Part 3 in Creating a Monthly Giving Program
Last month, in this series, I made the case for why monthly giving matters. You can read about it here. This month I want to focus upon the details of how a monthly giving program works.
The basics seem easy enough to understand. You ask one of your valued donors to join an invaluable group of monthly supporters of your organization and become a Sustainer. He or she pre-authorizes a recurring gift either by arranging for a deduction directly from their bank account or a through a regularly scheduled charge to a credit card. In essence, they have pledged fixed amount each month and provided you with the means for automatic fulfillment of the commitment by credit card or bank account number, or some other means (e.g., PayPal) for direct deduction from their account.
Sounds simple, doesn’t it? Well, it is, but there are many steps that have to be taken before you “make the ask.” Preparation and planning are everything—or, as a wise person once taught me, “Well begun is half done.”
You must become an evangelist for your innovation of a systematic program of monthly giving. Here are some steps that you should take in order to organize for success.
First, understand and explain the benefits of monthly giving to both the board and staff. It may require that they change their mindset to donor lifetime value (explained in detail below) but the highpoints are that monthly donors:
- give more, thus increasing their lifetime value to the organization;
- retain their support for many more years than annual donors;
- have stronger relationships with the organization;
- provide you with a stable foundation; and
- reduce your costs of fundraising.
Second, shift the organizational mindset that looks at each donor acquisition or renewal mailing in terms of an isolated return on investment. No longer is it as important to compute an ROI (return on investment) in terms of income received less expense divided by the direct and indirect costs of the mailing. We now need to look at each donor’s “lifetime value,” a more complicated calculation, for sure, but one which ensures that your organization will retain more donors and benefit with increased revenue.
According to Roger Craver, the guru of donor retention, among many other things related to fundraising, the simplest way to estimate lifetime value is to use the following equation:
(Average Value of a Contribution) X (Number of Repeat Contributions) X (Average Retention Time in Months or Years for a typical donor) = Gross Lifetime Value.
You can arrive at the Net Lifetime Value by deducting the costs of soliciting and servicing the donor over the period of time you’re measuring, costs which can be greatly reduced through a program of monthly giving.
The third step in your preparation and planning is to be sure that the organization has good financial controls in place. Nothing will kill a program of monthly giving faster than the inability to process and acknowledge the gifts of these most valuable donors effectively.
Before you get started, be confident and intentional. Know that you can do this! Do not simply put a line on your gift reply envelopes as an after-thought. Rather think through the program, put the infrastructure in place, and then launch a step-by-step process.
LAST MONTH: What is Monthly Giving and Why It Matters
NEXT MONTH: What You Need to Launch a Monthly Giving Program
Want to learn more about Monthly Giving? Last month I led a webinar with more than 300 participants from around the globe about “Creating a Monthly Giving Program: A Solution to Donor Retention and Financial Sustainability.” You can see and hear the recorded hour-long session here.