Regular giving or one off donations: which to go for?

Fundraisers need to grow their databases, but should they invest in regular giving (automatic debits) or one-off donations?

In Australia, until around 2002, the answer was simple because regular giving was a tiny part of the fundraising mix.  Some charities tried acquiring new donors straight on to regular giving, to mixed success.  Some just added an extra line to their direct mail acquisition appeals  offering the opportunity to become a regular giver.

Then face-to-face arrived.  Not only did it acquire hundreds of thousands of new regular givers, it actually created an entire new ‘type’ of donor – a younger demographic.

Brilliant fundraising expert and blogger, Jeff Brooks picked up on this in a recent blog where he noted that: “There are younger donors ... just not in America.”  He goes on to say that, “In Australia, more than a third of the charity collected each year comes from what's called Down Under "regular giving," otherwise known as monthly giving or sustainer giving.”

He is right indeed. About a third of individual income to professional fundraising charities appears to come from regular giving.  World Vision reports $195m of it’s $345m income in 2011 was from regular giving.  The Pareto Benchmarking report, looking at around $330m of other charities’ income, shows that over one third of that came from regular giving.  This report studied 48 different charities’ data.

Even though face-to-face has been the engine behind this growth, there still many regular givers acquired in other ways.  One significant way is by asking current donors to become regular givers, usually through a combination of phone and mail.

This ‘regular giving conversion’ process is so effective that some charities think of their ‘normal’ database as simply the means to generate leads for regular giving conversion.
Charities often make a choice as to whether they should focus on regular giving or not, but the latest data from Pareto’s benchmarking shows that this is the wrong approach. You don’t need to choose between one or the other.

One reason is that most regular givers come from face-to-face. These donors are younger and hardly ever do anything except upgrade when they are phoned. In addition, they are also poor major donor prospects, with very rare exceptions. Furthermore, they are not good bequest prospects, because they are too young and not yet interested in supporting charities in this way.

The chart below shows the percentage of donors in various categories who have informed the charity they have mentioned the charity in their will.

In general, face-to-face donors are clearly not interested in putting charities in their will.
The other reason you don’t need to make a choice for or against regular giving is that nearly all non-regular donors will not become regular givers, no matter what you do.

The chart below shows second gift rate by charity within 12 months of acquisition.  It shows the proportion of those second gifts that were the beginning of an automatic payment method (blue), or another one off donation (organe).  Each column is a different charity.  The black lines match the right hand axis – this is the number of new donors acquired by each charity, the orange block is the percentage that had made a second gift within twelve months, and the blue shows the percentage whose second gift was the first of their automatic debits.

Put simply, most new non-automatic debit donors don’t become regular givers within 12 months – even for those charities trying hard to get them to do so.

On the other hand, what of people who came straight in as regular givers?  The chart below shows the total contributions of all donors acquired straight onto regular giving by the channel that was used to acquire them.  Face-to-face accounts for well over two thirds of these donors, and only a few per cent are from online.
The little crosses go with the right hand axis and show the ‘ratio’ of giving compared to first gift after four years.  The left is the average total given by donors acquired through that channel straight onto regular giving.

For example on average, face-to-face donors will have given around 25 times their first debit – about $650 - after four years whereas a donor acquired straight to regular giving from a direct mail piece will have given around 45 times their first gift - about $900.

The blue is income from regular giving, and the orange is additional income from other donations.  The face-to-face donors across these charities gave insignificant amounts on top of their regular donations and the direct mail donors gave about $50.

So, we see that most of the value from regular donors is from those regular gifts and little from additional donations.

It is hard to get regular givers to give additional gifts and it is hard to get non-regular donors to become regular donors.  But you as a fundraiser really need both types of donor.

Don’t choose between regular giving and one off – do both.