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A Donation Model for a Global Economy

Last updated on May 22, 2012 by Sozo Staff Leave a Comment

In the U.K., they call it “regular giving”; in Canada, it’s “sustaining donations.” Other terms for this trend include “committed giving,” “recurring electronic giving,” and “EFT giving”. Whichever term you prefer to describe it, you really can’t deny its significance in funding nonprofit organizations across the globe. Thousands of Christian ministries are among the many US-based groups who have yet to tap into this extremely beneficial form of raising funds. Popular and successful in Australia, Canada, and the United Kingdom, the benefits of recurring electronic giving are increasingly being recognized by groups in the United States.

Why does it work?

According to Harvey McKinnon, author of Hidden Gold (Chicago: Bonus Books, 1999), recurring EFT giving “is among the most cost-effective, long-term fundraising methods. The gift is only solicited once, and because it is handled electronically, processing costs are kept low. Additionally, donors must put forth effort to cancel their gifts, giving you the benefit of ‘donor inertia’.” The idea of inertia is really powerful—just like objects in motion tend to stay in motion, your sustaining donors will be much more likely to continue giving than one-time donors or those who have merely made fund pledges.

Because there is typically no end date involved in this type of committed giving, the giver is not making a separate choice each week, month, or quarter, whether to give or not to give. Instead of having to think about it and take the step to write out a check or even click onto your website to make a gift, he or she has to do nothing in order to continue giving, as planned and promised. As you can imagine, donor attrition is greatly reduced through this inertia-like effect. In fact, eGiving.com has seen a 95% retention rate over a 5-year period.

How does it help?

Because recurring electronic giving offers a more reliable stream of income for your ministry, it ultimately means that your ministry will benefit in many ways. Not only will these more predictable donations mean greater operational efficiency, but it will also reduce your fundraising costs and even increase the donor pool. Many donors will appreciate the fact that your organization will run more smoothly when you have predictable funding coming in. They’ll also recognize the fact that the less fundraising you need to do in order to secure donations, the greater percentage of their donations will go toward operational costs and actual ministry, as opposed to fundraiser costs.

A secondary benefit is that your recurring givers are your best leads for one-time gifts toward special projects or funds. They already believe in the benefits of your ministry and have communicated their support with funding. Since you’re already linked to them electronically, they can respond to an e-mail request for an additional one-time gift with the click of a button. Sending out a mass e-mail to your EFT givers can prove much less labor-intensive and much more fruitful than hours of cold calls or mailings to new prospective donors.

Filed Under: Financial

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