Recurring Donations for Nonprofits: Billing Software

Nonprofit organizations have moved on with the times. No longer do these charity organizations accept only bank drafts or one-time gifts. Donors now have the option of recurring donations for nonprofits. To keep up with modern donors’ purchasing habits, nonprofit organizations or NPOs can set-up recurring donation systems in-line with these donors’ spending preferences. Subscription-based business models have increased in number as media streaming platforms like Netflix and delivery services like Amazon have risen in popularity. A subscription-based model for fundraising can therefore raise donor engagement, optimizing revenue streams for NPOs. According to a 2023 study, revenue from one-off donations decreased by 12% in 2022, while monthly charity payments rose by 11%. 

Why the Subscription Model Has Blown-Up

Subscription services have become the norm of our everyday lives. For customers, the subscription model offers a convenient and personalized experience that is difficult to replicate in the more traditional business model. For businesses, this model ensures predictable revenue, especially during times of financial upheaval, as they can get additional revenue from the same customer without extra acquisition costs by introducing more products. Subscribers already automatically buy products on a regular basis, so there is less of a marketing cost because they don’t need heavy targeting through expensive marketing strategies. These benefits have made the subscription model a popular choice for both customers and companies. Look at how pervasive the phrase “Netflix and chill” is. Who can now imagine life without subscription streaming platforms like Netflix?

Read More: The Ultimate Guide to Subscription Businesses for Dummies

What are Recurring Donations?

Recurring donations for nonprofits are essentially gifts given to these organizations by donors on an ongoing, usually monthly basis. Unlike one-off charity payments, a recurring donation system schedules donations automatically after a set time interval. As public interest in fundraising has grown, people are increasingly invested in supporting the causes that resonate the most with them. Subscription-based fundraising models then are necessary to attract and retain donors. As a 2023 study notes, “57% of donors are enrolled in a recurring giving program”. 

The Benefits of Recurring Donations for Nonprofits

Donations received on a consistent, ongoing basis can exceed the value of annual pledges or one-off payments. The average recurring donor pays 42% more in a year than a donor who makes a one-off payment. Subscription-based donation systems thus have many advantages:

Attracting New Donors

Finding new donors is an arduous and time-consuming process, often involving a substantial financial investment from the NPO. Having recurring donors mitigates this issue. Maintaining consistent donors allows NPOs to focus their attention on other important tasks necessary for the organization’s running, like recruiting new members, improving their public standing, etc. Moreover, recurring donations can lend legitimacy to the NPO’s mission as proof of the organization’s financial health and commitment to their cause. This might also have the added benefit of attracting new donors to the NPO who could later themselves become recurring donors.

Automation

Remembering to send monthly checks or manually logging into an organization’s website to donate are obstacles that can cut down an NPO’s funding. Automated billing management systems, however, circumvent this issue. Such systems simply charge the donor automatically according to the payment method they have on file, making this a very easy and hassle-free process. Additionally, as people have gotten used to subscription-based platforms like Hulu and DoorDash, this payment system is often intuitive to them and highly preferable.  

Increased Donor Engagement

Recurring billing systems can facilitate long-lasting donor relationships. These systems can automate tasks like sending thank you emails for donations and providing progress reports to make donors realize the difference their contributions make to the causes they support. As donors are kept up-to-date with their NPO’s work, they are likely to be more involved themselves and further support the organization monetarily.

Less Prompts

Donors do not always appreciate messages prompting them to contribute more. Donating then often becomes less about the cause they are supporting and more about a constant stream of ask and give messages. Having recurring donors solves this issue as they have already committed to contributing on an on-going basis, thus eliminating the need for additional message prompts. 

Better Financial Projecting

One-off donations do not follow a set pattern, making any financial projections based on them a challenging task. Recurring donation systems, on the other hand, are consistent and make it easier for the NPO to account for future funds. This makes the financial projection task more manageable and accurate.

Data Collection and Analytics

A billing management software can easily combine donation metrics to create a database that shows results like donor contributions, volunteer numbers, organization performance, etc. They can track fundraising numbers to get a better sense of the organization’s functioning. Such information is valuable for optimizing the NPO’s running. 

Mistakes to Avoid

While recurring donation set-ups are very advantageous for NPOs, they should take certain precautions to prevent donor churn. Common reasons for donor churn include:

1. Not receiving proper acknowledgement for their contributions,
2. Not knowing how the funds are being used, and,
3. Forgetting to donate on time.

Luckily, these problems are easily solvable by using efficient and reliable recurring billing management software like, for example, SubscriptionFlow. The billing software automatically charges the donor, eliminating the issue of forgetfulness. Moreover, the billing software can send automatic thank you messages once the donation is collected and periodically provide progress reports regarding the NPO’s activities. To achieve the goals of their organization, billing magnates need to shift towards recurring billing software. It streamlines billing processes and encourages donors’ engagement.

Shifting Your NPO to a Recurring Donations Model

To collect recurring donations for nonprofits, you need to use appropriate billing management software that can meet all the organization’s needs. While there are many such software on the market, an NPO should consider what their needs are and how convenient their chosen platform would be for their donors.

SubscriptionFlow is an example of recurring billing management software that assists NPOs in seamlessly managing their fundraising with its services. This platform enables NPOs to sync their taxes, donors, and sales activities with accounting software such as QuickBooks Online and Xero for efficient financial solutions. Furthermore, SubscriptionFlow eliminates friction in payment collection through integration with multiple payment gateways like Stripe and PayPal. Donations are received promptly in the local currencies of the donor, through the payment methods of their choice.

SubscriptionFlow also offers analytics and reporting features, giving NPOs the option to monitor their organization’s data metrics to track fundraising on a monthly, quarterly, or yearly basis. The results from this analysis can help the NPO set targets for the future as well as gain insight into how to achieve them. Its event updates can also keep the donor feeling involved, thus improving retention rates. 

Conclusion

Billing management software is now a necessity in the world of nonprofits. Retaining older donors and keeping them hooked is arguably more important and effective now than attracting new ones. A good recurring donation system that reduces the donor churn rate can boost revenue and help the NPO fulfil its mission.

Book a demo with SubscriptionFlow now and find out for yourself not only how robust a software it is at managing your subscriptions for you, but also how well it handles all payments made in various cryptocurrencies!