Monthly Donors

Brilliant. Just brilliant!

Compound interest is the eighth wonder of the world,” Albert Einstein purportedly said.

He could well have been talking about monthly donors!

For the past several years, momentum behind monthly giving programs has been steadily growing. And with good reason …

Monthly donors (sometimes called sustainers) can provide a steady, predictable stream of revenue for the organization. These donors are typically much more loyal, with retention rates two to three times that of the overall file. As a result, the cost of raising these dollars is significantly lower.

For supporters, monthly giving provides an easy, convenient way of contributing. More importantly, it offers the opportunity to create an impact far beyond what might be expected with a single gift.

Organizations often “dip their toe” in these waters by simply including monthly giving as an the option on the donation form. (In our recent study of Kansas City charities, nearly 2/3 of the organizations included this option.) Once they experience initial success, they may begin more specific efforts to expand the program.

One of our client’s experience illustrates the benefits of implementing a more strategic approach. Initially, they simply included the monthly option. Five years ago, about 2% of online donors gave monthly and their gifts represented about 10% of total annual revenue. Now, after more consistent promotion and outreach, the percentage of sustainers has nearly tripled and accounts for a whopping 25% of annual revenue.

In addition:
• Average length of commitment (not including sustainers who just started this year) is 27 months. Some constituents have been active monthly donors for more than seven years!
• Average annual giving among these constituents is just over $225 (Barely 10% of the overall donor file achieves that level of giving in a year.)

Sound too good to be true?

It’s not. According to the M+R 2015 Benchmark, monthly revenue currently accounts for 17% of total online giving. In some sectors, it’s nearly twice that. The average monthly gift is $18.

For long-term success, a monthly giving program does require careful planning and management. But, we can go into than in another posting!

Results Sway Even the Skeptic

The old DM testing axiom claims “Success happens quickly; failure drags on forever.” If a test is going to work you'll know it right away. If not, no amount of hopeful waiting will change it.

Like all rules of thumb though, it depends.

Some time ago we did an online campaign in which we offered a retail gift card as a back end premium to constituents who signed up as monthly donors.

It added excitement. The test message saw a 22% increase in donor response along with a 6% higher average gift for a total of 30% advantage in gross revenue.

What’s more, half of the responders actually opted out of the gift card… saving the cost of fulfillment. Still, on a total cost basis, the initial increase in response did not justify the added expense.

Keep in mind, however, this was an appeal for monthly donors and was based on an assumption (aka: hypothesis) that the program could reach breakeven within 60 to 90 days.

Which did prove to be the case. It made breakeven. Barely. But was it worth the trouble?

We were concerned, for example, that some people might sign up for the gift card and cancel their monthly commitment once they received/redeemed the card.

This wasn’t the case; in the first 90 days 12% of the control (no card) group cancelled their commitment. None of the test responders cancelled.

By the end of the first year, the test group generated 60% more revenue that the control group. Or, a 7:1 return on the investment in the cards. By the end of year two this had grown to an 11:1 return.

I’ll confess: I was skeptical at the outset. I’d like to believe that mission-based responders are better (i.e., longer term, more loyal) supporters than premium responders.

And while that may be true in many cases (e.g., acquisition), it isn’t the case here.

So, are we going to use the offer again?

Absolutely.

Even if it did take a while to prove out. After all, isn’t that the whole point of testing?