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Why Your Charity Should Have a Monthly Giving Program

Reliable Income -- Committed Donors

By

Calendar for monthly giving. Getty Images

Monthly giving programs have become more popular as nonprofits realize their potential, and donors find out just how convenient they are.

Monthly giving is just another name for recurring giving, which is the generic term for any donation that is made automatically at a regular interval.

What Is Recurring Giving?

Recurring giving is just what it says -- the option to give automatically to a charity on a recurring basis. That basis could be monthly, yearly, quarterly, or some other preset interval. Most people seem to prefer the monthly option.

Recurring giving has been a bit slow to take off in the US, but it is quite popular in other countries -- the UK, Australia, and Canada come to mind. In those countries, automatic withdrawals from a donor's bank account is quite common; while in the US, most recurring giving is through the donor's credit card.

What Are its Benefits?

For a charity, the benefits of recurring gifts include:

  • A steady, predictable source of income. Retention is high among recurring givers. Very few cancel their gifts and signing up for recurring giving is a good sign that the donor is engaged and committed to your cause.
  • No end date. Unlike a pledge, which is paid off over a set amount of time and then is finished, recurring giving can go on indefinitely. Most recurring giving programs do not have end dates, although, sometimes, options are offered. For instance, a one or three year duration is a possibility. With recurring giving, donor inertia works in favor of the charity. It takes an effort, albeit small these days, to cancel a recurring gift.
  • Small donations become larger ones. Most recurring donors like this option because it allows a small donation to become a larger one over time, without straining the donor's budget. Recurring donations tend to be small ($5 to $50 on average), but mount up quickly through repetition. The aggregate for the charity can be considerable, especially if the donor?s gift can be upgraded over time. Many recurring givers also give to a charity in other ways and in response to other appeals over and above what they give on a recurring basis.
  • Inexpensive and cost effective. The solicitation for recurring giving is easy to do and works well with the growing popularity of online giving. Once set up, the process is electronic and automatic so processing fees are minimal. The recurring gift program can be easily promoted alongside and integrated with more traditional appeals such as email, direct mail, and telemarketing.
  • Easy processing, tracking, and record keeping. Once a recurring gift system is set up, it's easy to maintain and requires little human interaction. Most electronic donation systems offer a recurring option whether the charity uses its own merchant account or a third party processor such as PayPal or Network for Good. Your donor management software may be able to incorporate recurring gift data right into the data management system.

For a donor, the benefits of recurring giving are similar to those for the charity:

  • They like being able to turn a small donation into a larger one without straining their pocketbooks.
  • They appreciate the charity's need for long-term, reliable income and are happy to help.
  • They enjoy the convenience. They can set it up once and not have to worry about it for a long time.

Are There Drawbacks to a Recurring Gift Program?

The benefits of recurring donations far outweigh any challenges, but there are a few cautions to keep in mind.

  • You must educate your donors about the program and convince them that it is safe and reliable.

    This has become easier in recent years as more consumers become comfortable with online shopping, banking, ticket purchases, and more. Even while online scams and fraud seem to grab the headlines, consumers are becoming more knowledgeable about how to protect themselves online. If your nonprofit brand is good, you are transparent about how you use your donors' money, and have all your technological ducks in a row, it shouldn't be too difficult to convince donors to enter into recurring giving.

  • You do have to keep up with your donors' information.

    That includes their addresses, bank accounts if they choose the option of automatic withdrawals, and safekeeping of credit card numbers and expiration dates. Expired credit cards may be one of the most difficult aspects of recurring giving, since you must contact the donor (by email first and then with a follow up phone call if necessary) to remind them to update their information in your system. That updating should be relatively simple, but it does give a donor the opportunity to simply not respond and thus drop out of your program. Although drop outs are not numerous, they are hard to retrieve.

  • You must continue to communicate with recurring donors.

    You must not just set donors up for recurring giving and then ignore them. These are some of your most loyal donors, so make sure that they receive a good, initial thank you for signing up, and ongoing communications such as email newsletters, annual reports, and an occasional unexpected thanks or gift. One animal charity sends a year-end DVD to recurring donors to remind them of all the great work the organization has done and to thank the donor for being a part of it.

Recurring giving is really an under-used way to raise funds, especially in the US. The advantages far outweigh any problems. Since recurring gift programs work best with online giving, once your charity has a robust online donation system in place, it should be no problem to set up a monthly giving option. Once you see a steady stream of reliable income, you'll likely never look back.

Read more at Best Practices for Monthly Giving Programs - How to Recruit and Keep Monthly Donors.

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