Sustained Giving May Be The Anecdote To Dropping Nonprofit Donor Volume

Last year, 54% of members responding to a year-end fundraising poll conducted by the Association of Fundraising Professionals (AFP) stated they’d raised more money than the year prior. Despite the increase in funds, the number of donors was down, according to survey results, as many nonprofits continue to rely on large donations from older generations. Meanwhile, some nonprofits have shifted their fundraising strategies to attract an increasing number of younger donors by asking for smaller, more frequent contributions.

Donor Profiles Are Shifting Younger

According to The Next Generation of American Giving, a 2018 report published by Blackbaud, Generation X individuals gave an average of $1212 per year compared to $732 from Baby Boomers. The next generation of givers, the Millennials, averaged $481 per year. Despite giving less last year, the Millennial mindset and future financial prospects makes this generation well-positioned to become tomorrow’s philanthropists.

Millennials Are Setting The Stage To Be Strong Nonprofit Supporters

Millennials are optimistic they can change their communities and the world, and they also believe it’s their responsibility to take action. Frustrated by the status quo, Millennials often give both time and money to causes they believe will make a difference. But Millennials want to understand how their time and money is making a difference. They seek regular communications from nonprofits and are “at least somewhat likely to stop donating” if they’re not confident their efforts are making an impact.

By 2020, Millennials will account for approximately one-half of the workforce. Plus, due to an expected upcoming wealth transfer of $30 trillion, Millennials could become the wealthiest generation in history.  Raised with the internet and living their entire adult lives with social media, Millennials are accustomed to receiving thousands of messages each day and multitasking through distractions.

Digital Media Is Becoming Increasingly Important For Nonprofit Fundraising

Since Giving Tuesday launched in 2012, online giving has grown by more than 500%. During this same period, the channels on which nonprofit marketing and charitable giving occur have become more diverse than ever with Millennial donors leading the way for online and mobile adoption.

Millennials entered adulthood with online banking and ecommerce already mature. Not much later, digital financial transactions, like PayPal and Venmo, became the norm for this generation. As a result, Millennials prefer to donate online compared to writing checks to nonprofits, and mobile donations are something most Millennials are open to.

For nonprofits wooing Millennials, creating an intuitive and enjoyable online user experience (UX) accessible from mobile phones is a must. But, the online experience should not be devoted to just the Millennial generation. According to Blackbaud, almost one-third of last year’s Giving Tuesday donations were made from mobile devices. “The growth of online giving mirrors ecommerce,” according to Scot Chisholm, CEO of online fundraising platform Classy. “It’s probably about five years behind, but it’s growing double digits every year.”

Nonprofits Are Predicted To Put More Emphasis On Generating Recurring Gifts

As Chisholm noted, nonprofits are following the lead of top ecommerce outlets. And for ecommerce, subscriptions are hot — with revenue up 100% each year, five years in a row. How can nonprofits follow suit? With sustained giving opportunities.

“Sustained online giving is important because it solves for many of the headwinds faced by today’s nonprofits,” noted Ray Schneeberger, VP of Sales at Digital Media Solutions and an expert in nonprofit marketing and the subscription economy. “Recurring gifts provide predictable revenue while reducing the need to ask for donations again and again.”

There will be an “increased focus on recurring gifts,” predicted David Blyer, CEO of Arreva, donor management and online fundraising software, in a roundup of nonprofit trends published by NonProfit PRO. “Donors appreciate monthly giving for the ability to spread their giving throughout the year,” Blyer explained, “and an increasing number of nonprofits will look to set up monthly giving options (leveraging technology) because of the degree of predictability and stability it provides to year-round fundraising.”

Recurring Donors Give More Than One-Time Donors

Although one-time donors generally deliver the highest immediate return on investment, recurring donors average higher lifetime value. According to data from Classy, the median donation for one-time donors is double the median donation of recurring donors ($50 compared to $25), but recurring donors give for an average of 13 months. Plus, recurring donors are more likely than one-time donors to make additional one-time gifts within the year. After calculating more than 2.5 million donations made on their platform in 2017, Classy analysts discovered that recurring donors had a lifetime value five-times greater than one-time donors.

Plus, ongoing engagement of recurring donors can save money. “The preferred channel of recurring donors is online,” according to Schneeberger, “which means you can save on printing and postage costs.”

Recurring Donors Have A Higher Retention Rate Than One-Time Donors

According to an AFP survey on fundraising effectiveness, recurring donors have a retention rate two times greater than the average donor retention rate. And, recurring donors are more likely to give year after year than one-time donors.

Sustained Giving Opportunities Are Expected To Grow

Sustained giving has grown in popularity from both the nonprofit and the donor standpoint, but there are still many nonprofits yet to embrace or fully exploit this new giving model. Classy is planning to double the number of recurring donors on their platform within the next two years. The only way they can achieve their goal is with nonprofits growing the ranks of their monthly donors.

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