson is a charity nerd, entrepreneur, digital marketer, professor, and writer. At NextAfter, he focuses on business development and partnerships, content creation, and marketing. He's also a huge Liverpool FC fan. #YNWA


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What You Can Learn About the Online Recurring Giving Experience from 115 Nonprofits

Published by Brady Josephson

Online fundraising can be quite complex, but in a nutshell, it boils down to three key things and corresponding metrics:

  1. How can you get people to find/visit your site? This is website traffic
  2. How can you get people to care about what you are doing, saying, and offering? This is the average gift
  3. How can you get people to complete their donation? This is conversion rate

If you multiply those three things — traffic x average gift x conversion rate — it equals revenue. You can learn more about these metrics and even benchmark your organization with them here.

So when we conducted research like The Nonprofit Recurring Giving Benchmark Study, we look for and asses the online recurring giving experience along those lines. And, in this case with recurring giving and 115 nonprofits, we found that, overall, it wasn’t as easy to find, understand why you should give, and actually donate as it should be.

Let’s look at each section.

1. It’s not easy to find out how and where to make a recurring donation

Before we get into why someone would or would not want to make a recurring donation—the value proposition or offer—they need to be able to find it and know a recurring donation is even possible. But, as we discovered, this wasn’t always available or easy to find.

1 in 10 nonprofits did not have an online recurring giving option available.

Even though this is a relatively low number, given how valuable recurring giving is to fundraising I found this quite surprising. And I’m not sure why an organization would not want someone to set up a recurring donation.

Call to action for recurring donors

3 out of 4 organizations did not have a separate call to action for recurring donations.

We were looking for ways to quickly find a way to give a recurring gift from the homepage—almost always the most visited page on a nonprofit site—but the vast majority of organizations were relying on you to want to donate and then once you were there to find the option to give a recurring gift (more on that later).

But if we want donors to find the online recurring giving option faster and easier—and we do because those donors are so valuable—then perhaps we need to help guide them there with specific calls to action or in the navigation.

In this experiment, we found that just by highlighting the donation option in the navigation, we increased donations 190%. And in this experiment, we were able to increase donation clicks 16% by splitting out the navigation items—from Membership to Join and Renew.

We’ve found that clarity is more important than persuasion, and it wasn’t very clear where we were supposed to go to make a recurring gift.

2. It’s not easy to understand why you should become a recurring donor

If you found out how or where to make a recurring donation, there’s still the question of ‘why’? Some donors have made up their mind before they visit a page—maybe because of the ad or email driving them there has conveyed the value and reasons why—but just going through a donation flow from the home page, we had a hard time understanding the answer to the value proposition question:

If I am your ideal recurring donor, why should I give to you rather than 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:

Why should I give a recurring gift to this organization, instead of a one-time donation, and rather than some other organization, or not at all?

But here’s what we found…

Only 9% of nonprofits used specific value proposition language on their donation page for online recurring giving.

Just about ¾ of organizations used simple language like “Become a monthly donor” when presenting the option to set up a recurring gift or simply a checkbox like this:

That may be clear — which is better than it not being clear — but it doesn’t help a donor understand why they should make a recurring donation as opposed to a one-time gift.

Only 9 organizations actually tried to answer that value proposition question with something more ‘value oriented’, even simply, like this:

Types of Recurring Gift Language

Only 14% prompted one-time donors to become recurring donors.

Beyond some language and a check box, some organizations went a bit further to nudge and encourage donors to make a recurring gift. These strategies ranged from simple:

To more complex with a pop-up as you are making a one-time donation:

This is an interesting strategy as it somewhat forces the donor to decide to make or not make a recurring donation. Forcing decisions on donors doesn’t always end well (more on that later) but we thought this was interesting and actually went and tested this approach for ourselves and found that, in this experiment, the pop-up prompt helped increase online recurring giving 64% and did not have an adverse effect on one-time donors.

Finding out how and where to make a recurring giving donation is obviously important but understanding why they should become a recurring donor is also key and from what we’ve seen there’s a lot of work, and testing, to be done.

Prompted to Upgrade to Recurring Donation

3. It’s not easy to actually make a recurring donation

Assuming a donor could find out where to make a recurring donation and was inspired enough to try and complete one, we found that the last step of giving, completing the form, was often invasive, complicated, or confusing.

We were asked for more and more personal information on the donation form.

Generally, the more form fields and information you are asking for from a donor, the less likely they are to actually go on and complete their donation — in this experiment, adding just one more required field decreased giving 56% — but we saw many instances where we were asked for a lot of other info besides what’s required for a donation.

Like our spouse’s information (assuming we even had a spouse…).

That’s a lot of extra info and I’m not sure what the benefit to the organization is there.

We had to answer some confusing questions without context.

Two of the 7 types of donation page friction are confusion friction — they are unsure what they are supposed to do — and decision fiction — they are asked to make more decisions than necessary — which add to a donors cognitive load — a fancy term for brain stress — and reduces conversion rates.

But when giving, sometimes we had to make choices about unclear things like an agency location:Recurring Giving - Agency Location

Or whether or not we declined the ominously named ‘benefits’:

Recurring Giving - Decline Benefits

These questions added friction to the giving process as we didn’t know what they were asking or how to answer.

We had to prove we were human. A lot.

Numerous times we were asked to prove that we were human by checking a box:

Or playing the ‘pick the street sign’ game:

I know these are intended to prevent spam and fraud—although I’m not sure who these rogue fraud bots are making donations to nonprofits are—but these measures don’t always identify the threat and make real human donors do extra work to complete their donations.

Success in making recurring donation

Nonprofit Fundraising with Recurring Donors: Summary

It wasn’t as easy to find, understand the value of, and complete a recurring donation as we had thought — and hoped. That means there is a lot of room to test, improve, and optimize to grow your online recurring giving program and that’s what we dive into in this post.

That just scratches the surface of what’s in the report, so here are a few other findings may be of interest to you:

  • 1 in 4 organizations collected a phone number in the donation flow
  • 1 out of 3 organizations accepted EFT/ACH donations
  • $100 was the most commonly suggested gift in a gift array
  • 62% of gift arrays were sequential (had suggested amounts that went from lowest to highest)
  • 23% of organizations offered a tangible benefit to recurring donors

Nonprofit Recurring Giving Benchmark Study

The Nonprofit Recurring Giving Benchmark Study

Get all the statistics and insights to improve your nonprofit fundraising with your free copy of The Nonprofit Recurring Giving Benchmark Study here.

About the author:

Brady Josephson

Brady Josephson is a charity nerd, entrepreneur, digital marketer, professor, and writer. At NextAfter, he focuses on business development and partnerships, content creation, and marketing. He's also a huge Liverpool FC fan. #YNWA


Set yourself up for online fundraising success this year-end with a free year-end fundraising course.LEARN MORE »

3 Reasons Why Recurring Giving Is Crucial to Your Fundraising (both today and tomorrow)

Published by Brady Josephson

Have you wondered why recurring giving programs are important? Do you accept recurring donations? Do you focus on them? One of the interesting things I’ve found in my career as a charity nerd (official title) is how valuable recurring donors are to organizations but how little time, attention, and resources are spent on recurring giving programs (generally speaking). There are many reasons and misconceptions but Harvey McKinnon, one of the foremost recurring giving thought leaders in the world and author of Hidden Gold (a classic) put it this way:

The single largest obstacle to a successful [recurring] giving program is buy-in.

So as we begin to share more of our findings from The Nonprofit Recurring Benchmark Study and run more experiments on recurring giving I want to take a bit of time to help bolster the case for recurring giving and get you bought-in (if you are not) and provide some ammo to help get others bought-in. So here are…

3 Reasons Why Recurring Giving Is Crucial To Your Fundraising

1. Good for you

Greater Lifetime Value

The 2017 Target Analytics donorCentrics Sustainer Summit — a benchmark study about recurring giving — found that “sustainers” (another name for recurring donors) are worth up to 4x more than those from one-time donors over the life of their giving (and for small organizations, it’s more like 11x!

Classy recently released The State of Modern Philanthropy and in it, they found that recurring donors were worth 5.4x more over their lifetime than one-time donors.

4 times. 11 times. 5.4 times. The main point here is that recurring donors are much more valuable when it comes to lifetime value.

More Money In a Year

Now, you may be thinking “well that’s all well and good but I need more money now!” I’d probably respond that you are being too short-sighted and that lifetime value is THE only metric that really matters for your fundraising but then I’d get off my high horse and let you know that Network for Good found that monthly donors gave 42% more than their one-time counterparts in a year. And that the Sustainers in Focus study shows how recurring donors in their 1st year are worth 52.5% more than one-time donors

Then I’d hop back on my high horse and ride off into the sunset.

Donor Retention

To boost lifetime value, you can either get people to give more (which I’ve already covered) or you can give them to give longer (this is donor retention). And it’s the difference in retention rate that really drives much of the lifetime value difference for recurring donors.

When you compare the 1st year donor retention rates of new recurring donors (52% according to the 2017 Target Analytics donorCentrics Sustainer Summit) to that of all 1st time donors (23% according to the Fundraising Effectiveness Projectinfographic from Bloomerang here) you can see that new recurring donors are more than 2x more likely to give again in year two compared to all first-year donors.

But if you expand that time period to 10 years, recurring donors are 4x more likely to be giving compared to one-time donors (according to Blackbaud Institute’s Sustainers in Focus). And some folks see recurring donor retention rates in the 85% to 95% range.

Donor retention not only helps drive lifetime value but the longer giving period allows your organization to better build relationships with these donors which can lead to increased volunteering, advocacy, and even planned or legacy giving.

Predictable Cash Flow

I hope you’re sold on recurring giving already but just in case… it gets better.

Because donors are giving every month, you can spend less time and money on advertising, direct mail, etc. to ensure that they give again. So the net revenue (revenue from the donor minus costs to acquire and keep) is much greater as well. This isn’t to say you shouldn’t communicate or spend time and money on recurring donors (you should) but it is cheaper to keep a donor than to try and get one back or find a new one. Especially when it comes to recurring donors.

And because the donation is recurring on a set schedule (most often monthly) your organization can better project and predict revenues (and costs) into the future. Your finance folks will love this because with so many unknowns in the fundraising world, being able to know you’ve got some revenue coming in allows you to make better and more accurate strategic decisions.

Those are all reasons why monthly giving is good for your organization but it’s also good for donors as it is a high impact, high convenience form of giving.

2. Good for donors

High Impact

Giving $300 seems out reach for quite a few donors or is maybe a bigger decision. But for many people giving $25 a month is very doable which adds up to that $300. Recurring donations allow people to make larger donations while managing their own cash flow.

A study in The Science of Giving found that giving in smaller amounts more often made people happier than giving larger amounts less frequently. So even if someone had $300 to give at once, they, in theory, would be happier giving it away in $25 increments throughout the year.

High Convenience

Another study in The Science of Giving offered people the chance to give $120 away all at once now, all $120 at once later, or in $10 increments each month for a year and found that the majority of people (61.5%) chose to give every month compared to all at once now (29.8%) or all at once later (8.7%). This gets at how simple it is for our brains to think about equal payments. It’s mentally convenient.

Recurring giving programs often also have some other convenient factors like allowing donors to upgrade, downgrade, and cancel at their donation at anytime, consolidated tax-receipts, and getting asked less frequently for donations (in theory).

So recurring giving can be a great way to give for all kinds of donors — young and old, low and high capacity, male and female — which is partly why recurring giving programs for nonprofits, and similar subscription purchasing for for-profits, are growing.

3. Growing (and should continue to do so)

Nonprofits

In that 2017 Target Analytics donorCentrics Sustainer Summit report — which covers 38 organizations, 20.5 million donors, 61.4 million donations, and $2.52 billion in total giving — saw an unprecedented increase of 25% in recurring donors in 2017. 2016 saw a 15% increase (nothing to sneeze at) and the 5-year increase from 2013 to 2017 was 70%!

The availability of tools to make the transaction side easier certainly helps but the recurring style of transaction is becoming more prevalent in other industries as well.

For-Profits

A McKinsey study on subscription e-commerce found that 15% of all online shoppers have one or more subscriptions and that the subscription e-commerce market has grown 100% over the past 5 years.

This style of purchasing — to replenish items you need, get curated items you may want, or access to content and offers you like — is particularly relevant to 25 – 44-year-olds. That demographic group is only going to command more attention in the philanthropic space as they age and have more disposable income.

SO…

Recurring giving is good for you in that it provides more predictable revenue today, a lot more revenue in the future, and allows for more relationship to develop with your donors over time with fewer resources required.

It is good for donors as they can give in a way that is high impact (greater giving over time and happier while doing so) and high convenience (easy to understand, set up, and cancel).

Recurring giving programs, and similar subscription e-commerce plans on the for-profit side, have been growing rapidly over the past 5 years and seem to be only accelerating in terms of growth moving forward.

If you don’t have a program, now is the time! And if you do, it can always be optimized. Good luck!

The Nonprofit Recurring Giving Benchmark Study

Get the Free Nonprofit Recurring Giving Benchmark Study

We worked with Salesforce.org to better understand how recurring giving fundraising was being done through the eyes of the donor by giving three different gifts — one-time, one-time and converted to recurring, and recurring — to 115 nonprofits in 9 different verticals and tracked the giving experience and communications along the way. We even reported one card as lost and the other as stolen to see what kind of systems nonprofits had in place.

Get all the stats, info, and more insights for yourself and download The Nonprofit Recurring Giving Benchmark Study today.

About the author:

Brady Josephson

Brady Josephson is a charity nerd, entrepreneur, digital marketer, professor, and writer. At NextAfter, he focuses on business development and partnerships, content creation, and marketing. He's also a huge Liverpool FC fan. #YNWA