Top 7 Reasons to Invest in Monthly Recurring Donations

Before online giving, accepting monthly recurring donations was difficult. Nonprofits had to get donors to commit to regular financial contributions (usually by phone or direct mail) and ensure they followed through.

Building a strong recurring giving program is no longer nice to have but critical to nonprofits’ sustainability and scalability. Thankfully, with increased access to online fundraising systems, inspiring and accepting monthly recurring donations has become a realistic option for nonprofit organizations of all sizes.

It’s time for your nonprofit to consider developing and promoting an online monthly giving program. Here are some of the top benefits of establishing a robust recurring program at your nonprofit.

Reasons to Invest in Monthly Recurring Donations

Classy’s State of Modern Philanthropy report found that 29% of first-time donors who become recurring donors do so within the first 90 days of their initial gift. Once they’ve established their regular giving cadence, these loyal supporters are over 9x more valuable to your nonprofit.

If that’s not enough to motivate you, here are seven other critical reasons your nonprofit must strengthen its recurring giving program.

1. Increased Revenue

Of the top nonprofits on Classy, nearly 40% of their revenue comes from recurring donors. Even though monthly donors generally give smaller amounts on a per-gift basis, the aggregate amount they give over a year almost always adds up to more—even compared to those who give quarterly donation amounts.

Successful Nonprofit Example: Recurring Donation Volume

Denver Rescue Mission challenged its donors with a “Double Your First Three Months of Giving” offer, thanks to generous donors who provided up to $36,000 in matching funds. Over $12,465 in new or upgraded monthly donations came in in one month from 125 donors, exceeding its goal by $465 and adding 81 new monthly sustainers. The long-term value of those new recurring donors is more than $580,000.

2. Easy and Effective Giving Process for Nonprofits and Donors

A monthly recurring donation allows supporters to spread the financial impact of their giving across the entire year. In our Recurring Donor Sentiment Report, 37% of respondents said they make a recurring gift over a one-time gift because giving in smaller increments is more budget-friendly. Supporters contribute more annually, but the payment distribution makes the commitment more manageable.

This flexibility makes recurring giving campaigns an especially effective way to increase gift amounts from committed supporters who might not have the financial resources to move up and become major donors with larger one-time gifts.

Also, from the nonprofit’s perspective, monthly recurring donations provide a more approachable way of asking donors for larger financial commitments. Instead of asking for an increasing lump sum each year, your organization can ask for a smaller monthly donation that adds up over time.

Using a recurring donation platform like Classy makes it easier to establish automatic payments with a credit card, PayPal, Venmo, or other preferred methods. Donors receive notifications to update their payment information as the expiration dates approach, and nonprofits can leverage easy templates for donation receipts and donor stewardship following each gift.

Successful Nonprofit Example: Streamlined Giving Options

Atlas Free was an early adopter of embedded donation forms, both pop-up and in-line, simplifying the transaction process and routinely seeing 2x the industry standard conversion rate.

Using the customization capabilities of Classy’s embedded donation forms, the nonprofit pairs powerful storytelling with a superior donation experience that allows donors to select recurring giving amounts based on beneficiaries’ stories. As a result, Atlas Free experienced a 151% increase in monthly supporter retention between 2021 and 2022 alone.

3. Improved Cash Flow

Monthly recurring donations are incredibly beneficial from an operational perspective. Since nonprofits often receive most of their income during a seasonal donation window, their revenue typically feels stretched outside those major giving days.

Nonprofits may notice revenue confined to certain months throughout the year, but operating costs generally get spread out evenly. As a result, organizations can experience insufficient cash flow to function optimally during the down months.

Building a predictable revenue stream helps to reduce this imbalance and provide much-needed support during your organization’s lull periods.

Monthly gifts also protect your nonprofit during times of uncertainty or emergency, such as a disaster or pandemic. When unforeseen circumstances challenge your organization’s cash flow, a recurring giving program will provide critical stability.

4. Better Long-Term Planning

The Fundraising Effectiveness Project’s quarterly fundraising reports have found that repeat donor retention rates have remained steady despite economic fluctuations—one of the only forms of giving to have done so.¹ As a result, this recurring donation revenue offers greater predictability than one-time donors.

With accumulated data, organizations can easily calculate the average life span of monthly recurring gifts and the monthly acquisition rate of new recurring donors. This means that a mature monthly recurring donation program can help an organization improve its long-term planning and decision-making.

For example, it’s much easier to commit to hiring a new staff member or piloting a new program if you know you can cover these costs with recurring revenue. Investments in recurring donor stewardship and relationship-building are key to successful long-term planning.

5. More Cost-Effective

There’s no need for repeat solicitation with recurring donation options. Once a donor is in your monthly recurring donation program, the gifts continue indefinitely until they decide to stop. Still, you’ll need a donor retention strategy to encourage continued engagement, but the costs of maintaining recurring donors are generally lower than annual givers.

Simple ways to improve donor retention without spending more include:

• Personalizing your outreach messaging
• Experimenting with donation form questions to understand your donor base better
• Sending customized follow-up emails after each online donation

Tip for Success: Offer More Flexibility through Recurring Donation Frequencies

Make it easy for donors to continue giving recurring donations at the frequency that works best for them. Offer options to give daily, weekly, biweekly, monthly, quarterly, semiannually, and annually.

6. Strengthened Donor Loyalty and Engagement

Our Recurring Donor Sentiment Report found that 56% of monthly donors feel their recurring gift lets them continuously support the organization. Additionally, 47% believe their ongoing donation makes a greater impact than a one-time gift.

It’s clear that recurring donors have a sense of loyalty to and investment in the nonprofits they support. This means they’re likely willing to take additional actions for your nonprofit on top of their monthly donations.

In fact, 84% of recurring donors become champions of the cause, extending their involvement through volunteering, additional donations, event attendance, advocacy, and peer-to-peer fundraising initiatives. Plus, 25% of all recurring donors on Classy return to give an additional one-time donation within the same year.

Use that heightened engagement to provide ongoing stewardship that keeps them involved. Invite them to an event, suggest they participate in a peer-to-peer fundraiser, or ask them to share your message with their wider network.

7. Heightened Sense of Community

The key to donor retention is nurturing a deep sense of trust, connection, and collaboration with your community. This requires tailored communications suited to each individual’s interests and motivations.

Every month, when a donor makes their contribution, you have the chance to start an organic conversation and remind them of their impact on your nonprofit. This fosters a clear sense of community critical to donors and solidifies a positive feedback loop that keeps them engaged with your nonprofit.

Successful Nonprofit Example: Community-Driven Growth

Brooklyn Public Library is incredibly connected to its supporter base and has leveraged this to grow its recurring donor program with Classy. The nonprofit doubled its number of recurring donors in one year through a multipronged approach that puts monthly giving front and center on most of its donation websites and embedded donation forms.

Integrate Recurring Giving into Existing Fundraising Campaigns

Start integrating requests for monthly recurring donations into your existing fundraising efforts and donation pages. This is the easiest way to integrate recurring giving and start testing different appeals while beginning to acquire recurring gifts.

You could also try including a recurring giving option in your next crowdfunding campaign or use a crowdfunding effort to promote your dedicated recurring giving campaign once it’s ready.

Develop and Promote a Recurring Giving Program

Now that you’re convinced why you should invest in a monthly recurring donation program, it’s time to start.

To start building a successful, scalable recurring giving program, identify your goals, analyze your audience, and plan a campaign to promote monthly donations. For example, these goals could include your target monthly recurring revenue or number of monthly donors.

Once you identify your focus, it’s crucial to keep your audience in mind when deciding on the best appeal.

Consider the top factors that form your target demographic and leverage your donor personas to map your fundraising strategy. From there, identify a small group of your most committed supporters to help get your new donor program off the ground, and ask them to become monthly donors. With a soft launch, you can test your strategy and receive valuable feedback from your avid advocates.

Create an exciting opportunity your community wants to join, and the return on investment from each monthly recurring donation will set you on a path to sustainability.

Copy Editor: Ayanna Julien

Article Source:

1. “FEP Reports,” Fundraising Effectiveness Project, last modified February 2, 2024, https://afpglobal.org/fepreports.