Soapbox Engage Blog

Which is better to have: one donor who gives $12,000 each year, or 10 donors who give $100 each month?

It’s a trick question! They both equal $12,000, but nonprofits that gather 10 monthly donors are in a far better financial position than the organization that relies on large annual gifts.

Monthly giving programs (sometimes called recurring donations or recurring giving programs) are the foundation of most nonprofits and charities.

How do monthly giving programs work? Your supporters sign up and enroll in an automatic draft program that bills them monthly for the amount they would like to contribute to your cause (just like most of us pay our bills). Many organizations also offer bimonthly and quarterly giving options. Their donations show up in your bank account like clockwork each month!

Monthly giving programs have a variety of benefits. It’s a fundraising strategy that creates a predictable cash flow with relatively low maintenance costs. Monthly giving programs may also open the door for you to attract major donors and help your current supporters give more.

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Benefits of Monthly Giving Programs

Easy maintenance

With the right online donation software, monthly giving programs are cost-effective and easy to run. Most fundraising software allows donors to create an account and set up an automatic draft for the amount and frequency they would like to give.

Usually, the donation software will update your financial records, and you can even create automatic "thank-you" emails to acknowledge their gift. Really, once everything is set up on the back end, it takes very little time and energy to maintain (which you and your staff will greatly appreciate).

Monthly Giving Programs are popular and improve donor retention

Did you know that 40% of millennial donors and 49% of GenX donors are enrolled in monthly giving programs? Those statistics demonstrate the popularity and effectiveness of recurring gift programs. People are used to signing up for monthly subscriptions and paying bills online with auto-draft.

Whether good or bad, people like "set it and forget it" style programs. (Of course, the goal is never to let your donors forget your organization or their financial contributions.)

Monthly giving programs can also improve your donor retention rates. There seems to be some debate around the actual numbers, but some organizations report donor retention rates of up to 90% with monthly giving programs! That means a recurring gift program has the potential to nearly double your donor retention rate.

More reliable cash flow

Let’s return to the question at the beginning of this blog. A nonprofit that has 10 donors who give $100 each month is in a much better financial position than the organization that has just a few major donors.

Perhaps more significantly, donors who enroll in monthly giving programs tend to give regularly for an average of five to seven years. And, if one monthly supporter can no longer donate for one reason or another, your organization isn’t left trying to raise thousands of dollars in short order. It is far easier to replace a monthly donor who gives a smaller amount than it is to find a major donor who can contribute large sums of money.

Potential to increase donor giving

Monthly giving programs actually allow many donors to contribute more money overall. Someone might not be able to give $1,000 in a single donation, but they can give $100 each month. Let’s do the math: $100 per month for 12 months is $1,200! By offering monthly giving options, you can help many of your donors increase their annual contributions.

Recurring donation programs are surprisingly easy to start, and they work for nonprofits of all shapes and sizes. We gathered the best practices to help you start a profitable monthly giving program for your organization!

How To Create A Monthly Giving Program

The first step is to make sure you and your team are ready for a long-term commitment. While recurring donation programs are fairly easy to run, everyone in the organization (including your board of directors) should be on board and committed for the long haul. After all, you’re preparing to ask your supporters to pledge monthly donations for at least the next 6 to 12 months!

This fundraising method won’t fill your bank account overnight as major gifts do. Monthly giving programs usually start slowly and gain momentum over time. Make sure everyone understands that this is a long-term strategy, not a short-term fundraising tactic.

Be prepared to invest time, energy, and resources in starting a profitable monthly giving program.

1) Name your program

It doesn’t have to be fancy or anything, but your program will be easier to market if you come up with an interesting (or at least descriptive) name. The truth is, whatever you name your program isn’t going to be what prompts your donors to support you.

Start with a brainstorming session with the people involved in creating and running the program. After you create a list of a few names, ask five to seven people (current donors, staff members, volunteers, etc.) to give feedback on your name ideas and even add their own ideas to the list. Then settle on one name.

One local area food bank named their recurring donation program, "Hunger’s Hope". Watsi is an organization on a mission to provide healthcare for every person in the world. Their monthly giving program is called Universal Fund. Charity: Water’s goal is to provide safe drinking water to people in developing countries. They appropriately named their monthly giving program The Spring.

This process should not consume more than a few hours. Many organizations agonize over the decision and delay the project, but the name of your program isn’t as important as you might think. If you’re really stuck, you can always just start without a name and add one later.

2) Decide what monthly donation amounts to suggest

There are several ways to structure your monthly giving request. Many organizations recommend three or four amounts and invite their donors to choose one (or write in the amount of their choice).

Another way to decide how much to ask for is to find a meaningful number. For example, if your nonprofit provides after-school tutoring for at-risk children, figure out how much it costs to provide one day of tutoring to one child.

If it costs $5.75 to provide one day of tutoring to one child, ask your donors to sponsor one day, one month, one semester, or one year of tutoring for one child. In structuring your monthly giving program this way, you are attaching extra context and meaning to their donations. It’s far nicer to think, "I just provided one month of tutoring for a child" than to think, "I just gave $115 to a charity I value."

3) Create a system to gather donor information and track your donors

We hate to sound like a broken record, but CRM systems are critical to the life and organization of every nonprofit. This is doubly true for organizations that have monthly giving programs.

You need a way to keep up with your donors, know how much they pledged, and whether or not they are giving as they said. You should also keep track of when and how you interact with each donor (thank-you notes, email updates, etc.). An essential component of any monthly giving program is keeping in touch with your donors--but we’re getting ahead of ourselves.

While we strongly recommend online programs like Soapbox Engage, but you can even use an Excel spreadsheet if absolutely necessary.

4) Create a way for donors to sign up

At the risk of being too obvious, you need to create a way for your donors to sign up for your monthly giving program. Most people expect to be able to sign up online and create an automatic draft schedule. It’s a good idea to also create a paper form, just in case you’re hosting a fundraising event and need to have paper forms.

You also need to be able to process online donations. Most people don’t write checks very often, and you probably don’t want people sending cash each month (that would be a bookkeeping nightmare). It’s also a good practice to make monthly giving the default setting on your donation page. That subtly encourages people to consider giving regularly instead of making one-time donations.

5) Create a plan to stay in touch with your donors

We mentioned before the importance of staying in touch with each donor. Before you sign up your first monthly donor, you need a plan for keeping them updated about your organization and for thanking them regularly. We recommend connecting with all your recurring donors once a month (and your monthly email update doesn’t count).

Handwritten thank-you notes are always a welcome treat. Short phone calls to chat for a few minutes and thank them for their monthly support go a long way to build trust and express gratitude. Try sending videos of your organization at work or hosting a live chat on Facebook or another online platform.

There are countless ways to keep your donors updated and express gratitude. The point is, you need to have a plan to stay in touch with each of your donors, in addition to your monthly email update and regular social media posts.

Now you’re ready to launch your monthly giving campaign! Start by asking new donors to give monthly, then work through your current donors to convert to monthly or quarterly giving. Your best prospects are actually the people who already give several times a year.

Remember, recurring gift programs often take several months to gain traction. It’s a long term strategy that is far more sustainable and beneficial than relying on a few significant benefactors.

Here are three more resources to help you launch or grow your monthly giving program:

• 7 Top Online Donation Software Options For Nonprofits: Donation software is a must for any organization wanting to start a monthly giving program. Here is a handy resource that will help you select the right software for your nonprofit.
• 6 Cost-Effective and Creative Donor Thank You Gifts: Remember, communicating with your donors is an essential part of your new monthly giving program. Here are some practical ways to show gratitude and appreciation for your donors throughout the year.
• 5 Marketing Strategies Every Nonprofit Should Implement: Most nonprofits need to figure out how to use limited resources to raise awareness about their mission to donors, volunteers, and recipients of their services. Here are some practical ways your organization can market yourself and your new monthly giving program.