A holy grail for fundraisers? Donors who keep on giving.
The big idea: With the rapidly expanding use of the Internet for fundraising, nonprofits are facing a growing challenge to retain donors. At a time when acquiring a new donor is three times as expensive as retaining an existing donor, nonprofits are looking to increase the lifetime value of donors. A low-cost experiment conducted at crowdsourced giving platform GlobalGiving shows a novel approach to retain donors over time.
The scenario: GlobalGiving, a nonprofit, provides a global crowdfunding platform where donors can give to grass-roots charitable projects. The platform allows nonprofit partners to reach a base of donors in ways they could not achieve alone. In a given year, GlobalGiving partners with over 2,800 charitable organizations to raise as much as $43 million.
In the past decade, the nonprofit sector has changed dramatically. There is greater competition for donors’ attention and dollars via online platforms, including reward-based, donation-based and debt-based crowdfunding. From the beginning, GlobalGiving recognized the challenge of retaining patrons over time.
Driven by the fact that the revenue generated by repeat donors was four times that of one-time donors, GlobalGiving designed ways to increase ongoing giving. Bonus days were held periodically, where contributions were matched. A project-of-the-month club was offered, allowing donors to sign up once and contribute each month to a different charity. Newsletters were sent to patrons, highlighting giving opportunities.
Originally, efforts to increase recurring donations involved offering contributors on the checkout page the option to give on a recurring monthly basis. Neither encouragement nor incentives were offered to make the switch, and the number of donor conversions to recurring donations remained small. In reviewing the data, GlobalGiving determined that while fewer donors gave a recurring donation, the lifetime value of those donors was, on average, seven times higher than that of one-time donors. So the organization prioritized increasing the rate of conversion from one-time to recurring donations.
The resolution: GlobalGiving collaborated with academic researchers to conduct an experiment online.
On the checkout page, while some donors were informed that their recurring donation would be matched by an anonymous donor, others were informed that the match would kick in only if a target percentage of donors committed to a recurring donation.
Results showed that a 75 percent contingent match condition resulted in the highest level of conversion from one-time to recurring donors. On average, recurring donors continued their contributions for over a year, raising donations more than tenfold for charities. GlobalGiving then implemented the contingent match at 75 percent, resulting in a 66 percent increase in revenue from recurrent donors and $7.3 million raised over five years.
The lesson: Online platforms allow experimentation on ways to drive increased giving for nonprofits.