The rise of the Subscription Economy has made building and growing a strong sustainer program accessible to more nonprofits than ever before.
Last year, recurring online giving saw growth of 25% year over year, representing 19% of all online giving in 2020 (according to the M+R 2021 study).
Consider these figures from one nonprofit:
- The average annual giving for a recurring donor is 211% more than the average giving of their single-gift counterparts — more than triple the annual value of a single-gift donor.
- The average retention rate of a recurring donor is around 95%, more than double the retention of single-gift donors at 42%.
- The average long-term value of a recurring donor is more than 5X the long-term value of a single-gift donor.
Monthly giving sustainer programs are some of the fastest-growing, highest-retaining, most-valuable fundraising programs for nonprofits today.
One of the biggest benefits of monthly giving is that it breaks the roller coaster ride of cash flow from donations, with huge spikes at year-end and a couple of times of year and terror-inducing valleys the rest of the year.
With a strong monthly giving program, nonprofits have a steady, repeatable, and consistent revenue stream all year long.
And, it gets even better — the Subscription Economy has made recurring giving possible for a new generation of nonprofits. Sustainer giving is transforming fundraising today and tapping into this opportunity fully requires a new kind of sustainer program.
Before we talk about how to use the Subscription Economy to develop a new kind of recurring giving program, let’s talk about what it is.
What is the Subscription Economy?
The Subscription Economy is the name given to the rise of recurring subscriptions in nearly every area of our lives. From Netflix to Amazon Prime. From grocery delivery to subscription boxes. From Hello Fresh to Spotify. Microsoft Office to Adobe Creative Cloud. Subscriptions are everywhere.
And subscriptions aren’t just connected to nondiscretionary transactions, like paying your mortgage statement or your utility bill on a recurring basis. Fully 48% of all automated payments today are what are called discretionary automated payments. Those are things like your subscription to Disney+, or Audible, or Amazon Prime, or Spotify. You get the picture.
So, first, consumers have become comfortable with the idea of recurring payments for things that provide them with ongoing value, access, memorable experiences, and personalized service.
In turn, as these same consumers have become comfortable with recurring subscriptions, they have started to change their behavior for charitable giving.
But to understand how donor behavior has changed, we first need to look at the landscape of monthly giving over the past 100 years. Yes, you read that correctly — recurring giving has been around for more than a century.
Three kinds of nonprofit recurring giving programs.
The first recurring giving program, in the form of child sponsorship, was started by Save the Children in 1920 to help children following World War 1.
Historically, there have been only two kinds of nonprofit organizations that could take advantage of recurring giving in a significant way — sponsorship-oriented nonprofit, and membership-oriented nonprofits.
- Sponsorship is when a donor gives and there is a specific, known individual who benefits. It’s the most direct kind of donor/beneficiary relationship out there. Child sponsorship. Missionary or volunteer sponsorship. If I give, this person (and often their community or people group) receives. This has been the gold standard of sustainer programs for decades. High retention, high long-term value. Very compelling.
But there is a problem. The vast majority of nonprofits do not have the kinds of programs and beneficiaries that are conducive to sponsorship programs. Either because of privacy issues or just that the nature of the nonprofit does not allow them to have that kind of relationship with many of their beneficiaries.
- Membership in recurring giving is when a donor receives some level of ongoing benefits. In other words, there is an exchange of value that is very much like a subscription. If I give, I will receive. Examples of this would be zoos, museums, public television, and radio — I give every month, and in exchange, I get access, discounts, or other benefits. The donor is a beneficiary in these types of programs.
Once again, though, there is a problem. The vast majority of nonprofits do not have the kinds of programs that are conducive to providing direct benefits to donors.
- Everyone else. The vast majority of nonprofits fit into a third category — the glorified EFT/CC/check program. Typically characterized by low enrollment rates (only the die-hard donors who are already giving regularly tend to sign up) and relatively low retention rates, at least compared to the gold-standard nonprofits listed above. These programs are nice, but they hardly have the massive potential for scale and impact that sponsorship and membership offer.
We estimate that 75% of all nonprofit charities are in this third category. Simply put, they’ve been left by the wayside over the past century — not quite able to tap into the power of recurring giving.
But the Subscription Economy has changed all of that. There is hope for the 75% (and some clues to the other 25% on how they might need to redesign their efforts). Let’s talk about how.
The Subscription Economy makes recurring giving accessible to everyone.
Thanks to the Subscription Economy, donors have expanded their conception of what giving monthly to a nonprofit organization looks like. Gone are the days of the massive scale of monthly giving being only available to sponsorship and membership-oriented nonprofits.
Today, 52% of Millennials say they would rather give monthly to an organization than a single large gift. Similarly, fully 48% of all Baby Boomer and Gen X donors are already enrolled in a monthly giving program.
This is not some future trend that is coming in the next few years. It is here today.
Today, donors are more willing than ever to automate their giving on a recurring basis. Whether that is to their church or to their favorite nonprofits, donors are signing on to recurring giving more than ever.
But read on because, as with most good things in life, there is a catch. While the opportunity for non-sponsorship, non-membership nonprofits to build and grow monthly recurring giving programs is more available than it’s ever been, there is a new kind of recurring giving program that is growing explosively.
A new breed of monthly giving program emerges.
There is a new breed of sustainer program emerging, also driven by the Subscription Economy.
You see, the Subscription Economy did more than just make donors more comfortable with whipping out their credit cards and giving them to be charged monthly. It also has rewired donors’ expectations about what they will get in exchange for that monthly donation subscription.
Remember what I said about how the Subscription Economy was rewiring consumer expectations?
Consumers have become comfortable with the idea of recurring payments for things that provide them with ongoing value, access, memorable experiences, and personalized service.
Ongoing value. Special access. Memorable experiences. Personalized service. Your traditional check-writing or credit card monthly giving program does not offer any of these benefits.
If nonprofit organizations want to tap into the power of the Subscription Economy to create and grow this new kind of recurring giving program, they need to realize that donor expectations are being shaped by the subscriptions that surround us.
In other words, it’s not good enough to just slap a name on your monthly giving program, hang out your shingle, and wait for the recurring donations to roll in. You’ve got to do more than that.
So, how does one design this new breed of sustainer program (or adapt and improve an existing sustainer program)?
In three words — Human Centered Design.
Designing a new breed of monthly giving using Human Centered Design.
Human Centered Design is the gold standard for industrial and product design, pioneered by firms like IDEO to create all sorts of products customers know and love — from office chairs that are functional and stylish, to kitchen tools that are ergonomic and easy to use.
Human Centered Design is based on a single premise that is built into its name — put the humans at the center of whatever you are designing. In other words, if you are designing a new chair, put actual or would-be customers at the center of every stage of the process, from gathering insights on how they use the product, to what frustrations they have, to what fires their imagination.
But putting the customers/donors at the center doesn’t stop with insights that lead to new ideas. It’s every stage along the way — from evaluating initial concepts, to finalizing and launching whatever the product or program is, and ultimately in refining and improving it.
If you fit into the category of non-sponsorship or non-membership, then I hope you have a new sense of possibility. That you too can tap into the Subscription Economy.
Building and growing sustainer giving in the Subscription Economy.
At Masterworks, we’ve used this combination of understanding the power of the Subscription Economy and the methodologies of using Human Centered Design to design and launch some of the most powerful sustainer programs.
On October 12, I’ll be giving a webinar on this topic with Carly Berna, VP of Marketing and Communications, at Jewish Voice Ministries International. I’ll share how we’ve tapped into the power of the Subscription Economy to develop a new kind of sustainer program. Carly will share how Jewish Voice has grown its Shalom Partners monthly giving program over the past several years through smart strategies and tactics.
In this one-hour workshop, we’ll cover:
- Two major forces reshaping sustainer giving programs.
- The unprecedented opportunity for 75% of nonprofits who haven’t been able to fully tap into monthly giving.
- Six common elements in this new breed of recurring giving programs.
- How Jewish Voice grew monthly donors by 252% and doubled revenue over the past five years.
- Four practical steps to assess, build, and grow sustainer giving.
- Practical examples of recurring giving programs that are growing explosively.
If this sounds valuable to you, I would love to have you join us on October 12.
Building and Growing Sustainer Giving in the Subscription Economy
October 12, 2021, 10-11am Pacific, 1-2pm Eastern
We will be sending a recording of the workshop out, so if you aren’t able to make that time, I would still encourage you to register so you can get access to the recording.