Monthly giving is important for nonprofits. But are we doing it well? To test, Brady Josephson ran an experiment involving giving to 115 nonprofits. And I’m honored that he agreed to write about his findings. Brady is the Vice President of Innovation and Optimization at NextAfter – a fundraising research lab. No stranger to nonprofits and technology, he’s widely cited in multiple media outlets. He can be reached on Twitter @bradyjosephson
3 months. 115 nonprofits. 345 donations. 4500 touch points.
Those were some of the key ‘stats’ that went into a recent study we did on recurring giving in partnership with Salesforce.org. Or put another away… it was a crap ton of work. And when people hear about the study, one of the first questions I get asked is “why?”
Well, one main reason: to better understand the giving experience from the donor’s viewpoint.
That is one of the hardest things, if not the hardest thing, for you as a fundraiser to do: imagine yourself in the donor’s shoes. When you try, or when I try, you inadvertently layer in your own knowledge and experiences, this is something called the curse of knowledge, and it can lead you down a dark path of ‘me first’, insider, and uninspiring fundraising.
So the hope is that a study like The Nonprofit Recurring Giving Benchmark can provide some objective, unbiased information on what a donor’s experience is so we can learn from it and improve upon it. (Plus we get some neat ideas to test with our research partners like how a ‘pop-up’ at the point of donation helped increase recurring giving 64.2%).
The second question I’ll often get asked is “what stood out to you?” While there was a lot of interesting things, here are…
3 Surprising Things I Learned About Recurring Giving From 115 Nonprofits
Very few organizations are communicating the ‘why’ behind recurring giving
A lot of emphasis, when it comes to digital, is on things like gift arrays or what image you should use or what color the donate button should be but the reality is, if a donor is not motivated or inspired to give and they don’t understand how they’re donation, today, will make a difference, those other things don’t really matter.
So it was surprising when we found that only 9 organizations, less than 8% of nonprofits in the study, tried to communicate value or provide a reason why the donor should make a recurring gift in the process. Most used a simple approach with a check box between ‘one-time’ or ‘monthly’ but if you hadn’t arrived at that decision point with your mind already made up that you wanted to make a monthly gift, there was nothing to help convince you. Or, perhaps worse, there was nothing to reaffirm your choice to give every month.
And just by adding some copy or text to help persuade or confirm the potential donor’s decision can make a big difference. In this experiment, one of my favorites, the extra focus on answering the ‘why’ helped increase donations 150.2%!
Recurring donors received 44% MORE direct mail than the one-time or upgraded donor
In the study, we had three ‘mystery donors’ to see how the communications and follow-up differed from a one-time donor to a recurring donor to a one-time donor who then upgraded to a recurring donor in the 2nd month. I was hopeful that we’d see some pretty significant differences between the three donors and while there were some encouraging signs — the recurring donor received more cultivation and less solicitation over the 3 months — there were also some worrying signs — in the 3rd month, the recurring donor saw increasing solicitations and decreasing cultivation.
But the most surprising thing, to me, was that the recurring donor actually received 44% more direct mail in the 3 months. When we dug into it a bit more recurring donors did receive more cultivation pieces in the mail but they also received more solicitations via direct mail. I’m not sure what the thinking or strategy is in sending more mailed solicitations to a donor who just chose to give every month indefinitely.
My hope is that it’s an odd quirk involving a lack of systems or data but my fear is that this is part of a strategy to squeeze more revenue out of a high-value, high-committed donor. This isn’t to say we shouldn’t optimize fundraising, we should, but the optimization of fundraising includes the donor and their experience and I don’t think this increased solicitation via direct mail after an online recurring donation is the message we, fundraisers, want to be sending to donors.
Many organizations seem to be okay with lost, cancelled, and expired credit cards
One of the main reasons recurring donors stop giving is because of their credit card lapsing, expiring, getting canceled, or lost so we wanted to see what nonprofits were doing to prevent this and how they would react once it did happen so we reported one card as lost and canceled the other one.
First the good. 68% of organizations were able to automatically update the card via their payment solution. I was a pitcher in college and I learned, quickly, that the best way to prevent runs from getting scored was to not let guys get on base. Now I wasn’t very good at doing that which is why my pitching career was quite short but if I had a way to automatically prevent 68% of batters reaching base, I’d be in the Hall of Fame.
Now the bad. Only a third of organizations accepted EFT/ACH payments (where you can pay directly from your bank). Now this is bad because donors may want to pay that way and avoid more credit card fees and a bank account lasts longer than credit cards. This is why the Target Analytics donorCentrics Sustainer Summit group found that donor retention was 4% higher for EFT/ACH donors compared to credit card donors. 4% may not sound like a lot but I can assure you it adds up over time.
And, worse, for the organizations that didn’t have a way to automatically update the credit card when lost, 75% of them didn’t reach out to us to recover it. And when we canceled our card, just under half of the organizations (47%) didn’t contact us.
I hoped organizations would do more to prevent donors leaving for payment reasons but it was pretty shocking to see how little effort and/or systems were in place to reach out to people when that did happen.
Those are just three of the most surprising things to me but I’m sure you’ll find more in the full report. The key is to make sure you’re looking at the recurring giving experience from the donor’s perspective and then find areas you can improve, optimize, and test to grow your recurring giving program. Good luck!
Get all the statistics and insights from The Nonprofit Recurring Giving Benchmark Study and see how your organization compares to those in the study at recurringgiving.com.