Do you find that every time you look at the attrition level of your donor file you break into a cold sweat? Here's a solution to your problems.

Monthly donor plans are one of the best ways to reduce donor attrition and upgrade an individual's giving level. In the next decade, charities will increasingly look towards monthly donor programs to increase their income. But you want to be one of the first for a very simple reason: while most philanthropically-minded individuals will give gifts to four to ten charities a year, they will rarely join more than two to four monthly donor clubs. And they will not necessarily choose their favourite causes. As with other types of fundraising, they will often join programs based on who asks them first.

When a donor joins a monthly donor club, it has consequences. They may even start reducing their single-gift donations to other nonprofits -perhaps yours!- because they have committed a greater share of their charitable funds through monthly donor programs.

Let's consider a hypothetical donor, Cindy Williams, who regularly gives a total of $1,000 a year to ten charities, or $100 each. That's her limit. Then she's successfully recruited by two of the charities into their $25/month donor programs. This means that she will give them $600 (or sixty per cent of her annual giving), leaving only $400 for the other eight charities. If Cindy splits the remaining money evenly, the charities will see their donations decline to one $50 gift each - a reduction of 50%.

Clear winners are the monthly donor programs - every time Cindy may even decide that she'll give $100 to four nonprofits and stop giving to four others. She could even increase her total giving somewhat, but when the smoke has cleared, the odds are still very high that her average single-gift will have declined substantially from its original $100 level. She could choose a combination of the above scenarios. But whatever decisions she makes, the clear winners are the nonprofits who invited her to join a monthly program. They each upgraded Cindy's annual giving by 300%.

Even if - as is highly unlikely - a nonprofit continues to receive a $100 annual donation from Cindy, it has lost. That's because the other two have dramatically increased their share of Cindy's annual giving. And she's now even less likely to join a third at $25 a month level. That's why you need to approach your donors first and soon. Multiply this by hundreds or thousands of individuals, and you see the potential loss to your donor income.

To make matters still worse, Cindy is far more likely to lapse if she is giving annual gifts than if she is on a monthly donor program. What's more, there is a good chance that she did not select her two favourite charities, and then join their monthly programs. Most likely, she responded to the two charities who asked her first. Donors have often told me they have joined organizations that are not at the top of their list of priorities, but they continue to give because they have "made a commitment."

We know that in planned giving, it's the organizations that ask which get the legacy. And if you do not offer a Monthly Giving Program to your donors, you can bet that many of your competitors will do so. It could cost you a lot.

© Harvey McKinnon

^ Back to Hidden Gold menu