Fundraising Q&A: The benefits of monthly giving

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Why should organizations should consider setting up a monthly giving program?

Donors who opt for monthly giving demonstrate a strong commitment to their favourite causes. Not only do they provide regular, predictable income, they are the most likely constituents to leave a legacy to their charities of choice.

Sometimes referred to as "sustainers" or "recurring donors" this method of fundraising got its start in child sponsorship programs. I still remember writing to my "foster siblings" in faraway lands almost fifty years ago, generously supported by my caring parents. Monthly giving programs have come a long way since those early days and yet the principles remain the same. What kept our family engaged in the Foster Parents Plan? It was the translated, handwritten notes on onionskin accompanied by photographs that marked the healthy growth of our chosen sponsor children.

Today's donors have much more instant gratification. Thanks to online correspondence, soliciting and stewarding monthly giving can appear seamless.

The benefits to donors and charities

What's in it for the donor?

  • It’s easy! Regular donations can be made in affordable monthly payments
  • Giving options include: Pre-authorized chequing (PAC) or Electronic Funds Transfer (EFT); credit card transactions and least likely now but not obsolete, post-dated cheques
  • Save postage and time with automatic transactions
  • Flexibility. Donors can easily increase, decrease, pause or stop their gift at any time
  • A cumulative tax receipt is issued annually
  • Staying informed through regular progress updates

And, through monthly giving charities can:

  • Increase their annual income
  • Reduce attrition rates
  • Strengthen long-term relationships with donors and the lifetime value of their support
  • Set more predictable budgets
  • Forecast cash flow more effectively
  • Keep postage and administrative costs down
  • Reduce the volume of fundraising requests

Where to begin

Start with approval from your charity's leadership team (chief executive and board). If you have difficulty making a compelling case within your organization simply ask which they'd prefer - annual or monthly donors? There is enough evidence available today to justify additional expenses in favour if increased revenue.

It used to be that monthly giving relied on a solid database of supporters. Charities would segment their records, ask select annual donors to consider giving monthly and a portion of them would oblige. Today we are seeing a number of institutions, particularly in large urban centres, using street solicitation to sign up new donors who agree to give twelve times per year to complete strangers!

"Chugging" (less affectionately referred to as charity mugging) is a proven, yet controversial form of donor acquisition. A recent Globe & Mail article stated "Half of MSF’s 45,000 current monthly donors started giving “because of a conversation they had with someone on the street or at their door,” according to Ms. Davies. Over a decade, donations from this stream have ballooned to $16.5-million with an average monthly gift of $16." The article goes on to say this fundraising method is an effective one...and I will add...for select causes.

Street solicitation is not for everyone. Médecins Sans Frontières (MSF), the Canadian Red Cross, Amnesty International and Greenpeace were the organizations cited in this Globe & Mail column. Sick Kids Hospital Foundation and World Vision have also been identified based on their 2007 experience. In comparison to these largely known organizations it's unlikely that a more obscure cause with a less compelling case for support would garner sufficient return on investment to justify the cost of this method of donor acquisition.

Monthly giving does rely on an appealing mission. The most successful purposes include: animals, children, emergencies, international relief, and religion. Charities who can "package" their mission into tangible appeals secure the most subscribers. For instance, animal lovers may find it hard to resist sponsoring a pet that needs special care. The regular updates they receive on their "adoptee" helps strengthen the bond. Another example of international aid that is well thought out is Plan Canada's Gifts of Hope catalogue.

To be successful in donor retention you will need to have an effective processing system that ensures timely and compelling correspondence and engaging stewardship. The least expensive way to keep in touch with your donors now is through e-news. Ask your supporters what types of communication they would like and then honour their request. Record their preferences in your database and develop your personalized marketing strategy accordingly.

Integrated fundraising refers to the multiple channels that charities can now use to keep their donors informed and interested. It is considered more cost-effective and productive and relies on both on- and off-line tactics to maximize results. The more strategic the organization, the less likely they will lose their donor between the resource development and IT/communications silos that occur traditionally. Success depends on cross-departmental conversations. Donors don't care whose job it is to communicate with them...they just see your charity as a single entity whose work they support and they want to stay informed.

Reactivating lapsed monthly donors

Retention is always cheaper than acquisition. Be sure to have a follow up strategy to reactivate donors who have cancelled their credit card due to loss or theft or not updated their information once their card has expired. Calling on evenings or weekends is the most effective way to touch base and confirm new information so build that approach into your scheduling.

Some donors have second thoughts and cancel their pledge. It's still beneficial to talk to them directly and find out if there is an alternative method or amount that they'd consider. Be respectful and don't judge their decision; there is no way of honestly knowing their financial situation. Always leave the door open and you'll be pleasantly surprised when they return.

The bottom line

Monthly donors are well worth the effort and investment! The benefits to both the donor and charity outweigh all the arguments. While some causes may be more compelling than others it's a meaningful way to encourage individuals to make a significant difference in the good work you do.

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Cynthia Armour is a freelance specialist in fundraising and governance. A Certified FundRaising Executive (CFRE) since 1995, she volunteers as a subject matter expert with CFRE International. She works with boards and senior staff to ensure that strong leadership will enhance organizational capacity to govern and fundraise effectively. Contact Cynthia directly at 705-799-0636, e-mail answers@elderstone.ca, follow her on Twitter at @CynthiaJArmour, or visit www.elderstone.ca for more information about her services.

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Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.

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