Nicole Stern, membership director at WDSE WRPT Public Television joined the Donor Participation Project to share her knowledge of monthly giving fundraising.
Monthly Giving with Nicole Stern, membership director at WDSE WRPT Public Television
What is monthly giving?
Monthly giving, also called sustainer giving or recurring giving, consists of setting up an automatically renewing monthly gift to a nonprofit. It is the equivalent of a subscription.
What are the benefits of monthly giving for nonprofits?
Monthly donors have both a higher retention rate as well as a higher lifetime value. Over time, these two facts compound to create important positive effects on the revenue available to fulfill your mission as well as your donor engagement efforts.
How can I start a monthly giving program?
You must embrace monthly giving as a new of doing business for your annual fund.
Simply adding a checkbox under an existing online form is not enough. You must make it clear in all your outreach efforts (digital, mail, phone) that monthly giving is the default and best way to make a gift to your organization.
Won’t monthly giving preclude me from requesting higher gifts from loyal donors?
On the contrary, monthly donors are especially receptive to upgrade asks as well as to planned giving conversations. An established monthly giving program also frees up resources that you can invest in improved stewardship and more donor engagement.
How hard is it to start a monthly giving program?
These are the areas you need to pay attention to if you want to start a monthly giving program:
Executive buy-in. Use the data in the presentation above to make your case. A full re-orientation of your annual fund to monthly giving will require changes in all your operations and in your cash flow.
Gift processing. Monthly gifts turn one gift processing transaction into twelve. Fields may need to be added to code the gifts. For example, storing the credit card expiration date in your CRM can help you get ahead of credit card renewals.
Digital communications. Your main gift form will need to make it clear that monthly giving is the default and most convenient way to give.
Branding the program. Many organizations give a name to their monthly giving program (Sustainer Circle, Evergreen, etc.) to make it clear that this is something special.
Recurring (sustainer) giving has numerous advantages for your organization including predictable long-term revenue, increased donor loyalty, higher donor retention and lifetime value, and incredible upgrade potential. We’ll explore how to prepare your fundraising shop to implement a sustainer program, how to create and execute fundraising strategies to take advantage of this transformational way of giving, and how to avoid any potential pitfalls.
Nicole was featured in an article on sustainer giving in the Chronicle of Philanthropy, which is included in the Required Preparation section below.
Brainstorm and Discuss this Topic With Peers During our October 14 Lunch Analysis
Lunch Analysis is a 45-minute meeting that is a part study group, part scholarly discussion, part brainstorming session, and part support group. Participation is open to all who fundraise or have fundraised at a nonprofit.
Each Lunch Analysis covers a specific topic in donor participation and has required preparation and discussion. This one will be on October 14, 2020 at noon EST.
There was a common preconception in the industry: “It is going to take you so much longer to get a gift from a non-white donor.”
As soon as I made it my intention to build relationships with Black donors, in that same year I raised close to $250k from 2-3 donors.
It was about: 1) Getting in front of them to let them know that they were important to the institution, regardless of race or color, and that we recognize that they are making an impact and are making a difference as graduates; 2) Letting them know that we want to connect them and get them involved in whatever way is important to them; and 3) Asking them how do they want to put their stamp on an institution where, if they didn’t feel connected, we have a whole group of students who we don’t want to go through the same experience. Tell them, “You have the ability to change that.”
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Situations of conflict with our donors and community members can lead to positive outcomes as long as appropriate conflict resolution skills are utilized. And yet, fundraisers and nonprofit organizations tend to avoid them.
As an experienced fundraiser once told me:
I’ll take a strong reaction, even if it is negative, over apathy any day.
Major Gifts Fundraiser
Lead with Active Listening and Empathy
Who are the experts in de-escalating highly agitated situations and lead them to constructive and safe outcomes? Even if your community members are probably not going to be physically violent, the techniques and research generated by the FBI can be helpful.
The Behavior Change Stairway Model was developed by the FBI’s hostage negotiation unit. This model offers five steps to get other people to see your point of view and change their behavior.
Active Listening: Truly listen and make the other party aware that you’re listening.
Empathy: Understand their position not only intellectually, but also emotionally. What are they feeling?
Rapport: One the other party starts to feel that you understand them. Trust starts to build here.
Influence: At this point, you can start to work on problem-solving with them. They may listen to your recommended course of action.
Behavioral Change: They act.
Common Errors
Typically, people try to start directly with #4 (Influence) and expect #5 (Behavioral Change) to happen. This often leads to failure.
Going into a conflict-laden conversation saying “these are the reasons why your position is wrong” is unlikely to cause any behavioral change because human beings are primarily emotional.
Pretending that most people are completely rational will, more often than not, make your conversation fail.
Listen to what they say. Don’t interrupt, disagree or “evaluate.”
Nod your head, and make brief acknowledging comments like “yes” and “uh-huh.”
Without being awkward, repeat back the gist of what they just said, from their frame of reference.
Inquire. Ask questions that show you’ve been paying attention and that move the discussion forward.
Additional techniques used by FBI negotiators:
Ask open-ended questions You don’t want yes-no answers, you want them to open up.
Effective pauses Pausing is powerful. Use it for emphasis, to encourage someone to keep talking or to defuse things when people get emotional.
Minimal encouragers Brief statements to let the person know you’re listening and to keep them talking.
Mirroring Repeating the last word or phrase the person said to show you’re listening and engaged. Yes, it’s that simple — just repeat the last word or two:
Paraphrasing Repeating what the other person is saying back to them in your own words. This powerfully shows you really do understand and aren’t merely parroting.
Emotional labeling Give their feelings a name. It shows you’re identifying with how they feel. Don’t comment on the validity of the feelings — they could be totally crazy — but show them you understand.
Vecchi, Gregory M. “Conflict & crisis communication: a methodology for influencing and persuading behavioral change.” Annals of the American Psychotherapy Association, vol. 12, no. 1, Spring 2009, p. 34+. Accessed 12 Sept. 2020.
Vecchi, G.M., Van Hasselt, V.B. and Romano, S.J., 2005. Crisis (hostage) negotiation: Current strategies and issues in high-risk conflict resolution. Aggression and Violent Behavior, 10(5), pp.533-551.
How have you tried to broaden your donor base and make it more representative? What has worked for you? What backfired?
As part of the Donor Participation Project, this Lunch Analysis session will be guided by Patrick Powell, AVP of Volunteer Engagement and Donor Philanthropy at Morehouse School of Medicine.
An expert in donor engagement and community-building, Patrick is part of one of the fastest-growing institutions in the country at Morehouse School of Medicine.
Brainstorm and Discuss this Topic With Peers During our September 16 Lunch Analysis
Lunch Analysis is a 45-minute meeting that is a part study group, part scholarly discussion, part brainstorming session, and part support group. Participation is open to all who fundraise or have fundraised at a nonprofit.
Each Lunch Analysis covers a specific topic in donor participation and has required preparation and discussion. This one will be on September 16, 2020 at noon EST.
Required Preparation
Take a moment to jot down the answer to the following questions:
What is the percentage of alumni giving/participation for your Black and or Latino donors?
Has leadership placed an emphasis on engaging donors of color at your institution?
If yes, what are the strategies or best practices you’re utilizing to identify and cultivate this constituent group(s)?
If no, what do you perceive the barriers are to these discussions?
How has that impacted your desire to cultivate these specific groups if at all?
Have you experienced any success or rejection as a result?
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This discussion came up, and I was hoping you may be able to direct me to some resources I can share with her to make the internal case for ask amounts in appeals. Thanks for anything you can pass along!
I have a difficult time convincing that specific ask amounts work. Am I completely off base?
Including a suggested ask amount is considered a fundraising best practice. As such, it’s included in the fundraising letter checklist.
There is scientific research that shows that including a suggested donation amount gets more people to give. They also tend to give the amount you suggest.
References:
Edwards, J. T., & List, J. A. (2014). Toward an understanding of why suggestions work in charitable fundraising: Theory and evidence from a natural field experiment. Journal of Public Economics, 114, 1-13.
Goswami, I., & Urminsky, O. (2016). When should the ask be a nudge? The effect of default amounts on charitable donations. Journal of Marketing Research, 53(5), 829-846.
Reiley, D., & Samek, A. (2017). Round giving: A field experiment on suggested charitable donation amounts in public television. University of Southern California working paper.
I recently shared a list of US higher ed institutions with a high growth rate. Specifically, alumni giving participation growth between 2009 and 2019.
My team and I have been interviewing the top 10 in the nation. This varied list includes Ellon University, Villanova University, Morehouse School of Medicine, and Princeton University. Here is what we’re learning:
Donor growth is (one of) the VPs personal priorities
Growing organizations have the unit in charge of growing this metric (typically “Annual Giving” or “Annual Giving and Alumni Engagement”) reporting directly to them.
They act like “community incubators”
A “community incubator” is a term I created to describe organizations that are constantly generating different engagement opportunities for their donor base. “It’s a volume business,” one of the growing org VPs shared with us.
None of the schools told us that they had just grown and grown their existing engagement opportunities (i.e. reunion program, alumni board) to reach their ambitious growth goals.
Instead, they told us that they were constantly innovating and finding new segments and designing engagement opportunities for these constituencies: primary care physicians, alumni business owner marketplace, athletics-focused groups, the list goes on and on.
They do not shy away from transactional exchanges
All the growing schools embraced the fact that, at times, people will just “give to get.”
What they get can vary from access (“dinner with the president”) to simple incentives and promo items in the public radio-style, or simply satisfaction (“the 100th gift will unlock $10,000 to a specific program!”). Often, this is done to promote first, second, and third gifts.
Intensive use of incentives, challenges, and matches are an integral part of all of these programs.
They make recurring gifts easy and emphasize this way of giving wherever possible
They all have robust offerings and streamlined systems for monthly giving and multi-year pledges that you can make online, on the phone, or by mail.
They experiment and change their org chart based on priorities and team strengths
If they’re convinced that annual giving and engagement are two parts of the same coin, they will put them together in the same department. If they believe that a certain area needs more attention, they will have it report directly to the VP. If they believe that this is no longer the case, they will change the org chart again.
Stagnation and rigidity are not part of the vocabulary at any of these organizations.
Recently, I was asked to do some simple modeling on the effect of retention rates on revenue.
The results were surprising. You can read the post and resulting conversation here.
The post author’s goal was to show what that investing in donor retention is better than investing in donor acquisition (getting new donors) OR donor extraction (getting more major gifts from your existing pool of prospects).
The model is simplistic but the consequences for our engagement strategy are profound.
Tale of Two Nonprofits
We compared two nonprofits, one with high retention and low acquisition and another with low retention and high acquisition. Unsurprisingly, the high retention nonprofit grows and grows…
…while the low retention nonprofit stays the same, barely recovering the number of donors they lose every year.
To calculate revenue, I presumed that all donors start out as annual donors ($25/year) except for a small pool of donors who have been with the org for a while (5% of those who have given for three years or more) who then become major donors and make a $10,000 gift.
Here, the high retention nonprofit ends up making four times more per year…
…vs the low retention nonprofit:
Assumptions
Post-analysis, it was enlightening to think through the underlying assumptions. If this is so clearly a better strategy, why doesn’t everybody do it?
If you’re investing in retention, you’ll also need to invest in major gift capacity.
If you decide that a high-retention strategy is for you, after seven years you’ll have a major donor pool that is five times bigger. This means that you’ll also need to invest in gift officer, stewardship, and admin training/personnel to be able to proportionally maintain your ability to get major gifts from that engaged pool (the 5% rate in the model). It is a decision that requires at least a three-year commitment. How many orgs are operating on year-to-year plans?
Not Everyone Wants or Can Handle Growth
On the service delivery side, it takes vision to become the organization that is worthy of receiving this extra funding. Your service model might work at your current scale but will have trouble reaching more people. Maybe there is internal resistance to becoming so reliant on fundraising revenue.
Perhaps, despite all your current needs, additional revenue would create more problems than it would solve. Major gifts typically have some type of restriction in their use. Unless you have a crystal clear vision and are willing to walk away from certain gifts, an influx of restricted gifts could be problematic.
The people factor can also be important here. In this new world where you 4x your fundraising revenue, would you grow your people and make it a priority for them to stay?
With Great Engagement Comes Great Responsibility
More engaged constituents are people that expect a superior level of human communication with the organization. Many of us find this challenging enough as individuals, even more, when dealing with organizations. Some organizational leadership may actually prefer having less engaged, arms-length constituents. The disconnect happens when they also want those disconnected constituents to be audaciously generous.
The 5% “Extraction Rate” is a Big Assumption
In the model, I assumed that the “extraction rate” remains constant at 5%. In other words, your capacity to generate gifts from the pool of donors with high engagement and high capacity. It probably fluctuates more than this. As gift officers turn over, staff needs to be retrained, and donor relationships rebuilt. You would think it made sense to offer longevity bonuses at least for the time it takes for major gift relationships to mature.
Engagement == Annual Donor
Having annual donors is nice but, in this model, it isn’t only about the money. More generally, it is about having people engaged with the organization long and deeply enough so that the few with the capability to make a transformational gift are inspired and invited to do so. In the past, it may have been hard to measure other forms of engagement so making an annual gift was a good proxy. This is no longer the case and every org with a CRM can build an engagement score of some type.
The true goal is to maintain and increase engagement year over year.
This engagement can express itself in multiple ways: making a gift, being an active member of your community, or visiting your website every week.
