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Implementing a monthly donor program: A case study

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At Mennonite Central Committee, a charity that responds to basic human needs and works for peace and justice, our most recent strategic plan included a priority to “research, develop, and implement donor best practices and new initiatives with an eye to donor retention and acquisition.” While by no means a magic bullet, a monthly donor program was one such best practice that we researched, developed and implemented in Ontario. We have learned a lot and so far the results have been excellent. This article intends to share some of what we have learned in the hopes that it encourages your charity to develop a monthly donor program if you haven’t already.

Why develop a monthly donor program?

Before you dive in, it is important to take a step back and understand the key reasons why you will want to consider developing a monthly donor program:

  • Increased annual income per donor: Studies differ somewhat on what an organization can expect in terms of increased annual income once a person signs up a monthly donor, but you are likely to see that annual income per donor (on average) will increase once they have signed up to make monthly gifts.
  • Retention: Once a donor signs up to give monthly, the vast majority will stick with your charity year after year. Research has shown that retention rates can double from an industry average of around 40% to 80%. At MCC we have seen excellent retention rate from our monthly donors, with more than 7 out of 10 donors who have ever signed up to give monthly in the last 10 years still with us.
  • Planned giving: A further financial benefit is that monthly donors are the most likely to leave a bequest. So beyond increasing current revenue, a monthly donor program can become a central pillar of a charity’s planned giving strategy, increasing the pool of donors that can be reached for conversations about a legacy gift.
  • A stronger relationship with your donor: You can also expect to strengthen the relationship with your donors, because most of your touches will be offering thanks and reporting on the impact of their investments instead of asking for money. Donors will increasingly feel like partners in achieving your mission.

The significant and long-term impact for your charity comes from the fact that monthly giving dramatically increase the lifetime value of your donors, which is really the sum of the above parts. Harvey McKinnon, an expert on monthly giving, says that organizations can achieve an 800% increase in lifetime income per donor once they have signed up for monthly giving. But even if you don’t see an 8-fold increase, the research shows that your monthly donors give more each year, give for more years, and are more likely than others to leave planned gift to your charity.

Taking stock of where you are at

Once you decide you want to set up a monthly donor program, the first thing you want to do is take stock of where you are at. While MCC hadn’t developed a monthly donor program, the good news was that we already had donors that were choosing to give monthly, which meant that we had some simple systems in place to process monthly donations. But make no mistake, having donors who give monthly does not mean you have a monthly donor program. Harry Lynch said it well: “These days, getting started [taking monthly donations] is the easy part—deceptively so in fact. Most online donation processors now offer the capacity for recurring gifts...But having the basic functionality [of accepting monthly donations] is a very different thing than building a program and effectively promoting it in multiple mediums.”

What you need before you launch

Beyond simple backend systems with clearly defined roles and workflow to process sign ups and monthly donations, the following components are suggested in order to launch a monthly donor program:

  1. A plan for welcome communication to new monthly donors
  2. A marketing and communications plan to promote monthly giving
  3. A plan for ongoing communications with those who have signed up as monthly

1. Welcome communication to new monthly donors

We have developed a simple checklist we complete each time we set up a new monthly pledge. This includes, for instance, making sure we give new monthly donors a call to say thanks and review the details of their monthly donation.

An email, like you see below, is then sent to confirm what we went over on the call. Those that we don’t reach by phone get the email as well with an added sentence along the lines of “sorry I didn’t reach you when I tried calling”:

Hi, Peter.

Great to speak with you just now. And thanks again for your donation to support MCC's relief, development and peacebuilding projects and your request to set up a monthly donation. We really appreciate that you have chosen to partner with us in this way!

I wanted to confirm the following details with you:

  • Your donation of $25 per month will be designated to where needed most
  • We will process your donation on the 1st of every month beginning March 1st
  • We will consolidate your monthly donations and send you one annual receipt in February
  • If you have any changes to your credit card number or your expiry OR if you want to make changes to your donation (pause, stop, decrease, increase) just let me know
  • We keep our monthly donors updated through our e-newsletter called "In Touch". If you ever decide you no longer wish to receive these updates you can click unsubscribe or just send me a note and I can update your preferences.

We are extremely grateful for your support. Please don't hesitate to be in touch if you ever have any questions or feedback.

Sincerely,
Allan

2. A marketing and communications plan for promoting monthly giving

This sounds like a big job, but it doesn’t need to be complicated. Here are some of our suggestions:

Segmenting your donor file

While you will likely want all of your donors and contacts to receive an invitation to consider monthly giving at some point, you need to decide which segments of your donor file you will prioritize and focus on. True to the research we carried out, we found that the monthly giving prospects most likely to say yes checked off a number of these boxes:

  • The lower end of your mass donors: Erica Waasdorp suggests focusing on donors giving between $5 and $99.99. At MCC, we also have a large contingent of donors in the $100-349 range we are inviting.
  • Payment type: donors who give online or with credit card.
  • Frequency of gifts: donors who give frequent gifts, ideally several times a year.
  • Donors that have given consecutive (or multiple) years.
  • Donors who gave recently.
  • So for instance, when we looked at our mass file, we found that the 61% of our donors had given between $1-$349 and for 3 or more years. We could then drill down into this list by payment type (online and credit card), frequency of gifts (2+ gifts/year), and recency of gift (e.g. within last 6 months) if we want to increase the likelihood of an affirmative response.

    If you have someone in your office that is familiar with donor databases and spreadsheets, ask for their help as you home in on a segment of donors that hits a number of these criteria. Remember these are suggested criteria and not a prescriptive list. Feel free to play with these and other criteria until you get a list (size and composition) with which you feel comfortable testing your asks.

    Amount of the ask

    It is important to develop ask amounts that fit your donor base and organization. Pat Munoz found that asks between $5 and $25 are ideal. Waasdorp encourages charities to consider average gift size suggests 1/3rd of the recent donation, or even lower. She suggests that lowering the ask will increase the sign-up rate and to remember that after they sign up you can always ask for upgrades in the future.

    You want the ask to be low enough that you get a high signup rate, but not so low that we go below current levels of giving. Taking into consideration this research as well as what we know of MCC’s mass file, we landed on having three asks in our appeals and online: $20/month, $30/month, and $50/month, while also including an option for donors to select their own monthly gift amount. Lower those amounts if you feel it makes sense based on your donor file.

    What channels should we use to promote monthly giving?

    To get started in promoting monthly giving use communication tools that are well established in your organization such as email, appeals, social media, and events. Based on best practices and our experience, we would also recommend making generous use of phone calls as a follow up to direct mail and email appeals.

    Here are some examples of how we promoted monthly giving through these channels:

    • By email: we initially tested a mass email with about 400 donors in the lower end of our mass file.
    • Mailed appeal: we then segmented a group of about 1250 donors and created a separate version of the appeal focused on a monthly ask
    • Phone calls: After our first email appeal we tested follow up phone calls to some of the donors who opened that email. The results were encouraging so we followed up with phone calls to about 100 donors who received our mailed appeal as well.
    • Staff orientation: new staff are now invited to become monthly donors at their orientation.
    • Events: You want to promote monthly giving any chance you get, especially at events. We created a revenue development focused display and monthly giving is promoted. Ideally, you will combine this with a flyer or something physical that people can take with them.

    For each of these channels, you can direct people to a monthly donor landing page on your website for further info and to sign up online. But regardless of where you begin, Waasdorp suggests the key is to “get started with at least one method” and then test and grow your promotional efforts incrementally as you have capacity.

    3. A plan for ongoing communications with monthly donors

    Developing a plan for ongoing communications with monthly donors doesn’t need to be complicated. Our monthly donors receive our e-newsletter with a special message at the top that reads “Thank you for your monthly, sustaining gift to support the work of MCC. The stories below are examples of the impact you are helping to make possible through your generosity. If you have any questions, please don't hesitate to be in touch.” Monthly donors also receive a thank you email twice a year with an update attached as a PDF, such as:

    Hi, Cathy.

    I hope that all is well as you gear up for the holidays.

    Just a quick note to say thanks so much for choosing to partner with MCC as we respond with compassion to those in need around the world. We are so grateful for your generous monthly donations designated to support our response to the crisis in Syria and Iraq. Thank you!

    To keep you up to date I am including a report that provides highlights and examples of the impact you have helped to make possible. Have a look, and let me know if you ever have any questions.

    And just a reminder that you will receive one consolidated receipt from MCC in February for your donations in 2016.

    Sincerely,
    Allan

    When possible, we have also made a thank you call, which is especially important for donors for whom we don’t have an email on file. We also try to mail out a long handwritten thank you note with an update to donors for whom we have neither at phone number or email on file.

    Results from implementing a monthly donor program

    MCC began implementing our monthly donor program in November 2015. We have learned a lot and so far the results have been excellent. In 2016, we saw a net increase of 105 new monthly donors (32% growth year over year) and achieved a net increase of $96,960 in annualized donations from our monthly donors (28% increase year over year). For comparison, in 2014 before we had implemented a monthly donor program, we saw an increase of 20 monthly donors and $8736 in annualized revenue. So while it is clear that we cannot attribute all of our new monthly donors to the development of a monthly donor program, there does seem to be a significant correlation between our investment and the results attained.

    While an additional $97,000 a year from monthly donors is significant we also need to take into consideration the resources we invested in order to achieve that increase, which allows us to estimate a return on our investment (ROI). On the high end we estimate it has required about 1.5 days a month of admin staff time to provide support to the monthly donor program. This includes setting up new monthly pledges in our donor database, processing monthly donations, and following up with failed transactions, etc. Revenue development staff time invested has been 1.5 days a month since September 2015, when we first started developing the monthly donor program. This includes project management, special appeals development, year-end thank you calls, emails, and letters to current monthly donors, welcome calls to new monthly donors, and follow up calls to some appeal recipients. This means that we have invested up to 360 hours over 16 months in developing and implementing our monthly donor program between September 2015 and December 2016 (3 days of staff time each month times 16 months).

    If we take the figure of $96,960 in annualized revenue that we had gained by the end of 2016, and divide that by the 360 hours we have invested in monthly giving we get an ROI of $269 in annualized income per hour of staff time invested. Given that our retention rate of monthly donors is high (industry average is around 7 years), we can expect that a significant percentage of those donations will be coming to us for years to come. Which means that the lifetime ROI for each hour invested will be much higher than that, perhaps as much as to $1883. Granted, not all of that will be new money as some of these donors would still have made annual gifts had they not signed up as monthly donors. But you get the idea.

    Conclusion

    I will leave you with a helpful and encouraging quote that has guided our efforts at MCC as we got started with a monthly donor program:

    “Don’t wait until everything is just right. It will never be perfect. There will always be challenges, obstacles and less than perfect conditions. So what. Get started now. With each step you take, you grow stronger and stronger, more and more skilled, more and more self-confident and more and more successful”Mark Victor Hansen

    Allan Reesor-McDowell holds an MSc in Development Studies from the School of Oriental and African Studies and has worked with Mennonite Central Committee in program, communications and revenue development since 2005, currently serving as Manager of Donor Engagement. If you have questions about developing a monthly donor program please don’t hesitate to be in touch with him at allanreesormcdowell@mcco.ca or on LinkedIn.

    Mennonite Central Committee, a church-based nonprofit, carries out relief, development and peacebuilding in 50 countries alongside more than 500 partners around the world. To learn more visit their website or Facebook page.

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    susanfish@rogers.com susanfish@rogers.com
    My research suggests that Millennials are quite open to becoming monthly donors, but they, like other potential donors, need to be asked.
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    allanreesormcdowell@mcco.ca allanreesormcdowell@mcco.ca
    Hi, Susan. Thanks for the comment. Asking is always a good idea! One suggestion I read was quite helpful: most people who say no (or get upset when you ask) would rarely have given anyway. But there are a lot of potential yesses out there who just need a nudge.

    We haven't done much specific testing of millennials vs other age ranges, but anecdotally I can say that younger donors are signing up.

    Oh and keep up all of the good work on your articles. So many good ones!
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