Get The Most Out Of Individual Giving
An individual giving program consisting of numerous automatic contributions can be a reliable and sustainable foundation for an NGO’s budget. Many thriving organizations have tens or hundreds of thousands of recurring donors giving $20 to $30 per month, which can mean annual income in the range of $20M to $40M. With low maintenance costs of only about 10% of the revenue, this means that a large proportion of the donors’ contributions are available for your budget. It is also nice to have the flexibility of unrestricted donations without the demands of servicing a more hands-on development program. As Chief of Staff and Senior Vice President of The Public Interest Network, I saw these benefits to my organization in managing a 100,000+ member automatic giving program from acquisition through development.
Whether you are looking to begin a program or you have one but want to make sure you are seeing the best returns, here are several tips for getting the most out of an individual giving program.
Make It Automatic
This point probably goes without saying, but it is so important that it is worth repeating: an individual giving program focused on recurring or automatic giving is essential. For most NGOs, a recurring giving or “sustainer” program is built on automatic monthly debits from supporters. Quarterly or annual recurring givers are more difficult to acquire but usually achieve better annual retention rates, and thus are a small but valuable segment in the donor file.
There are two primary reasons for focusing on sustainers. First, their retention rate is much better than a direct mail, digital, or telemarketing member’s annual retention. The most successful monthly sustainer programs have 70%+ annual retention in their first year, whereas other types of members retain at less than half that rate in their first year. Second, it is not an insubstantial cost to get future donations from direct mail or telemarketing members. Automatic giving is automatic, meaning the only costs associated with it are processing fees and any cultivation techniques you choose to employ. Automatic giving has the best return on investment (ROI) of any mass individual giving program.
How You Sign Them Up Matters
If you are beginning an individual giving program focused on monthly sustainers, then you should know the best ways in which to acquire them. It is challenging to sign up sustainers via direct mail or telemarketing, and as such, these channels see lower return on investment than more fruitful channels such as face-to-face fundraising and digital marketing. As such, I would recommend that you put your acquisition budget into these channels to sign up new monthly sustainers.
Who You Sign Up Matters
Even within sustainer programs, retention rates vary widely. Primarily, this is a function of the characteristics of the actual members. In general, an older average age of the file will mean a higher retention rate than a younger age, as will a higher average income. There may be good reasons to build a sustainer file with younger or lower average income members, but if you are looking for the highest retention rate and best ROI, then I recommend a door-to-door canvassing program. This program will reach older people with higher average incomes than any other acquisition strategy. Door-to-door sustainers can achieve year one retention rates of 75% or better, whereas street-acquired sustainers generally have year one retention rates of 50% or below.
The Contribution Method Matters
In general, sustainers who give via ACH (i.e. a bank transfer via their checking or savings account) or American Express retain at higher rates than sustainers giving through Visa or Mastercard. I suspect that this says more about the financial means of the sustainers than anything in particular about those means of giving. But, it is true that some sustainers leave your file because they change their credit card account and you are unable to reach them to get new information. By contrast, people rarely switch banks, and American Express card members are known for being loyal to AMEX. As such, if you can get a contribution with ACH or AMEX, you should aim for that over Visa or Mastercard.
Bump The Gift Amount
Most monthly sustainer files have an average gift of $20-$40 per month. Generally speaking, going higher than that negatively harms retention. Still, $20 to $40 is a big range, and you will want to be on the upper end of it. After a sustainer agrees to give a certain amount per month, it is valuable to find ways to bump up their gift amount. One way is by asking your sustainers to cover the processing fees for their contribution. Another way to bump the average gift is to ask sustainers to add another few dollars to their monthly amount to pay for a specific program or initiative. The key is to bump them up after they have agreed to give monthly.
Regular Upgrades
It is advisable to institute a regular upgrade program for your sustainer file. Usually, this means telemarketing or face-to-face outreach to your sustainers to invite them to increase their monthly gift amount. An upgrade program will generally attempt to reach your sustainer file twice per year. Success would mean increasing the average gift on the file by a few dollars, which could end up increasing your annual income by several hundred thousand dollars, depending on the size of your file. Keep an eye on the attrition rate -- sustainers who cancel their accounts when contacted -- but this should be minimal and more than outweighed by the increase in the average monthly gift.
Aggressive Recaptures
Some of your monthly sustainers’ debits will not process. Sometimes, reprocessing the debit a few days later is successful. Usually, though, a failed debit means that the sustainer has changed their bank or credit card account. I advocate aggressive efforts to reach these sustainers and get updated payment information. Various software tools exist to attain new payment information, but you should also use digital and telemarketing to reach failed sustainers within two months.