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Nonprofit Hub Radio
Whether starting a nonprofit or taking an existing cause to the next level, The Nonprofit Hub Radio Podcast is about breaking down how nonprofits can grow. Each episode features an interview with a sector star with insight, stories, or ideas that can take your nonprofit from good to excellence. Join host Meghan Speer every week to make your good go further!
Nonprofit Hub Radio
Unlocking Sustainable Giving: Transforming Nonprofit Fundraising Through Recurring Donations and Strategic Change
Discover the secrets of sustainable giving with our guest Dave Raley! We tackle the significant shift in the nonprofit world towards a more structured approach to recurring donations, moving beyond the simplicity of a monthly giving button. Join us as we promise to enlighten you on how the subscription economy is reshaping donor expectations and why comprehensive sustainer programs are the future of nonprofit success.
Dave Raley is the founder of Imago Consulting, an advisory firm that helps organizations create growth through innovation. As a speaker and advisor, he has inspired thousands of nonprofit leaders to grow both personally and organizationally. He’s the author of The Rise of Sustainable Giving: How the Subscription Economy is Transforming Recurring Giving, and What Nonprofits Can Do to Benefit. Dave also writes a weekly innovation and leadership column called The Wave Report, and he’s the co-founder of the Purpose & Profit Podcast – a show about the ideas at the intersection of nonprofit causes and for-profit brands.
Get free nonprofit professional development resources, connections to cause work peers, and more at https://nonprofithub.org
If you're looking to maximize your fundraising efforts, donorbox's online donation platform is designed to help you reach your fundraising goals with ease. Discover the world of simplified, seamless fundraising at DonorBoxorg DonorBox helping you help others.
Speaker 2:Welcome back to the Nonprofit Hub podcast. I'm your host, megan Spier, joined today by my friend, dave Raley, who you may know was on the podcast last year as well, excited to have him back with big news. We teased the last time you were here, dave, that a book was coming, and it is now really coming.
Speaker 3:It is really coming. It's really happening, like really coming.
Speaker 2:Yes, dave Raley is the founder of Imago Consulting and the author of the new book the Rise of Sustainable Giving. So excited to have you back on the podcast. Welcome in friend.
Speaker 3:So good to be back. This has been a long time coming. You and I were talking about this and you've written a book, but, man, it's the best metaphor I can think of is it's a marathon, right, you know, it's like real fun at the beginning. The middle part can be not so fun, but there is daylight at the end of the marathon here.
Speaker 2:Well, it's definitely a long time coming. I remember you telling me that you were like toying with the idea of writing a book. We were in Dallas, I think, for a conference a year and a half ago, two years ago now. Yeah, definitely been a process in the works, but I'm excited about the fact that it's already here. I had a moment when I so when I wrote my book a couple of years ago, I had a moment, the day before it launched, which, for you, was like just a couple of days from now coming, where I, like I all of a sudden had this like terror panic moment of like, oh my gosh, it's real and someone might actually read this book. And I remember talking to a friend of mine and I, like I shared that fear and he was like I did I miss the point. I thought the point was so that people read it. Oh my gosh.
Speaker 3:Oh, I so know what you mean, are you?
Speaker 2:there. Are you like? Where are we? How are you feeling?
Speaker 3:Yeah, you know, I had a moment the other day where one of the early you sent out advanced copies and folks that are just generously have agreed to read the thing and, if they like it, to endorse it. Right, and I had a gentleman who's the just a significant leader in a, in an organization that has just done incredible things with sustainable recurring giving. Yeah and Megan, he called me and he was like this book is awesome, like you've, you've hit every major point. And then he started making. He started quoting like parts of the book back to me and I was like, oh, does that like, is that going to happen? So I'm just so jazzed, so excited and, candidly, this industry needs to hear this message and so there's very much a missional element to this and so to get it into the world, I realized the metaphor for the marathon breaks down, or it's like the finish line is the starting line, right, kind of a deal, but just so excited to have it in the world and have people be able to just be exposed to the message.
Speaker 2:Yeah, that's awesome. So help me understand and help our audience understand, right, when we talk about sustainable giving I know this has been the message that you've been preaching for years now and building that sustainable program, let's kind of level set from the jump. Is that different than like? Oh yeah, I have a monthly giving button on my donation page. Is that when we're talking about sustainable giving? What does that look like? What is it and what is it not?
Speaker 3:oh, I love that question why I literally just wrote an article called why your sustainer Program Is Not Growing, and the number one reason that I see in the organizations that I both research as well as the organizations I work with, is that they don't actually have a field in a database.
Speaker 3:They send a direct mail piece every January or whatever, right, and they said, well, of course we have a monthly giving program. It's like you accept monthly giving and you maybe feature it sporadically, but you don't have a holistic program. And I don't mean to say that like meanly or anything, but really one of the things that we've seen with candidly the subscription economy and how it's really rewired, the way first consumers behave and then donors think. We talked about that on the last episode, you and I did, but that has resulted in a completely different expectation from donors, from nonprofits, and so sustainable giving or recurring giving or sustainer giving or whatever subscription giving whatever term you want to use. The good news is that it's more accessible to more nonprofits than ever before. But that comes with a caveat, and that is you have to have a holistic, valuable, ongoing sustainer program to really take advantage of it.
Speaker 2:Interesting. So you did there, I think, hit the nail on the head with all of the different ways that people refer to this thing, right? So I've heard it talked about as sustainer giving, subscription, ongoing, whatever the there's all sorts of caveat. Talk to me about the word subscription, though, because I think that at least I've seen some articles to this effect where people are like I just I like the idea, yeah, of especially of sustainable giving or recurring giving, but the subscription model for some reason puts some like put some flags up for folks when it's so. It's so prevalent in everything that we do. How many subscriptions do I have at this point? Right? So I'm curious your thoughts about overcoming the stigma, maybe, of that type of thinking in nonprofits.
Speaker 3:Yeah, well, fun fact, by the way you say how many subscriptions you have. The average American? Well, first of all, 95.8%, and I know that sounds like a made-up stat, but that's a real stat 95.8 percent of of us adults have a subscription. Wow, that's, that's like everybody, the average you want to guess other random like three point. Whatever I know I was like how did you survive? Do you want to guess that the average american number of subscriptions I'm going to go with 12.
Speaker 3:This is awkward, megan, because the average American has 12 subscriptions. Are you kidding me? Nailed it right on the head, easy dozen. By the way, some of us bring up that average. I think the funny thing is, today you have actually subscriptions to monitor your subscriptions. I don't know if you've seen Rocket Money.
Speaker 2:I have the Rocket Money.
Speaker 3:We've talked about it. Yeah, so I got Rocket Money. I was like, shoot, I'm writing a book on this. I should probably see how many subscriptions I have 125, I think. And by the way and this is for our charity leaders, listening, your monthly giving shows up in Rocket Money Just alongside your Netflix subscription and your Amazon prize subscription.
Speaker 3:So that kind of implication of like I'm quote unquote subscribing to giving is even showing up on the consumer side, and for a lot of nonprofit leaders, megan, that makes them nervous because they're like, oh, that cancel buttons right next to the right, exactly. And it's right next to my button.
Speaker 2:I can get out of that.
Speaker 3:I totally hear people, you know, and I have my own feelings.
Speaker 3:I think one of the things that we've seen in the subscription economy like with any sort of hype thing that happens is you get a bunch of, basically, players that I wouldn't say they're bad actors, but they show up in the market just looking to grab money, yeah.
Speaker 3:So they come up with a thing. They call it a subscription, but really it has no ongoing value proposition, it has no belonging or community, it has no really lasting value. It's a cash grab, right. And just like you could do that in fundraising and that won't last, you can do that on the business side. And so when I say subscription giving, I'm referring to, candidly, the better parts of what we can learn from subscription things like ongoing value, things like creating belonging and community, things like having a really clear, strong value proposition, right. But what I don't mean is churn and burn, because, by the way, the best subscriptions if you look at the market, the best subscription businesses realize that the vast majority of the value that they generate as a subscription is in long-term relationship, which I don't know about you, but that sounds like good fundraising to me.
Speaker 2:Yes, that subscription implies and I have my own feelings about this. I'm happy to share them but subscription implies that I am getting something. Instead of building a model for generosity where I'm giving, I would argue that we all have a. The nonprofits all have a place wherein we do need to be providing value At least, and it's not necessarily. It's not like I'm sending you a book, I'm not Netflix producing a new movie every month, but I am showing you the value of what your money is doing. Right, and I would argue that there's some giving in that, but do you think that there is in the way that we talk about it? Is that's where the strategy that you're talking about coming in? If we're moving to that model, we do have to.
Speaker 3:Maybe think more about what the donor is getting out of the transaction or getting from the giving. Yep, I think we always need to think about that value proposition. Yeah, we always need to think about that value proposition. Now, I do want to be careful, and I actually have another article on what I don't mean by subscription giving, because I do think it does invoke some consumeristic tendencies. For example, one of the areas that recurring giving really diverges from subscriptions is in the area of the volatility. You know, if you look at the number of US adults who have canceled the streaming subscription, last year, 56% of subscribers have canceled a streaming subscription. Now I think the similar numbers 50 to 60% have also added a streaming subscription right. So that's a wild.
Speaker 2:That's normally me right, because I decide I'm only going to have, when it comes to the streaming, I'm only going to have X number of things, and if I want to get, if I want to add something because I'm interested in something that's on that platform, then something else has to go.
Speaker 3:And that's why you're seeing so many of these subscriptions going to bundles. Oh, you want a Disney plus.
Speaker 3:Now you get Hulu and it's like are you going to cancel now and then you also will see annual a discount for an annual subscription, because they just know, man, that volatility really stinks. This is where it differs in the so far, in the nonprofit fundraising spaces, donors are not nearly as volatile. They're not like, for the most part, looking at their giving to you every month and saying am I, did I use that in the last two months? So there are some areas where I want to be careful not to invoke that kind of consumeristic sort of attitude. But what ongoing value are you providing to donors, whether it's tangible or intangible? You mentioned books, by the way. There are actually quite a few charities that actually do create resources and that is a part of their ethos, their DNA. Candidly, it's a part of their program and mission is they have one client right now that puts out multiple books a year and in those cases I'm like amen, let's use the book as an incentive for recurring giving and as a value add and as a blessing to the audience.
Speaker 3:But that doesn't mean your relief and development charity needs to start now, publishing tchotchkes that you can mail to people on every month.
Speaker 2:Yeah, so one of the things that I think has been kind of an overall arching theme that I've seen from a lot of folks in the space lately is this idea of growing generosity. We want to encourage people in generosity because it's maybe something that we see globally as starting on the decline, right. So how do we change the tide? How do we grow generosity? Our friends at NextAfter talk about it and Virtuous talks about it. There's so many vendors in the space that are committed to this idea of growing generosity and helping to increase that amongst people. Is this a part of it and, if so, how do organizations go about that?
Speaker 3:The generosity crisis is absolutely real and I, you know, make it as a dad. By the way, it breaks my heart. I have an 11 year old and a 14 year old, two girls, and I just think about the world that I'm raising them in, the parenting that I'm bringing to the table for lack of a better term, and it's I don't know if there's an old man statement, megan, but it's like, it's concerning, it's like oh my gosh, like um, uh. The reality is that the number of individuals giving single gifts in north america we'll just keep it in the north american context it has been declining. The cost to acquire donors and to retain them is increasing. By the way, on the consumer side, this is also the case like getting a consumer to buy another tube of your brand of toothpaste and then to buy the same one next time when they have this explosion of choice and consumer loyalty is at an all-time low. And I was thinking about this was early in the writing of the book Megan, that, actually the book the Generosity Crisis that Nathan Chappell and his co-authors wrote, and one that really struck me just personally.
Speaker 3:Professionally, I've spent now a couple of decades helping to work in the philanthropic sector. Like, oh my gosh, what is going on? And then I realized, megan, that a core part of discipling people around generosity is ongoing, recurring, faithful giving. And while there are fewer individuals giving single gifts than ever before and I that breaks my heart, too, and we need to do something about that the reality is the number of donors who are giving on a recurring basis is actually growing, and so it's like okay, what can we learn from that and how can we tap into that? So I think there are a couple like, if I think of what are the solutions to the generosity crisis? There are multiple. It's not a single solution. There's how we teach and train younger generations around what generosity looks like, understanding how we can use technologies like AI to create communities of giving, stuff like that. But, megan, the rise of sustainable giving is one of the most important, I think, answers to the generosity crisis today fundraising platform that streamlines your operations, amplifies donations and delivers a user-friendly experience for your supporters.
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Speaker 2:One of the things that you said up front right is the idea that it's not just having the checkbox on your website or maybe sending out one email a month or one email a year, even a letter a year, that says, hey, we would love your ongoing support, would you consider? So what is the switch in language that our fundraising or development teams need to start to embrace, to move in that direction? Like, how do we begin making progress in how we talk about those things, even internally, versus and then moving it externally to begin that process?
Speaker 3:That is the maybe it's not the million dollar question. Was the? Who wants to be a millionaire? That's the $100,000 question, I think. Well, one of the things I outlined in the book is 10 different areas of developing a thriving program. So I'm just going to pick on one and that is. It is so important.
Speaker 3:What happens inevitably with an organization is they do have the checkbox or the gift type. They don't necessarily consciously think, well, that doesn't mean we don't have a recurring giving program, but the reality is they don't really have a recurring giving program. They might have a cool name too, by the way it's the monthly partners program or whatever. By the way, I'm not knocking the name of your program, if that's what you call it, but one of the things I've seen internally is that the structure and team responsibility about recurring giving is one of the biggest barriers to understanding this. So it goes like this Well, I asked the question and when I do audits and assessments and growth maps for clients, I ask okay, who's responsible for recurring giving?
Speaker 3:And Megan, I would say more than half the time the answer is well, some version of we're all responsible for recurring giving or. Well, we have the direct mail team and they do this and we have the digital team and they do that Right. Or we have a entry level person who's been on the job for six months and we assign them to recurring giving. All of those answers are part of the problem. We assign them to recurring giving. All of those answers are part of the problem.
Speaker 3:And the reality is, if recurring giving is not a priority, then it's not going to get responsibility.
Speaker 3:But if everybody's responsible for recurring giving, then nobody's responsible for recurring giving.
Speaker 3:Yeah, and so it's just becomes this nagging frustration on the part of nonprofit leaders, of executive directors, presidents, VPs of development oh man, why isn't our monthly giving program? And there are a lot of reasons why your monthly giving program might not work, but one of those is just the lack of internal ownership and clarity and somebody who both has the responsibility for recurring giving but also then the authority and accountability to that. So it's one thing to be like Joe is responsible for recurring giving. It's like it's another thing to actually empower Joe with the budget, resources, manpower, coaching, whatever Joe needs to succeed, or then the accountability that that joe or jill is responsible for this and actually has goals and targets and we measure them and that kind of a thing. So that's just one. I don't want to make it sound like it's only that, but that is one of the key things, that that is a pivot that tends to be huge and helping move into actually creating a holistic program, and so on and so forth.
Speaker 2:That's interesting. So let's say, jill is responsible for that recurring giving program. Right, she's been tasked, we've taken the step, we've made somebody responsible for it responsible for it. Are there metrics around what is reasonable for the expectations of that role? By which I mean if you, for sake of round numbers, if you have 10,000 donors in your file, or a hundred thousand donors in your file, or whatever the case may be, is there? Are there metrics out? Yet have we started to look, look at like it would be reasonable or the a good goal would be x percent of the?
Speaker 2:donor file revenue yeah, how do we start to track? And you know, if we're going to make somebody responsible for it, then how do we make sure that they're doing the job like? What does success look like? Or how do we measure that at this point?
Speaker 3:yeah, a couple thoughts. I think number one is to understand where you are today in terms of your metrics, and so there's a couple of numbers. I go through 12 core metrics in the book, but just a couple. Number one how many and how much? So like, how many recurring donors do you have and how much are they giving on an annualized basis? So basically, in subscription parlance, what's your monthly recurring revenue, your MRR or your ARR, which is another, by the way, lesson we can learn from the subscription businesses? They live and die by a couple key metrics, including MRR and ARR, monthly recurring revenue and annual recurring revenue. As an aside, one of the other metrics they live and die by is churn, which how many of those monthly donors are dropping and how much revenue is dropping on any given month. Nonprofit industry does not use churn, but I think it should.
Speaker 3:But back to your original question. So you need to understand where you are. And then there's no hard and fast rule on when you should assign somebody. I would argue you should always assign somebody to recurring giving. The question is whether or not it's their only job or part of their responsibilities. Sometimes I have a client right now that has 99 recurring donors. The executive director is effectively in charge of recurring giving and that's fine and that's appropriate and honestly that's, I think, really smart, because it's not just a resourcing challenge, but it means the executive director is actually in their have somebody responsible for recurring giving, but it's not even that person's fault.
Speaker 2:Multiple somebodies at that point I would hope.
Speaker 3:It is. But even in that case, in that particular instance, it's not their full-time job Now.
Speaker 3:I would argue it should be more of their current job, but the bottom line is they have somebody that's responsible, accountable and has agency in terms. There is a something about organizations that put an inordinate amount of F responsibility like they invest essentially ahead of growth, to say this is important to us, and so I write some stories about some organizations that our listeners will have certainly heard of World Vision, charity Water, to name two, that arguably have had a very lopsided, almost myopic focus on recurring giving but that has ultimately completely bared fruit. To the tune of one of those organizations is more than a billion dollars, right, and so I'd take some, some lopsided focus there, but they invested ahead of growth.
Speaker 2:Yeah, it did not and maybe it should have, but it did not occur to me. And it did not and maybe it should have, but it did not occur to me, as we've had this conversation about sustainable giving and subscription model for how long now? It never occurred to me to think about world like. I have had the same world vision child on my refrigerator for the last eight years and it never occurred to me to think about the fact that that's what that model is. So I'm feeling a little foolish for not being like it's interesting. I've never thought about it in those terms, even though I've been participating in it.
Speaker 3:Yeah, well, and you start to do that math. Yeah, you know, eight years times 40 bucks a year times 12. I'm at 13 years, by the way, with our oldest, because we, with each of our children, we sponsored a child. That's like $6,000. Yeah, like, I'm basically a mid-level or major donor, depending on your definition, to those organizations. Well, I wouldn't give a $6,000 check Exactly, but, sure enough, donors become that value.
Speaker 3:And, by the way, this is back to the lessons we can learn from the subscription economy. Subscription businesses know they own, they live and die on what is happening with the retention of their subscribers, so they can't just trick you into this is the bad rap that some subscription businesses have caused is they try to trick you into a subscription and then, okay, maybe you stay for 60 days or 90 days because they make it really hard to get out, which, as an aside, there is legislation right now about actually making that easier. But the reality is the businesses that succeed and actually create positive cash flow and revenue and grow and accomplish their mission. They realize that the vast majority of the value for their customers comes from keeping them. The average donor, monthly recurring donor to an organization 97% of the value of that donor is in after the first gift. So if you thought about it that way, if 97% of the value of this donor, of this World Vision Child Sponsor, is post-first gift, how does that make you think differently about how you treat them, how you cultivate them, how you onboard them, how you upgrade them?
Speaker 3:And, candidly, I had a client the other day that got. They did their very first effort at like an open house and offered people the opportunity to become recurring donors. We worked on the messaging and everything. They had a handful of donors sign up and they were like. There was almost this question of like. Is that good? Like, should it be a big quantity number? And I'm like well, number one.
Speaker 2:this is the first time you've ever talked about this, and he is good.
Speaker 3:And two was that an event that was not a fundraising event, so, but that organization in that day, in that one day event, ended up raising $10,000 in long-term value from their donors. And so when they realized that maybe the quantity of donors was not huge, but they had just basically, in one day, generated $10,000 of value, they were like, oh okay, again, 97% of the value of your recurring donors comes in after the first gift.
Speaker 2:Interesting. This is all so good. Okay, so we are just days away from the book being available. So close. We could tell people to pre-order, but at this point you may as well just order, Right? But what's? Where do we go to find more information about the book?
Speaker 3:Yeah, so the book is the Rise of Sustainable Giving, and so the URL is just sustainablegivingorg and that'll get you to the landing page. I actually didn't mention it before, but we've got a couple of resources for folks that they can grab. One is a blueprint to growing a thriving sustainer program. So it's take some of the elements of the book and condenses that down into an easy seven-step guide. Well, I should say simple seven-step guide. Yes, if only it was easy, right, but that's one. And then we also have a sustainable giving assessment for people to do, a sort of a self-guided assessment of how they're doing, where they need to focus, and that kind of stuff. So my goal is to help the whole philanthropic sector move forward, and so this message is super important, but-.
Speaker 2:It's just a tiny goal. No, it's nothing major.
Speaker 3:Just a little thing, easy, but the message is important. But also I'm so motivated to help nonprofit leaders actually do something about it. You know that's what they call junk learning. I don't know if you've heard of this term where it's like, oh yeah, now I know a thing. It's like, oh yeah, now I know a thing. It's like what's the? Is the abc or nbc, the more you know you know it's like no, let's do something with that.
Speaker 3:Let's do yes and that's what the that's candidly what the book's about okay, perfect, so they can order straight from your website yep amazon you can order direct. But but the traditional places are also available which is fine by me.
Speaker 2:That's so great. Congratulations. I'm so excited for you that the day is finally here, thank you. It's been a long time coming, and I think this is going to have a huge impact on the sector and on nonprofit leaders across the board. So I am excited for you, a friend. I can't wait for everybody to dig into this. Final thoughts before we go. One one tiny last question, now that you have done it you've written the book, you've got it, it's going would you do another one?
Speaker 3:Ooh, yes, I there was. Back to the marathon metaphor. I ran one marathon in my life and the journey was basically first couple of miles this is incredible. Middle part this is fine. First couple of miles this is incredible Middle part. This is fine, Uh mile 21 was like I am never doing this again. What is this about?
Speaker 3:And thankfully I'm on the other side of that, so I'm on the like that last stretch when you're like all the people are cheering and you're almost like this is actually pretty cool, so I don't know how quickly another one would happen and, candidly, I'm still on, as I believe every author should say, like I am still in a learning mode, like I'm still learning things. That was one of the things that freaked me out about writing a book in the first place is like what if I learn things that change what I think after I write the book and it turns out that's like how life is.
Speaker 2:Yes, or at least how it should be.
Speaker 3:You don't want to stay stuck how life is, and at least how it should be. You don't want to stay stuck, but I am confident the principles in the book are much more timeless and timely, but yeah.
Speaker 2:Excellent. Well, I can't wait for everybody to dig into it. Dave, thank you so much for joining us today. Glad to have you on here, excited for the next chapter of your journey here as the book comes out. Again, my guest has been Dave Raley, who's the founder of Imago Consulting and the new author of the Rise of Sustainable Giving. Check it out, go ahead and order yours today. We can't wait to read it. Thanks for joining me.