EFT Makes Recurring Gifts A Reality

It’s much more efficient to collect donations via electronic funds transfer than it is to process a check by hand, says Jon Biedermann, vice president of fundraising products for DonorPerfect Fundraising Software. No one has to physically go to a bank, and there are fewer problems with reconciliation. On top of that, EFT facilitates recurring payments for monthly givers.

The white paper, “Creating a Successful Pre-authorized Gift Program,” authored by Frank Chudnow, vice president of DonorPerfect’s parent company SofterWare, looks at the benefits of accepting pre-authorized, or recurring, gifts. For these types of gifts, a donor makes a pledge and authorizes the organization to deduct a certain amount of money at a certain time (most often monthly). Such donations are collected via EFT.

Some of the benefits to having a recurring-gifts program, as noted in the white paper, are that it:

* Improves the donor relationship. For one thing, it eliminates the hassle of writing checks and the postage costs of mailing them. What’s more, it allows organizations to send fewer solicitation mailings and to focus on fostering relationships.

* Creates long-term givers. Biedermann says that a donor who gives $10 every month is a much more valuable donor than one that gives a single gift of $120 in a year. Typically a monthly donor’s lifetime value is more than double that of a regular donor because the monthly commitment builds a much greater affinity with the organization.

* Increases income and provides a predictable source of funds.

* Lowers fundraising costs, as the organization sends fewer solicitation mailings and has to process fewer paper checks. Biedermann says it can cost anywhere between $1 and $2 to process one check. Processing a paper check requires an administration process, including time and overhead to account for the check, travel to the bank and entering the information by hand into the database.

He recommends that an organization take these four key steps necessary to establish a recurring-donation program:

1. Educate staff and donors about recurring donations via EFT;

2. Develop ways to recruit recurring donors;

3. Implement the technology necessary to manage and process recurring gifts; and

4. Test.

Biedermann notes that communication with recurring givers should be different from those with donors who haven’t made an ongoing commitment. Rather than including them in its regular direct-mail or telephone solicitations, an organization should update recurring donors regularly on how their gifts are being used to achieve its mission. But it also must be sure to send them an annual upgrade appeal, thanking them for their past support and asking that they increase their monthly commitment.

Offering EFT needs to be part of an entire marketing push, complete with a centrally devised message that is included online, in newsletters and in direct-mail letters announcing that donations can be given through this method.

From the donor’s perspective, EFT enhances the convenience of giving. From the organization’s perspective, it is a reliable, recurring donation stream that cuts retention costs considerably.

Jon Biedermann can be reached via www.donorperfect.com. To download the white paper “Creating a Successful Pre-authorized Gift Program,” visit http://www.softerware.com/doclib/DP/Sales/DP_SAL_WhitePaper_CreatingAGiftProgram.pdf