News and Information about the nonprofit sector in Massachusetts. Check back frequently to keep informed.
October 1, 2020
 
Monthly Giving May Be the Right Fit During and After the Pandemic
Book - How to Create Lifelong Donors
Nonprofit organizations looking to align their fundraising with new realities emerging from the coronavirus crisis owe it to themselves to consider instituting a monthly giving program, if they haven't already, by following advice offered in How to Create Lifelong Donors Through Monthly Giving.

The reason is straightforward: A low monthly commitment can keep donors involved with your organization and, in the process, provide a significant source of income.

According to author Harvey McKinnon, a fundraising consultant/trainer, sometimes called the "guru of monthly giving": Monthly giving improves donor retention, raises more money at lower cost, and provides organizations with "a way to do more of the good work the world desperately needs." Monthly donors also give significantly more than single-gift donors.

The key metric when evaluating a monthly giving program is net lifetime value – an estimate of your total income from a donor over their giving history, minus the costs incurred.

For example, a donor who gives $20 each month for, say, seven years will give $1,680. And, as McKinnon notes, monthly givers frequently make additional gifts in response to special appeals. They could provide another$300 to $500 over those years, for a total of about $2,200. If it costs $300 to acquire, serve, and communicate with a donor over time, her lifetime value is $1,900. Multiply that by, say, 100 such donors, and the program will generate $190,000 over seven years.

Does it work? Yes, writes McKinnon, who cites the case of St. Jude's Children's Hospital: "For decades, St. Jude's staff invested little money in promoting monthly giving. Yet when they finally did so in earnest, their program grew significantly – it now generates more than $125,000,000 in annual sustained income."

The reasons for not establishing a monthly giving program are legion, including "It won't work with our donor base," "$10 or $15 a month is a small amount of money," and "We tested it, and it didn't work." They're all myths, according to McKinnon, who demolishes them with examples and case histories.

As noted, people who give monthly, often called sustainers, can, and usually do, give more than their monthly commitment. But it doesn't happen automatically. McKinnon provides advice on how to keep sustainers involved, often for decades. Tactics include upgrading monthly giving levels and making special appeals. In addition, some monthly sustainers at some point decide to make a large donation.

Retaining donors is a major challenge for all fundraising programs, as finding new donors to replace those who drop out is costly. While a 75% annual retention rate may sound strong, 1,000 donors will dwindle to 75 after 10 years. Concludes McKinnon: "Every single donor you retain translates into hundreds if not thousands of additional dollars over ten years."

Monthly giving programs falter for many reasons. McKinnon details the 12 mistakes most commonly made by nonprofits, and offers some of his best advice: "Post this list on your bulletin board and encourage everyone in your organization to read it." And then, of course, do the opposite.

How to Create Lifelong Donors Through Monthly Giving is available from Emerson & Church, Publishers.

Reviewed by Peter Lowy

May 2020
SUBSCRIBE FREE – Keep current with the Wednesday Report emailed to you free each week. Click here.
Got news, advice, resources? Send it to editor@massnonprofit.org.