Unlocking Sustainable Funding: The Power of Recurring Donations
Recurring donations are essential to successful fundraising plans. Whether monthly, weekly, or every other week, these contributions offer flexible options for donors to consistently contribute to your organization. But the benefits extend beyond donor convenience.
For nonprofits, recurring donations create a stable and cost-effective revenue stream, enabling more accurate cash flow predictions, better budgeting, and efficient fund allocation for staffing, overhead, programs, and capital projects. This stability transforms your fundraising efforts.
For donors, recurring giving is straightforward to set up and manage, lowers fundraising costs, and converts one-time supporters into long-term investors. Utilizing platforms like Anedot or Julep, nonprofits can significantly enhance their revenue by effectively promoting recurring giving. This comprehensive guide will help you kick-start your recurring giving program and cultivate committed donor investors.
Why Recurring Donations Matter
• Recurring donors stick around.
Donor retention rates are notably higher for recurring donors. While only 43% of one-time donors make a second gift, over 80% of recurring donors remain committed after a year. In 2022, recurring donations comprised 28% of all online revenue for nonprofit and advocacy organizations. With the high cost of recruiting new donors, it makes sense to encourage your existing donors to make this convenient commitment.
• Recurring donors give more.
Though individual contributions from recurring donors may be smaller, they accumulate to more significant amounts over time. Research finds that recurring donors give 42% more annually compared to one-time givers. While the average one-time gift was $125, the average monthly gift was $36, which totals $432 per year.
Recurring donors are also more likely to make extra one-time gifts for special events or campaigns. Additionally, 25% of recurring donors make extra one-time gifts.
• Recurring donors diversify your donor base.
Because recurring donations are set up through credit or debit cards, they are popular among Millennials. Approximately, 40% of Millennials are enrolled in an online giving program. Giving USA reported that between 2016 and 2022, Millennials increased annual giving from $942 to $1,323, and they are entering their prime earning years. Gen Z is also quickly entering the workforce with the eldest members turning 27 this year. Having come of age with online subscriptions and streaming options, this generation prefers the flexibility of recurring giving.
• Recurring donors are investors.
View recurring donors as key investors in your nonprofit. Their consistent support can foster strong advocacy and volunteerism within your community. They can also serve as a source of volunteers, mid-level donors, and potential board members. Recurring giving enables many donors to give at major giving levels with gifts split up throughout the year.
Step-by-Step Guide to Recurring Giving
Sitting down to formulate a written plan for recurring giving will help you establish which donors to reach, how to communicate with them, and create systems that will lead to stable and substantial fundraising streams.
Step 1: Create a plan.
Developing a proactive strategy to convert existing donors into recurring ones is crucial. Start by creating a written plan that outlines your goals, objectives, strategies, and tactics. Focus on engaging your existing small-dollar donors, particularly those who have donated $50 or less, and segment them by issues they care about to tailor your communications.
Step 2: Utilize your fundraising platform.
Ensure your fundraising platform, such as Anedot, supports recurring donations. Develop special landing pages and donation forms with clear calls to action. Donors are 31% more likely to initiate a recurring gift on a branded donation page. Highlight recurring gift options on regular forms and provide flexible giving frequencies. Set up automated confirmation emails and include tax information in all communications.
Step 3: Be transparent.
Transparency is key. Do not pre-select the opt-in for recurring donations, be clear about when gifts will end, and make it easy for donors to cancel recurring gifts. Ensure donors receive automatic email receipts for each donation and promptly follow up on their questions or concerns.
Step 4: Develop special communications.
Design your recurring giving ask around specific goals and create targeted email appeals. Break down expenses to show donors the impact of their contributions, provide frequent updates, and offer incentives such as matching gifts or special donor status.
Step 5: Thank them regularly.
Expressing gratitude is essential. Set up auto-responder thank you emails, mail handwritten thank you cards, and acknowledge aggregate totals rather than individual gifts. Regularly thanking your donors helps reinforce their commitment and loyalty. Look at the totality of their gifts. If annual giving corresponds to major giving levels, treat those recurring donors as major donors.
Step 6: Keep trying to convert.
If a donor declines to convert to recurring giving initially, follow up after a few months. Analyze your metrics to understand what might have gone wrong and adjust your approach accordingly. Include recurring gift options in all fundraising communications to keep the option visible.
Step 7: Don’t silo donor communications.
Integrate all communications into a comprehensive plan. Use tools, like Julep, to track communications and ensure donors are not bombarded with multiple fundraising asks. Remove recurring donors from regular appeals to avoid frustration and build long-term relationships.
Step 8: Prevent recurring donor churn.
Retention is vital for recurring donations. Utilize donation platforms that update card information automatically, notify donors before their cards expire, and contact donors directly if their information needs updating. If a donor cancels, reach out to understand why and offer solutions like temporarily pausing the donation.
The Investment Pays Off
Implementing a strategic recurring giving program is challenging but rewarding. It provides a reliable revenue stream, keeps donors engaged, and reduces fundraising costs. For an organization, it provides these three crucial factors:
Predictability: Recurring gifts forecast monthly cash flows with greater accuracy.
Cost-Effective: Recurring gifts lower fundraising costs by reducing the frequency of appeals.
Long-Term Support: Recurring gifts transform one-time donors into lifelong supporters.
For donors, they provide flexibility, simplify the giving process, and lay the foundation for a long-term relationship. Remember that recurring donor programs bring:
Higher Retention: Over 80% of recurring donors continue their support after a year.
Greater Impact: Recurring donors typically give 42% more annually than one-time donors.
Demographic Appeal: Recurring donations are popular among Millennials and Gen Z, who appreciate the flexibility and familiarity of digital transactions.
By following the steps explained in this guide, your nonprofit can turn one-time donors into dedicated, long-term investors. This ensures sustained support for your cause.
Learn More
As experienced fundraisers, the team at Julep understands how important recurring giving programs are. We’ve expanded on the information in this blog post in a PDF guide you can download here.