At its core, recurring monthly giving is a way to ensure donor retention by creating a predictable and sustainable revenue stream. In todayโs world, where subscriptions are a part of our daily livesโfrom Netflix to meal kits to gym membershipsโnonprofits can leverage this mindset by creating recurring giving programs. Donors who commit to monthly giving offer financial stability that helps organizations better support their communities and missions.
In fact, because subscription models are embedded in our culture, examining this model separately is crucial when looking at donor behavior and revenue streams. Recurring giving can have a transformative impact on a nonprofitโs bottom line.
The 2024 Virtuous Nonprofit Benchmark Report highlights seven essential metrics that drive nonprofit success. In this post, weโll dive into one of those crucial areas: recurring giving. Check out the full report here for insights into all seven key metrics.
Key Calculations
Tracking the performance of recurring donors can vary depending on each organization’s offerings.
For our benchmarking purposes, we used the following definitions:
- Recurring Donors: Individuals who have donated monthly for at least six consecutive months.
- Percent of Revenue from Recurring Donors: This is calculated by dividing the total amount received from recurring donors over the past 12 months by the overall giving in the same period.
Why Recurring Giving Matters
Monthly recurring donors provide predictable and sustainable revenue, which can help smooth out the typical peaks and valleys associated with traditional fundraising campaignsโthink GivingTuesday or natural disaster relief.
Recurring giving is also an excellent way to increase donor retention. The automatic nature of monthly credit card payments ensures higher retention rates compared to one-time or sporadic donors. The โset it and forget itโ mindset allows donors to continue giving without starting a new donation each time.
Revenue Impact: The Difference Recurring Donors Make
Itโs easy to see how recurring giving can affect the bottom line when broken down. Take this, for example: a sample nonprofit has 4,500 loyal small donors who give three times a year, with an average gift size of $140. At the same time, they have 1,000 recurring donors who give $100 each month.
Baseline Scenario (No Conversion of Donors)
- Non-Recurring Donors: 4,500 donors giving $140 three times per year.
- Monthly Recurring Donors: 1,000 donors giving $100 each month.
Revenue remains consistent at $3,570,000 each year over five years.
Upside Scenario (Converting 10% of Donors to Recurring Each Year)
- By converting 10% of sporadic donors to monthly recurring donors each year, the nonprofit experiences a significant boost in revenue:
- In Year 1, total revenue increases to $4,074,000.
- By Year 5, revenue jumps to $6,090,000โa 70% growth compared to the baseline.
Industry Benchmarks: What Top Performers are Doing with Recurring Giving
In the Benchmark Report, the top quartile of nonprofits consistently earned 37.59% of their total revenue from recurring donors. This demonstrates the enormous potential of cultivating a solid base of monthly giversโthe nonprofits in the top quartile have consistent revenue and higher donor retention.
Tactics to Grow Recurring Giving
Using a robust nonprofit CRM to grow recurring giving allows you to easily reach new donors and convert smaller donors. See how itโs done with Virtuous.
Consider these tactics to unlock the full potential of your nonprofitโs recurring giving plan:
- Create a Branded Monthly Giving Program: Follow the example of charity: water. โThe Springโ program creates a sense of belonging and mission for recurring donors.
- Communicate the Exclusive Value: Show donors how their monthly commitment makes a difference and give them exclusive updates or perks. This is often done with a magazine or newsletter.
- Convert Smaller Donors: Use donation forms and welcome series to encourage one-time or smaller donors to upgrade to a recurring monthly giving option. Highlight the impact of their contributions over time.
- Engage New Donors: When new donors give, present the option to become monthly donors right away. This can be done through a compelling follow-up communication sequence that emphasizes the benefits of consistent support or on the donation page.
The modern nonprofit landscape increasingly depends on recurring giving programs and with good reason. Monthly donors offer a reliable source of income that allows organizations to predict their revenue, weather financial uncertainties better, and make long-term plans. By prioritizing recurring giving and nurturing these relationships, nonprofits can see substantial growth in retention rates and overall revenue, ensuring a stronger, more resilient future.
Take action today by developing a compelling monthly giving program and watch as your organizationโs financial stability and impact grow year after year.
