If a genie were to pop out of an ancient lamp and grant you any one wish of yours, what would you ask for? As a kid, you might’ve blurted out the name of that shiny red Ferrari whose glimpse you caught at the auto show in your city. But as an adult, you know the answer to this trick question is “A 1000 more wishes.”
It might be that the well runneth deep, but by the laws of physics, at some point, that well will runneth out. And nothing hurts more than the well of money running out, especially for nonprofits, which are generally strapped for cash. A smaller but steady cash flow puts nonprofit management at more ease than a large lump sum donation because a constant flow of funds leaves room for manoeuvring unprecedented expenses due to external shocks (not unheard of when it comes to nonprofits).
Power of Small $ Donors
There are several reasons why having an army of $5-a-month donors is more important than having a bigger financial donor backing your nonprofit’s efforts.
Guaranteed Revenue: There’s something about passive rental income that attracts everyone towards it, and that is the ease and peace of mind it brings. Having a large base of small donors guarantees a nonprofit a certain portion of its revenue pie so that it can plan activities around it. It also helps to have your bases covered when unprecedented events, say COVID-19, occur; a diverse revenue stream is extremely important in that aspect.
Wider Base: You can ask Warren Buffet for a $5-a-month donation, but you can’t ask your barista to lend you a $100,000 lump sum because you have ambitions to end global hunger or feed every child in yourdistrict (that’ll get you a bungled order). The charm of small donations lies in the fact that anyone can make them. People from diverse financial, ethnic, or racial backgrounds can become a part of your cause, allowing you to reach agreater audience and deliver a greater impact. For instance, Charity Water’s“Dollar A Day” program has garnered country-wide support for its plan to provide clean drinking water to all.
Why Recurring Donations Are Gold
Recurring donations allow you to do what every nonprofit needs the most: be financially prudent. It is much more difficult to prepare a monthly household budget when you don’t know how much you’re bringing in, right? The same logic applies to budgeting for nonprofits, too. Having a steady income, or the likeliness of it, can help the finance team move things around and cut costs where needed.
Smaller donations also have the advantage of being generalized, allowing nonprofits to utilize them for various purposes. Big money comes with strings attached, and nonprofits have to use them for the intended purpose, even if the need of the hour differs. Small donations can or cannot be program-specific and can be used to cover operational costs and overheads.
How to Build Your Recurring Donor Base
Building a recurring donor base seems daunting but has never been easier. With multiple online fundraising platforms in the market, all a nonprofit needs to do is sell its narrative and make it easy for the donor tosign up.
The first step is the most crucial. A donor only feels close to the cause if they relate with the cause. When drafting a narrative, remember the three ancient pillars of making an argument: Ethos, pathos, and logos. Your story has to appeal to the emotional donor as well as the rational donor.Evoking empathy is easy, but making your program make sense isn’t. It helps to be transparent and let the donor know how their donation is going to fuel the cause; breaking down the mechanics of the theory of change is one way to do so.
Moreover, who doesn’t love perks? Goodies have always helped brands build a loyal base. The National Public Radio offers its donors early access to events and podcasts to keep them hooked.
Keep Recurring Donors Engaged
Building a loyal donor base involves not only finding the right donors but also maintaining a good relationship with them. Donors stay for longer when they feel that they’re closer to a cause. A few things that can help them notfeel alienated are regular updates on how their donations have been utilized. This not only keeps them up to date with the organization’s efforts but also promotes the image of a healthy, transparent organization.
Ketto, the fundraising site, brings in long-term donors by sending personalized thank-you messages with a call to action. Another example is theHeifer International. They use personalized updates and stories to create an emotional investment in their cause.
Lastly, it helps to foster an online (or an offline) community of donors. This can be done through regular newsletters, online or offline meetups, panel discussions, or physical donation drives.
Conclusion: Start Small, Grow Big
A steady inflow of funds lends a sense of financial security and flexibility that lump sum donations lack. Apart from planning the budget for the upcoming months well in advance, a steady income also ensures you have enough rainy-day money to weather external shocks. Engaging small-dollar donors is key to ensuring their sustainability. Take them on the journey to accomplishing your goals by sending them regular updates and personalized messages; if possible, involve them physically with donation drives and conclaves.Remember, every penny counts - if you’re a nonprofit, you know that it does.
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