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Establishing a regular giving program is a big challenge for any charity. F&P asked Fiona McPhee how she recommends getting donors over the line and keeping them on board for the long term.

According to fundraising expert and blogger Jeff Brooks, about a third of individual income to professional fundraising charities in Australia comes from regular giving. Pareto’s Fundraising Benchmarking 2016 report, which studied the data from 48 different charities, supports his argument – confirming how an ongoing commitment from donors is crucial for a charity’s longevity and stability.

In your opinion, what defines a high-performing regular giving program?

This is one that has well managed customer service and attrition. The biggest challenge in regular giving is the fact that donors stop. They sign up to a monthly donation then at some point in that journey their giving stops, with most new donors bowing out within the first year.

So organisations with low attrition tend to have high-performing programs. The average first-year attrition for starters (those who make at least one gift) is 40% across all channels.

How can a charity reduce the loss of donors within the first year?

Declines management is number one for me in terms of managing attrition, and that basically means if I process your monthly donation and you don’t have enough money in your account or the account is closed, the charity gets a decline back.

Declines management is crucial – you can recover a very large percentage of those declines throughout the year if the right administration and customer service processes are in place.

Many organsations have been able to bring their attrition down by 5% or 10%, simply by assessing and addressing these processes, which makes a huge impact on their income and their retention.

Another way is to have a strong donor save program in place. Charities have to put the effort into training, into developing KPIs and into monitoring their donor save programs so they give themselves the best chance of keeping their regular givers on board. Whether it’s offering them the chance to reduce the monthly amount or even put it on hold for a while, having a strategy in place and a trained team ready to address donor savings is critical.

What’s one of the biggest challenges charities are facing with regular giving?

Supplier capacity and retention for faceto- face recruitment – you might have the budget to invest, but engaging and retaining a suitable supplier and getting the recruitment volume you are after is a real challenge in today’s market.

Marketing automation is another challenge for a lot of charities, but some of them are really trying to crack it. The very good ones are targeting a variety of demographics through a combination of email, SMS, phone and printed material – they’re covering all bases. This is a well-planned strategy but, of course, cost comes into it too.

I think the cost of marketing automation versus the benefit of it is a real barrier at the moment too. However, we can certainly see lower attrition rates in that first period for those who put the effort in.

What kinds of strategies should charities have in place for ongoing retention?

One strategy is upgrade programs, which includes contacting donors and asking them to increase the value of their giving. Again, the high-performing charities have a multifaceted program. It’s not just a one-shot, single-phone campaign at one point in the year. They’re looking at what the different channel opportunities are and the different ways that they can offer upgrades.

Channel diversification for upgrade programs is another good idea. This involves moving beyond just calling or mailing donors. Some charities are looking at how they can use SMS and email to supplement – it’s about getting coverage, so actually trying to get through to every single donor and give them the opportunity to increase their giving as opposed to just touching base on the phone once a year.

How can a charity hope to establish a successful regular giving program?

The first thing it needs to look at is its product or its proposition for regular giving. You’ve got to have a reason for someone to commit to you on an ongoing basis.

That could differ from charity to charity. For example, an organisation that collects money in response to emergencies needs to think about why someone who’s used to giving in response to a really tangible, current emergency should commit to an ongoing monthly donation. It’s also critical that the back-end systems are in place, so that the donor’s transaction process and service experience is as smooth as possible.

Having a long-term budget and commitment in place is also critical. Regular giving tends to not break even and the acquisition of new regular givers can take more than 12 months, depending on the channel, yet a lot of charities run on a 12-month budget.

Setting expectations that regular giving has an excellent, long-term return on investment is often the first step towards ensuring the organisation is committed to investing. You’ve got to stick with it in order to reap the rewards. From that perspective, you’re better off establishing a three-to-five-year return on investment view of regular giving.

What advice would you give to a charity looking to establish a regular giving program?

Start with the expectation that you will need to diversify and evolve the program – it’s not a ‘set and forget’ activity. Based on how things have trended in recent years, expecting what’s working today to be working the same in three years’ time is risky.

From a diversification perspective, there are several different channels options, and each requires a different approach and delivers different types of donors. However, in the market right now, face-to-face accounts for more than 75% of the income for regular giving, so that’s a real focus area. But it comes with massive challenges in that there is less supply than there is demand.

For me, the organisations that are doing really well are using that as their base, but testing to diversify channels. They are looking at other opportunities. They are trying to develop other avenues into regular giving that certainly don’t have the same volumes, but are giving them some stability and sort of future proofing in the event that anything changes.

When you look at the Pareto Fundraising Benchmarking program, you certainly see that those charities that are generating the most income have multiple channels feeding their program.

Fiona McPhee is Strategy Director for Pareto Fundraising, helping charities in Australia and New Zealand like St John Ambulance Australia to develop their individual giving programs.

This article was first published in Fundraising and Philanthropy Magazine 2016

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