Fundraising Momentum Through Recurring Giving

As the competition for donor dollars continues to become steeper, many nonprofit organizations look toward increasing their donor retention year after year. This is where recurring giving comes into play. Recurring donors — also known as monthly donors or sustainers — are donors who give on an ongoing basis, which could be as frequent as monthly, quarterly or annually. As nonprofits recover a from challenging year, a prioritization into recurring giving programs could boost fundraising dollars significantly.

While one-time donations are typically higher than a recurring donation, recurring donors have a higher lifetime value than one-time donors. Plus, the process of encouraging donors to give on a recurring basis requires less resources than trying to get a new donor to give for the first time.

According to the “2021 Nonprofit Leadership Impact Study,” three of the four top challenges nonprofits face include putting efforts into acquiring new donors (Figure 1):

1. Difficulty acquiring new donors (41%)
2. Lack of resources (40%)
3. Lack of nonprofit awareness among potential donors (28%)
4. Difficulty cultivating donors (25%)

Figure 1: Biggest challenges facing nonprofit leadership teams in 2020 | Credit: NonProfit PRO

What was surprising about the study results was that only 10% of nonprofits said that difficulty retaining donors was their top challenge, which tells us that nonprofits believe they are doing a good job at retaining donors or they don’t believe retaining donors is more important than acquiring new donors. According to an article by CauseVox, the median donor retention rate for nonprofits is 45.3%, showing room for improvement. Additionally, the “Nonprofit Leadership Impact Study” shared that 16% of nonprofits said their top priority in 2021 is increasing recurring gifts and 15% said increasing monthly gifts (Figure 2).

Figure 2: Nonprofits top priority in 2021 | Credit: NonProfit PRO

However, while there is certainly room for improvement for donor retention and recurring gifts, data shows that monthly giving is on the rise. According to “M+R Benchmarks 2020,” monthly giving grew 22% from 2019 to 2020 — compared to an 8% growth in one-time gifts. Additionally, monthly gifts made up 17% of all revenue in 2019.

With this all said, it’s important to point out that one-time donations are still a valuable asset and can bring in a significant amount of revenue for a nonprofit. However, it does take much more time and effort to get a potential donor to make that first gift compared to a donor who has already committed that first gift. TrueSense points out that nonprofits should expect a return on investment of roughly $0.50, with most acquisition efforts breaking even within 18 to 24 months.

To download your copy of the “2021 Nonprofit Leadership Impact Study,” click here.