Recurring donations are an excellent way for charitable organizations to receive consistent financial support from donors. With recurring donations, a donor chooses to make a fixed donation every month or year instead of giving one lump-sum donation. Recurring donations are an effective strategy for nonprofit organizations because they help build trust and loyalty with donors. They also streamline the donation process so that donors can give at any time with the click of a button or the swipe of their credit card. Recurring gifts are ideal for donors who want to give regularly but don’t have a lot of money available at one time. If you’re considering setting up recurring donations, here are some pros and cons to consider before taking that step.
The benefits of recurring donations
Better donor retention: Studies show that they result in higher retention rates than single one-time gifts, and are an effective way to retain existing donors. – Flexibility: Recurring gifts are a great option for donors who want to give but don’t have a lot of money to give at one time. You can also set up recurring payments for monthly or quarterly donations. – Consistency: They can be an helpful way to provide consistent financial support to your organization. – Ease of use: They are convenient for donors and nonprofits because donors can give at any time, and nonprofits receive a steady stream of income throughout the year. – Increased income: By adding a recurring donation option to your donation page, you can increase your organization’s overall income. – Streamlined donation process: They make it easy for donors to give, and allow nonprofits to receive donations with just one click.
Drawbacks of recurring donations
As with any decision, there are some drawbacks to consider when choosing to offer recurring donations. Some drawbacks include – Potential for donor fatigue: If donors choose recurring donations to give a certain amount each month, they might grow tired of giving after a while. This can lead to donor fatigue or a decline in donations, so it’s important to encourage donors to give one-time gifts as well. – Loss of flexibility: While donors appreciate the ease of recurring donations, nonprofits lose some of their ability to decide how to spend the money. If your organization relies on lump-sum donations, it could be problematic to have to account for monthly donations. – Potential donor burnout: If you offer recurring donations for a certain amount, donors might burn out by giving more than they can afford. It’s important to encourage donors to adjust recurring amounts as needed. – Loss of donor choice: While donors appreciate the convenience of recurring donations, they also appreciate the ability to give a one-time gift. They take away donor choice and require them to give a certain amount.
Other considerations before setting up recurring donations
Nonprofits should offer a range of donation options to help meet the needs of donors and provide them with choice. However, you should strongly encourage donors to give one-time gifts as well. – They are best for donors who have a consistent source of income. – You should only offer recurring donations if you have enough resources to handle the extra administrative work. – You should clearly explain what recurring donations are and include information about how to cancel them on your donation page.
How to set up recurring Donations
Before you set up recurring donations, you should understand what they are and how they work. Here are some ways to set up: – Basic subscription: This option lets donors select an amount that they want to give every month or year. You can also set up a minimum amount, under which the donations will not be processed. – Gift amount + percentage: This option lets donors select an amount and percentage of their income to give. You can also set a minimum percentage that donors must pay. – Gift amount + percentage + fixed amount: This option lets donors select an amount, percentage of their income, and a fixed amount that they want to pay each month or year. You can also set a minimum amount under which the donations will not be processed. – Fixed amount + percentage: This option lets donors select a fixed amount every month or year, as well as a percentage of their income. You can also set a minimum percentage that donors must pay.
When you’re considering setting up recurring donations, you should make sure donors know the following: – Donors should know the amount they are giving each month or year—and that they can always adjust their donation amount. – Donors should know what happens if they can’t afford their monthly donation. – Donors should know how to cancel. If you’re ready to take the leap and offer a recurring donation option, it’s important to understand the pros and cons of this type of donation. With these advantages and benefits in mind, you can make a smart decision about whether to set it up for your nonprofit.