Myths of Monthly Donor Programs

Challenging the myths About monthly giving programs

by Harvey McKinnon

Monthly giving plans are one of the best ways to reduce donor attrition and to upgrade an individual's giving level. In the next decade you will find that 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: Most people will only join two to three monthly donor clubs. And they will not necessarily choose their favorite causes. They will often join programs based on who asks them first.

Most philanthropically minded individuals will give gifts to four to 10 charities a year. But they rarely join more than two or three as a monthly donor. I base this on my Canadian experience and on research in Europe, where programs are far better developed than in the U.S.

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

Here's an example to illustrate my point:

A donor, Ms. Cindy Williams, regularly gives a total of $1,000 a year to 10 charities, or $100 each. That's her limit. Then she's successfully recruited by two of the charities into $25/month sustainer programs. This means she'll give them $600 (or 60 percent of her annual giving), leaving only $400 for the other eight charities. If Cindy splits the remaining money evenly, the nonprofits will see their donations decline to one $50 gift each. This is a reduction of 50 percent. Or Cindy may even decide that she'll give $100 to four nonprofits and stop giving to four others. She could choose a combination of the above scenarios.

But whatever decisions Cindy makes, the clear winners are the nonprofits with the monthly donor programs. They each upgraded her annual giving by 300 percent. And the clear losers are the remaining eight charities.

Even if a nonprofit continues to receive a $100 annual donation from Cindy, it's lost. That's because the others have dramatically increased their share of Cindy's annual giving. And she's not likely to join a third at the $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.

Also, Cindy is far more likely to lapse if she is giving annual gifts than if she's on a monthly donor program.

What's more, there's a good chance that our imaginary donor did not select her two favorite charities and then join their monthly programs. Most likely, she responded to the two charities who asked her first. Donors have told me they often 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, the organizations who ask are the ones who get the legacies. And if you don't offer a Monthly Giving Program to your donors, you can bet that many of your competitors will do so. That could cost you a lot.


Harvey McKinnon, a fundraising consultant specializing in monthly giving programs, can be reached at:

Harvey McKinnon Associates

#330 - 1985 West Broadway
Vancouver, BC V6J 4Y3 Canada

info@harveymckinnon.com

Another article on Monthly donor programs
• What to ask before you launch a monthly donor program