We hesitate to call any one group of nonprofit donors “the most valuable.” They’re all valuable, of course. But if we were to start evaluating the lifetime value of different types of donors, there’s one group that would be darn close to the top of the list: recurring donors.
Recurring donors (also known as sustainers) are champions for your organization. They give, in fixed amounts, each month. This is revenue you can count on. It keeps your nonprofit afloat, your staff paid, your lights on, and your programs operating. And these are people you can count on. They are your nonprofit’s tried and true supporters. They invest in your cause, and show up to support your work month after month, campaign after campaign.
But how do you get more of these high-value donors? How do you get them to make their gift monthly? And once you’ve got their recurring donation set up, how do you keep them from canceling it?
The Value of Recurring Donors
Okay, so as we said, all donors are valuable. Obviously. But some donors are more valuable than others. The kind of value we’re talking about here is donor lifetime value (sometimes shortened to DLV).
Understanding Donor Lifetime Value
Donor lifetime value is, in short, a prediction of how much money you can expect from a donor. And while it’s not advisable or sustainable to calculate the lifetime value of every donor on an individual basis, knowing your average lifetime value is important. Your nonprofit’s average lifetime value can provide powerful insight into how well you’re building lasting support for your work … or whether you’re letting donations slip through your fingers.
We don’t want to get lost in the math here, because that’s not what this post is about. But knowing your average lifetime value is important.
So, here what pieces of information you’ll need to calculate it:
- Your average donation amount. Good news for nonprofits with a Mightycause subscription! We do the math for you in your Analytics tab. But you can also find it by downloading last year’s Donation Report. Take the total amount you raised and divide it by the number of donations you received. The result is your average donation amount for that year.
- Donor attrition rate. Donor attrition, also known as churn, is how many donors you lost year-over-year. Get the scoop on donor attrition and learn how to calculate it in this blog post.
To calculate, take your average annual donation amount (number 1), divide it by your donor attrition rate (2), and the answer is your average donor lifetime value.
Increasing Your Donor Lifetime Value
One of the most effective ways you can increase your nonprofit’s average LTV is to focus on recurring donations. That’s because recurring donors have a higher LTV. So, the more recurring donors you have, the higher your average LTV will be overall.
How to Get Recurring Donations
Even if you’re on board with increasing your LTV and getting more recurring donors, the question remains: How?! It’s actually easier than you think! It requires a few key shifts in how you talk to donors, follow up, and talk about your nonprofit’s work.
1. Ask for Monthly Donations
Okay, okay. This seems obvious, right? But it’s worth mentioning because some nonprofits, particularly small nonprofits, simply forget to ask for recurring donations. They focus on campaigns-based fundraising and getting one-time donations. But you know what they say: If you want something, first you’ve got to ask.
Ask While They’re Making a Donation
The good news is that it couldn’t be simpler for donors on Mightycause to set up recurring donations. The option is already there when they’re choosing how much to donate. See?
Becoming a recurring donor is as easy as clicking a button. But you can make your case for donating monthly by customizing your suggested donation amounts and descriptions. Donors do read these and factor them into their decision about how much to donate! So, why not use these to suggest that donors give these amounts monthly?
Certainly, $5, $10, and $15 per month seems reasonable. Endless services like Netflix, Hulu, and Planet Fitness have made smaller monthly costs a key part of their business plans. And nonprofits can do it too! Use those spots to explain what $10, $15, $20 per month helps your nonprofit provide. And encourage donors to click the “Donate monthly” box.
Make It Your Follow-Up Ask
We’ve talked before about how getting the second donation soon after the first is important in donor retention. The sooner you get that second gift, the more likely your nonprofit is to retain that donor over time. But there’s no rule that your follow-up ask can’t be that they become a recurring donor.
Doing a little bit of math here can help you out in the long-run. For donors who’ve given in small amounts, you can play up how affordable their donation is on a monthly basis, especially given how much it helps your nonprofit do. (Provide specifics! If they gave $10, how much would $10 per month allow you to do over the course of a year?) For donors who gave in larger amounts, break that amount into monthly installments. So, for instance, if you have a donor who gave one $200 donation last year, ask for a $20 monthly commitment. That actually bumps their annual donation up a bit, allows them to contribute in more manageable regular donations, and ensures that they’ll continue to donate.
2. Show the Value of Becoming a Recurring Donor
So, if you’re anything like us, you get sucked into a PBS marathon once or twice a year. Whether it’s “Downton Abbey” or “Anne of Green Gables,” you end up sitting on your couch on a Sunday watching hours of PBS… with PBS asking you to become a sustaining supporter during breaks.
These ask-breaks are great examples of both “because of you” messaging, and showing the value of sustaining support. PBS uses shows that are perennial favorites to rope in viewers. Then, it reminds them that the only way they can continue to show these beloved favorites is with sustaining support of “viewers like you.” And then PBS sweetens the pot by offering goodies to viewers: DVD box sets, “Anne of Green Gables” dolls and books, limited edition swag, the list goes on. So, by the end of the short segment, they’ve shown the value of supporting PBS in a few different ways. They showed you what they do by airing great content that represents what they’re all about (and demonstrated the value of their organization to you, by getting you to watch their marathon). And then they offered you goodies for donating.
This is a great template for showing donors the value of becoming sustainers.
What Donors Want
So, obviously, you may not have the budget PBS has. You probably can’t offer deluxe box sets of people’s favorite TV shows. And you probably also don’t have the great Dame Maggie Smith to help you make your case for donating. But even the smallest nonprofits can show donors the value of supporting their work by being a recurring donor. You start by understanding why donors give to your nonprofit, and what they get out of it.
In general, donors across all categories look for these things:
Personal satisfaction. This is sometimes known “warm glow” giving, a model developed by economics professor James Andreoni. It’s basically an “impure altruism” — people give because it makes them feel good. (And it’s a real thing! Charitable giving actually releases dopamine in the brain.) Donors often give because of that helper’s high they get when they support a good cause.
Identity. A big reason why many donors give is to project a certain identity. That’s why major donors and bequests made to, say, universities and museums might find a wing named after them. Those donors wanted to be known as philanthropic people. That identity is important to them. You’ll find this to be true of many donors: they are compelled to give to your nonprofit because of what it says about them as people. That’s why many donors love things like tote bags, bumper stickers, and buttons they can use to display their donor status to the world. Their philanthropy is a source of pride, and they want people to know they support your cause.
Sense of community. Some donors like the sense of being part of a group of like-minded individuals who support a cause. That’s often why donor tiers are such an effective tool — you’re literally creating a club for people to join.
Return on investment. So, ROI is usually something you associate with for-profit businesses, but charitable donors look for it too. But they want to see that the money they donated was well-spent. That means knowing their donations helped, and that your nonprofit is transparent about how they’re being used.
Empathy. This is a factor for most donors, but some donors are just taken in by a compelling story. They give because a story you told tugged at their heartstrings and they wanted to help. (This would be a more “pure” form of altruism, compared to “warm glow” giving.)
How to Show Your Value
Appealing to the reasons donors choose to give is hard to do all at once, so it can require a multifaceted plan. You can prioritize based on your budget, scope, and sense of what might be most effective with your current donors. But these simple steps can help you better engage donors, and turn them into recurring donors.
Develop Donor Tiers
This is a strategy that can tick a couple of boxes in the list above: personal satisfaction, belief in your mission, identity, and a sense of community are all addressed with donor tiers.
You can ramp up how meaningful your donor tiers are with a few simple tricks. Insert recognition of how important donors are in your tiers. Call them “advocates,” “allies,” “heroes,” “champions,” and so on to appeal to donors who like the extra recognition, sense of community, and feeling of importance to your cause. Invest in some simple rewards like bumper stickers, t-shirts, pins, pens, and tote bags as rewards for recurring donors. (If you work with a direct mail marketing company, talk to them! They may be able to cut you a deal on some new donor rewards.)
Publish an Annual Report
This is for the donors who look for ROI. And it’s also just a best practice! It shows that your nonprofit is transparent about fundraising and your operations, while giving you a chance to celebrate your victories. This can be done in a few ways, depending on your size and budget. A slick PDF sent to donors is a low-cost way to distribute an annual report. You can also take it up a notch by printing copies of your annual report and sending it to major gift donors, board members, and recurring donors.
An annual report also acts as a call-to-action for the upcoming year. It’s an excellent way to show your organization’s impact, report on your results, disclose vital financials, thank donors, and most importantly, get them engaged for the year ahead.
Host a “Member” Meeting or Town Hall
This is something a lot of big nonprofits do — they’ll host an annual or semi-annual meeting for their “members,” meaning recurring donors, where they talk about what they’ve done, what they’ve got coming up, and the open the floor for feedback. Hosting these meetings also gives your nonprofit a great opportunities to meet your supporters in person and build a closer relationship with them! It gives your recurring donors a chance to have their thoughts heard, and feedback from engaged supporters can be immeasurably helpful to your nonprofit. As a bonus, it can be a great opportunity for recurring donors who appreciate a sense of community to get to know each other!
3. Launch a Recurring Giving Program
If you’d like to boost recurring giving at your nonprofit, launching a formal recurring giving program is the way to go! A program (and accompanying campaign) will help you capture more recurring donors and allow you to incorporate recurring giving into your year-round fundraising strategy.
Here’s how to get your recurring giving program off the ground.
Find Your Angle
We recommend coming up with a “hook,” name, and even logo that will help make differentiate your recurring giving program. You want something that stands out, ties into your mission and work, and communicates what recurring giving can help your nonprofit do.
Branding your recurring giving program
Develop a Structure
When developing donor tiers, here are a few things you’ll want to keep in mind:
- Average donation amount: You’ll want to figure out how much your average donation is so you can set realistic amounts. If you’re a Mightycause subscriber, this is calculated for you in your Analytics!
- Keep it concise: So, you don’t need 10 different tiers. That’s just confusing! Stick to 3-4 different donor tiers to keep your program manageable and to ensure donors can easily understand the tiers.
- Make your recurring donors feel special: Becoming a recurring donor should feel like joining a prestigious club. Think through titles (again, things like “heroes” and “champions” are always a hit) and a welcome package that’s scaled to each donor tier.
Get a Matching Grant
You can sweeten the deal and build hype for your new recurring giving program by working to secure a matching grant. We recommend checking with your Board of Directors and any local partners first.
Want to learn more about securing a matching grant? This blog post has great advice that applies year-round, not just on #GivingTuesday!
Remember that becoming a recurring donor should feel like becoming a member of a club. And, so, personalized outreach works best for launching recurring giving programs. Because who wants to join a club that sends an email begging anyone and everyone to join?!
We recommend doing a soft launch to a smaller group of people who seem likely to be interested in joining your program. That includes Board members, donors who’ve been retained from year-to-year, donors who typically make one or two gifts per year in larger sums, and so on. These folks are low-hanging fruit because you know they support your organization. And because they’re such great supporters already, we encourage you to reach out personally whenever possible!
Once you’ve got those people on board, you can broaden your reach and invite more people to join.
5. Keep Them Engaged
Recurring donors are more likely to stick around, sure. But that doesn’t mean you can be passive about keeping them engaged in your nonprofit’s work. You need a strategy to keep your recurring donors interested and passionate about your cause.
Stay in Touch
Make sure you check in with your recurring donors throughout the year. And we don’t mean “send them emails.” We mean actually pick up the phone and call (or use whatever their preferred form of communication is.) You may even want to schedule an in-person meeting with donors in your upper tiers. Like sponsors, grantors, bequests, and so on, it’s all about relationship-building with recurring donors. This process of building a relationship with your donor is called stewardship.
Get their feedback, hear what’s on their mind, answer any questions they have, make sure you’ve got their updated contact information, and touch base about anything exciting coming up at your nonprofit. Ideally, you’ll want to assign a staff member to each donor (and have them be the contact each time you reach out), but you can also get volunteers involved in your outreach.
Segment, Segment, Segment
When you do send blast emails, make sure you take extra care with your recurring donors. Take the time to craft emails just for this group, and acknowledge their importance to your organization. Even if it’s a quickie email, taking the time to talk specifically to your recurring donors will help engage them and help your nonprofit retain them — and even bump up their support.
If you’re a Mightycause subscriber, our Supporters tool makes segmentation easier by allowing you to add custom tags to your donor records.
Show Your Appreciation
Incorporate special shout-outs to your recurring donors as part of your stewarding strategy. Here are a few ideas you can use to show your appreciation for these vital donors:
- List recurring donors on your printed newsletter (if you have one)
- Host appreciation events like happy hours and lunches for recurring donors
- Send out exclusive updates on your work with “because of you” messaging
- Have staff and volunteers sign thank you cards for your recurring donors, send them in the mail once or twice per year
- Create an appreciation video
- Have a wall with recurring donors’ names listed at your facilities (unless they choose to be anonymous, of course)
You can get creative here! However you do it, make sure you’re planning ways to make your recurring donors feel special and appreciated throughout the year.