How to Create Sustainable Revenue With Recurring Giving

For every year-end donation, how many times do you have to make an ask? Is your organization using a recurring model for revenue? If not, you’re missing out! In this post, we’ll discuss more specifically why the recurring giving model is beneficial to adopt, how to launch it, and how to keep it going.

Think about your Netflix, Spotify, or Amazon Prime subscription. Chances are, you’ve been subscribed for years, but they only had to ask you once to make ongoing payments! It’s convenient for you because you get the benefit of ongoing service without having to remember to pay every time you’d like to receive services. It’s fantastic for those business models because every single ask has a time and effort cost associated with it. All they have to do is keep providing you with stellar service and nurturing your relationship to prevent you from canceling. And that’s much cheaper than making an ask – also called an “acquisition.”

Just because you don’t provide goods or services in exchange, don’t assume this model can’t apply to your own revenue stream – nothing could be further from the truth!

The truth is, there is not only a demand for goods and services; there is also a demand people have for charitable giving. In fact, “contribution” is one of the 6 core human needs. And your organization’s work is perfectly poised to meet that need. You can do so easily and sustainably. Not only do you get the benefit of reliable, sustainable revenue without having to ask for every dollar every time, but the donor gets the benefit of the convenience of an ongoing connection to making a contribution; making a difference is meaningful to them.

What is recurring revenue?

If you have more than one month of operating reserves, you’re doing better than roughly half of nonprofits. Historically, nonprofits fundraise heavily around the holidays with December comprising nearly a third of annual giving. But managing yearly fundraising variables and unexpected expenses with this type of revenue stream is difficult.  

Instead of going out and renting or buying a DVD, you can subscribe to Netflix instead. Your credit card is charged a nominal fee monthly, which over months and years adds up to significant revenue for Netflix. This is a recurring revenue model.

Not only are most Americans are used to this model by now, but many (younger generations especially) also prefer smaller monthly giving over large, one-time donations. Giving $100 upfront feels like a big commitment, but giving $10 a month indefinitely happens without you even feeling the cost.

A subscription model provides stable, predictable income and allows your donors to conveniently support you. It behooves you to not put your program recipients and mission at risk by not incorporating a sustainable revenue stream for your organization!

Why do you need recurring giving?

Increase your average donation amount

The average one-time gift is $128, while the average monthly donation is $52, which amounts to $624 per year—more than 4x more! While donors can cancel their monthly subscriptions any time, donors who set up recurring donations give 42% more annually.

Higher Retention

You probably have heard, it’s always cheaper to retain an existing “customer” than to acquire a new one! Recurring donors are also easier to retain and support you for the long haul. Monthly giving donors have a retention rate of 90%, whereas repeat (but not subscribed) donors fall to 60% and first-time donors drop all the way to 23%.  And if you keep your recurring donors for more than 5 years, the retention rate skyrockets to 95%.

Stability and Predictability

Leave behind the feast or famine of unpredictable fundraising seasons. You’ll be able to reasonably estimate your income so you can better budget and plan for the year.

Ease and Automation

Whipping out the checkbook or credit card every time you want to make a gift is work, too. Let people automate it, and everybody wins! It’s about continued relationships with your most loyal supporters, not starting from scratch each time.

How to start your recurring giving program and make it exciting

1. Set a goal

To start, pick one program or service your organization provides. What is the monthly or annual cost of providing it? By this time next year, aim to have recurring giving sustain the cost of this program! (A fundraising platform like Flipcause will help you track your active recurring revenue.)

2. Define success metrics

Pick some additional metrics that will help keep you on track for your larger goal. You’ll want these to be quantifiable and easy to measure. Here are some key indicators to consider:

• What is your average monthly recurring revenue?
• How many new recurring donors did you recruit?
• What is your rate of retention on subscribed recurring donors?
• How many donors did you convert from one-time to recurring?

3. Communicate your value proposition – what do you offer? 

Donors want to understand how their contributions matter. Clarify exactly what value those contributions provide and show donors how their giving makes a tangible impact. Sharing stories from the ground and communicating ongoing gratitude emphasizes donors’ sense of significance and goes a long way to keep them engaged.

4. Create a targeted ask 

The more directly you can speak to a prospective donor, the higher the likelihood of them saying yes. You can create a donor persona to help you understand the people who want to support you, and this starts by basic segmentation of your database of previous and existing donors:

• How much did they give?
• How frequently?
• Through what channel? (Website, peer-to-peer, live event, etc.)

This information can help give you a sense of how best to approach your ideal audience. Start by focusing on those who gave recently, and those who give frequently.

Austin Angels – Monthly Sponsor Campaign

5. Segment your email list

Monthly recurring donors are your most valuable donors. Don’t make the mistake of sending the same email to one-time donors as five-year supporters. When a donor signs up for recurring giving, move them to a separate email list. This is called “segmenting.”  The better you can segment, the more you can personalize your messages, too.

6. Personalize your appreciation to build real relationships

When we talk about moving from one-time donations to recurring giving, we’re also moving away from a transaction to a relationship – a beautiful thing, indeed! When working within organizations, it’s easy to forget that relationships and connections still happen between individuals, not between entities. For this reason, it’s important to frame all communications in a personal and individual manner.

• Designate one of your staff as the touchpoint for your recurring giving program. Donors will have someone they can specifically address should they have questions and a name for the person with whom they are building a relationship.
• Your communication and emails should be sent from this person. Use a person’s name instead of an impersonal “info@nonprofit.org” (or worse, “noreply@nonprofit.org”). Sending messages from a personal address also helps prevent your newsletters from being sent to spam folders.
• In newsletters—and especially when soliciting for an increase or a one-time additional donation—reference specific qualities about your donor: the amount of their last contribution, how long they have been a supporter, their name.  
• Handwritten thank-you cards or even images within emails can go a long way, too!

7. Foster community 

It’s our human nature to want to be part of something. And you can provide that! Here are a few ideas to foster a sense of community:

• Publicly thank your donors in announcements and on social media.
• Celebrate your monthly recurring donors by listing their names on your website, email list, or social media. 
• Include personal testimonials from other monthly givers on your webpage.
• Create engaging content that’s relevant to the happenings in your community—don’t be afraid to get personal.

True advocates of your mission want to know their funding is going toward a good cause. Material items that make the donation feel transactional diminish the sense of altruism. However, if your organization can afford to send gifts, material rewards can be reframed in a number of ways. A gift can be a surprise thank-you. A special invitation to an event can be a community-building experience!

8. Tell a compelling story

A heartfelt story that demonstrates the real impact of donations is one of the best ways to engage your donors. The goals that you established at the launch of your recurring giving program should be woven into your narratives. Focus less on how much money you’ve raised and more on how those funds have affected real people.

How to fuel your recurring giving program – future stewardship

Once you’ve gotten your sustaining program off the ground, here’s how to steward your donors and keep the momentum going.

1. Retain your subscribers

Once you have recurring donors, don’t forget about them. Remember, they give to you every month. It’s important to acknowledge their continued support and the impact they support your organization in making.

2. Convert one-time donors to recurring donors

This is important to remember but easy to forget: you’ve got to make the ask. In one of your follow-up communications to one-time donors, include a call-to-action for a recurring donation. If you acquire a second gift within the first 3 months, you have a much better chance of retaining that donor.

3. Re-establish a relationship with lost connections

• Reach out to donors who have stopped giving, and ask why they left. Is there something you could improve on? Asking for feedback is a key way to garner engagement and build or renew relationships. 
• Get ahead of expiring credit cards, and follow up with those with donors.
• Speak with any donor who has voiced concern or dissatisfaction with your organization.

Even if you can’t get every donor to renew, you can still learn from these conversations and grow as an organization.

4. Periodically increase asks

One reason that the recurring giving model works particularly well with millennials and younger generations is that they tend to be in the early stages of their careers.

As your donors’ salaries grow, so too does their capacity to give.

Every 6-12 months, it’s a good idea to ask for an increase in their monthly gift amount. Even if they were unable to give more last time you asked, circumstances can change in 6 months or a year.

5. Employ strategic one-time asks

You can also ask your recurring donors for one-time donations for special occasions or projects.

Wish them a happy birthday. And remind them that friends and family might be happy to gift to a cause they care about.

Bonus Tips!

If asked, most donors will cover the processing fees in the payment transaction. This is a small amount to them but over time could have a large-scale positive impact on your organization. 

Speak to your donors like you know them. Offer them a community of like-minded, good-hearted people. Thank them, and consistently tell them how their giving translates into real, positive impact!

With your recurring giving program in place, your organization just needs to continue nurturing your relationships with your supporters via regular connection and communication. Empower them with knowing the kind of impact they are able to make with their giving, and you’ll provide sustaining value in this symbiotic partnership!