Like any company, charities are serious business.
They need to invest in the right infrastructure to support fundraising so they can minimise costs and maximise the distribution of funds.
How many people think about how they actually donate to a charity? For some, it might mean buying a lottery ticket. In contrast, for others, it is dropping some coins into a collection tin outside the local supermarket.
As a win-win, charities should look for recurring revenue by signing up regular donors using efficient and cost-effective technology.
The value of regular donors
According to the Charities Aid Foundation (CAF) survey into UK Giving, 53% of people donating to charity use cash, with a third using a regular giving channel such as Direct Debit. Regular giving to charities means a steady and predictable stream of recurring revenue day in and day out, which makes it easier to forecast ahead. Knowing how much money is coming in and what funds can be relied on is particularly useful when fundraising for making significant investments into the work the charity does and into the community.
Regular giving is also low maintenance as the payments are collected at set intervals. As long as you build that relationship with your donors and update them on how their regular donations will be used and the impact they have. If managed carefully, loyal donors can support a charity for many years.
In the same way that subscription pricing allows you to capitalise on increased Lifetime Value (LTV) from a customer, the same applies to charitable giving. LTV is the total money you would expect to receive during a donor’s relationship with you. People who give to charity monthly will usually have a higher LTV than other donors.
Smoother cash flow
The CAF survey also revealed that November and December tend to be the most popular months for donating to charity, and people use cash the most in these months. Charities see a spike in donations during this busy period followed by a drop off in the New Year.
Regular giving has the effect of smoothing out the peaks and troughs of cash flow. By offering charities a more stable stream of recurring revenue, they can plan ahead better and put additional time and effort into other activities that raise funds. This virtuous circle can help to accelerate growth which ultimately benefits the good causes the charity supports.
Give back to monthly donors
A key aspect of monthly giving is that donors typically expect to have more information about how their funds are used. Reward your monthly donors by creating a program name for them, which conveys the extra value they provide.
Clarity and transparency over how funds are used are vital for ensuring that charities maintain an excellent reputation for trust and honesty. Communications such as email updates and newsletters featuring real-life stories that illustrate how funds are used, work well.
Offering a ‘peek behind the scenes’ gives donors valuable insight into the practical impact their donations make and builds engagement. You can go one step further and provide exclusive updates, such as letters and photos from the beneficiaries of the donations.
Increasing LTV
Once a regular donor has signed up, there will be opportunities to encourage them to increase the amount donated, such as on the anniversary of signing up. You can also target regular donors with ad hoc offers, such as sponsoring additional projects, or supporting one-off fundraising drives. These are a common marketing technique used by charities that can have a significant impact on the LTV of each donor. However, a word of warning that timing and frequency of requests for additional donations should be managed with care, as you run the risk of donation fatigue if people are being continually asked for more.
Give thanks
To maintain high levels of engagement and trust with your regular donors, remember to thank them. It might sound obvious, but communications that start with a sincere ‘thank you’ are always appreciated.
Inexpensive gifts such as calendars, posters or address labels are an excellent way of expressing thanks while keeping your charity in the minds and hearts of your donors.
Make it easy to set up recurring payments
Recurring revenue plays a vital role in fundraising for charities – it is efficient and cost-effective.
Additionally, cloud-based payment solutions remove the overhead traditionally associated with buying and maintaining software. They allow charities to give donors an easy way to set up a recurring payment that is automated, easy to manage and low resource to administer. The latest Direct Debit solutions or services tick all of these boxes. With 90% of the UK population having at least one Direct Debit, they are the UK’s most popular regular payment channel.
The automation offered by Direct Debit solutions reduces the workload required to operate the scheme and ensures that the lifecycle, from donor sign-up to payment collection, is as pain-free as possible. It makes it worthwhile to collect even relatively small sums such as £3 or £5 per month.
Some software providers can offer you the advantage of adding a Gift Aid declaration which makes a case for using such a system more compelling. They can also be used to embed responsive data capture forms directly into your website. Any bank account or address keyed in by a donor can be instantly verified, which reduces the risk of a Direct Debit collection failure and the associated cost of rectifying it.
Parkinson’s UK gains a more stable source of income
Parkinson’s UK, the support and research charity for Parkinson’s disease, is leading the work to find a cure. The charity is totally dependent on donations. As a membership organisation, Parkinson’s UK donors are encouraged to use Direct Debit.
According to the charity, the Bottomline solution PTX plays a key role in helping to move donors onto Direct Debits. This is vital for Parkinson UK’s long-term fundraising growth as it gives the charity a stable source of income, greater predictability, and visibility over cash flow. You can read a more detailed overview of how Parkinson’s UK are managing their Direct Debits study here.
Conclusion
The simplest way to boost LTV is to keep your donors for longer. This places an increased emphasis on the charity to ensure that donors feel valued and engaged through regular communications.
There are many advantages to using Direct Debits for charitable giving. If managed correctly, they can be low cost, low resource and deliver an efficient experience for donors which encourages long term giving. Additionally, they are widely recognised as the best way for the charity to get paid on time, every time.
Investing in cloud-based infrastructure or service to support fundraising should keep overall costs down, freeing up budget to spend on other areas. This can have a positive impact on accelerating growth while still providing the funds to put towards good causes.
