Friday, June 11, 2010

Why hasn't monthly giving exploded in the US?

I've been canvassing opinion from some of the best American fundraisers of late about the $64m question: why has monthly/regular giving not really "taken off" like it has in other developed fundraising nations?

The views I've had back from some of the best in the business, including the likes of Mal Warwick, have been pretty universal.

Before I go on I should say, for clarification, by monthly gift I mean an auto deduct or automatic payment form someones credit card or bank account. I am not referring to monthly giving clubs that require organizations to send monthly reminders to people. These are two very different things.

Most cite the proliferation and unsophistication of the banking system. Cheques still play a huge role in the lives of people in the US, less so automatic payments, like us Aussies and Brits are used to. As a side note, the UK plans to go "cheque less" by 2018.

There were other consistent reasons given, like trust (both with banks, and from donors).

I feel all of these are excuses. Monthly giving really is the big idea, the next big thing in the US.

Of course there are some brilliant organizations with large monthly files. ASPCA, Amnesty International, Greenpeace. All I believe are riding the monthly giving wave. There are no doubt more. But not enough.

But for me, there are two very simple reasons why ongoing, regular gifts have not (yet) transformed the monthly giving landscape in the US.

1 US charities are a victim of their own success. Direct response, in particular direct mail, programs in the US quite simply, rock. The sheer volume, and on the back of it, levels of income organizations generate from these vehicles is astounding.

There's a part of me that thinks if I was Director of Development of a US charity I too would find the case for monthly tougher if I was bringing in tens of millions of dollars through the door this year with an intensive onetime cash driven program.

It's certainly an easier "sell" in Australia, Canada, the UK or New Zealand, where we are fishing from small pools comparatively.

That doesn't mean it isn't a case worth fighting for. For example, check out the slide below which shows the average 3 year net value for monthly gifts versus onetime cash gifts. This varies by method of recruitment, and of course varies depending on other factors, but gives you a sense of the difference over the long term of the power of monthly gifts.

When you put it like that, its a tougher proposition to ignore.

2 Poor execution. To be fair, this is not exclusive to the US. There are many cases of not getting the implementation right, and I've blogged about it lots, including back here.

However the point I want to make here is its easy to do something once, not get it right - reflected by poor results - and then be heard to say "we tried that and it didn't work". I also talked a little while back specifically about this topic, why poor execution can get in the way of a solid approach.

I hope this doesn't happen for lots of US organizations in the pursuit of serious fundraising transformation.

Monthly giving has changed the way we fundraise in the UK, Australia, Canada and many other countries.

The US is next.

Jonathon

8 comments:

Conor Byrne said...

Jonathon,

Such an interesting post. Interestingly the organisation I work for has been pushing monthly giving in the US for about 10 years now, with huge success. When we started working in the UK and Ireland we actually got push back from people who wanted to just get the money in (ie go for one time gifts). So I differ slightly in my experience of who is better at seeing the benefits of monthly. Maybe its just the organisation I work for?

I still think a lot of charities in the UK and Ireland aren't pushing for monthly gifts. They often cite the number of cancellations they get from previous campaigns as a reason to just get the one larger gift in. I of course disagree

Of course there are examples of people doing it really well. Damian at Ask Direct did a great campaign with the Irish Hospice Foundation which you can find on his blog. They went out at the height of the recession and offered people a Donation Vacation, and actually had 400 people increase their monthly donation, and very few (40 I think) cancelled.

Great post.

Jonathon Grapsas said...

Hey Conor

Thanks for the comment, appreciate it.

Thats brilliant that you guys are rocking on monthly in the US. It's fair to say you are the exception rather than the rule. I'd say this says more about the fantastic work your org is doing. Great stuff.

There's no doubt a lot of org's in the more developed 'monthly giving' countries are still way behind too. As per my 2nd point in the post much of this about execution. Some of this is apathy.

Keep the comments coming.

Cheers
Jonathon

Tara Lepp said...

Interesting post Jonathon, as always. That is fascinating that the UK is going to go "cheque less" by 2018. I don't think Canada is quite there yet and won't be for awhile. But I do think we are much more accustomed to direct debit and donating by credit card than the US for sure.

Jonathon Grapsas said...

Hi Tara

Thanks for your comments.

The level of comfortability with automatic payments is definitely higher here in Canada, than the US. Although I think this (in the US) is a challenge that can be covercome.

Likewise here in Canada, where although cheques play a big role still, people are used to using CC/direct debit also.

It's all about getting on with it and just doing it. I.e. finding the best way to find new monthly donors. The rest looks after itself.

Cheers
Jonathon

EricaEG said...

I agree monthly giving is fantastic! It does, however, take a lot of time to manage. Credit cards are constantly expiring and being denied. This is a huge reason that it hasn't exploded in the US. The people you do get in the via these campaigns, however, are some of your most loyal givers in the long run.

Jonathon Grapsas said...

Thanks Erica.

Definitely an obstacle (and in fact charities in other countries have all gone through similar situations re expiring CC's etc). Of course direct debit is also widely used around the world, granted not all banks in the US have this functionality.

However I'd rather have 100 people on credit card monthly gifts and have to chase 15 of them to update their details than have 100 new onetime cash gifts and lose 70 of them due to attrition.

Hard work, yes. Impactful if done right, no doubt.

Thanks again for sharing, great comments.

Jonathon

Kathryn Hill said...

Hi Jono!

Great blog as always. I was just wondering if you could let us know where you got the statistic from that compares net income after 3 years from monthly giving to cash donations over the same period?

Thanks,
Kathryn

Jonathon Grapsas said...

Hi Kathryn

This is looking at an average for some of our Canadian clients where we've looked at this recently.

This differs by org, by method of recruitment and by country, but gives you a 'sense' of the difference between monthly and cash donors. To be honest its often more skewed in the favor of monthly.

Hope you're well. :)