Subscription Philanthropy 📈Three Types of Recurring Giving

I was privileged to give a talk in Orlando this week called “How the Subscription Economy is Transforming Ministry Models.” In it, I unpacked how various nonprofits are adopting subscription models and shared ways for attendees to implement them in their organizations. 

Above: Giving a talk this week on how the Subscription Economy is transforming fundraising and ministry models for nonprofits.

I’ve written about the Subscription Economy and recurring revenue in a recent Wave Report, so if you’re interested, you can review that. 

In this week’s report, I’ll share the three kinds of subscription giving models we’re seeing in the nonprofit space, including takeaways for each type of model and organization.

Three kinds of recurring giving

There are three kinds of monthly giving programs out there today. A key element of succeeding with building and growing a monthly giving program today starts with understanding which type of program you have, leveraging the unique strengths of that type of program, and mitigating the downsides (every model has its downsides). 

Let’s unpack the three types of sustainer programs and explore how to take advantage of subscription philanthropy regardless of your model.

One-to-One Sponsorship

This form of recurring giving has been around for thousands of years and is based on the donor’s gift supporting a specific recipient. In this setting, the donor generally has a relationship with the recipient, and a bond forms between the giver and the receiver, making this one of the stickiest and highest-value forms of sustainer giving.

Today, the most common forms of one-to-one giving in the United States are child sponsorship and staff or missionary support. In either case, the donor elects to give to support the organization through a specific individual. 

There may or may not be a personal relationship, and the giving often more than the individual, including broader programming for the nonprofit. But the donor is motivated to continue giving for an extended period because of the feeling of responsibility that comes with a one-to-one connection.

One-to-one sponsorship is one of the strongest forms of monthly giving, typically seeing the highest retention and long-term value. If you can create this kind of program, it is a game changer.

Barriers and Downsides to One-to-One Sponsorship

One-to-one sponsorship is not without its downsides. Donor loyalty is often more tied to the individual beneficiary than the organization or overall cause. If the beneficiary is no longer available to sponsor for any reason, it can be challenging to retain the donor.

The infrastructure required to build and maintain such a program can be daunting. Programs like this require a massive amount of logistics to provide updates from each beneficiary to each sponsor, among other administrative burdens. It can also be harder to control for quality, with so many distinct relationships to maintain. 

Most organizations that can offer one-to-one sponsorship like this find that the effort is well worth the reward, but there is no denying that the effort can be significant.

Even more importantly, the reality is that the vast majority of nonprofits are unable to create a one-to-one subscription-giving program. This is because either the organization’s program model is not conducive to connecting mass numbers of beneficiaries to donors, or privacy or other concerns prevent them from building such a program.

💡 Takeaway: If your organization has a model that is conducive to connecting donors directly or indirectly with individual beneficiaries, lean into that. If you don’t have a program, explore building one (let’s talk), or if you have one, consider how the subscription economy has changed donor expectations from the sponsorship experience (again, happy to talk!).

 One-to-one subscription giving is a powerful motivation for giving and an even better motivation for continuing to give. 

Let’s examine the next type of sustainer program, where the donor is the beneficiary, at least partially – membership.

Membership Giving

The second kind of recurring giving program, known broadly as membership, is marked primarily by the reality that the donor is a beneficiary of what the nonprofit does, at least partially. 

In these types of programs, the donor receives some sort of benefit, whether tangible or intangible. Examples of membership-style recurring giving programs include public television, zoos, museums, news, content, or training-based nonprofits. 

In all cases, recurring givers generally give, at least in part, because of what they receive. This is not to say they pay for services, though no doubt some donors feel that way. Mostly, donors give because of valuing continued access (“what’s in it for me”) and the desire to help provide access for others.

Barriers and Downsides to Membership Giving

There are a couple of downsides to membership giving. First, the more donors feel they are “paying” for services, the more they tend to think like consumers – and the more demanding and less sticky they can be. In other words, the more donors view their giving as an exchange of benefits, the more their giving starts to feel like a Netflix subscription and is subject to the question, “What value have I gotten lately from this subscription?”

There are also the overhead costs of creating and administrating benefits. If your nonprofit exists to do what you provide as benefits – such as news or training for example – that may not be a deterrent. After all, you would create the content regardless of whether donors “paid” for it. But the fact remains that creating and maintaining valuable benefits can be significant and costly to maintain. 

The last and most significant barrier, like the one-to-one sponsorship example above, the reality is that the vast majority of nonprofits are simply unable to create a membership-style recurring giving program. Donors may give to support beneficiaries, but donors are not beneficiaries themselves, and the nonprofit doesn’t have natural resources that would be directly beneficial to donors. 

💡 Takeaway: Membership monthly giving programs can create a robust and growing giving base. For the right kind of organization, they can accomplish both program goals (e.g., education, awareness, sales or attendance, etc.) and fundraising goals (revenue).

Like the one-to-one sponsorship model of recurring giving, if you can build a membership-style subscription-giving program, I would strongly consider doing it (again, let’s talk!). But they aren’t without their downsides, in overhead, sometimes lower retention rates, and expectations for services (i.e., donors with a consumer mindset).

But what about the rest of the nonprofit world?

What about the rest of us?

But what about the rest of the nonprofit population? What are they to do if they cannot create a one-to-one sponsorship or membership program? 

Of the 1.4 million nonprofits in the United States today, I estimate that 75% do not have the programming or infrastructure to build a sponsorship or membership offer. 

Thanks to the subscription economy, a third type of subscription giving program has emerged – benevolence.

Benevolence Subscription Giving

Historically, the vast majority of nonprofits have been unable to build a thriving, growing, substantial monthly giving program. 

Today, thanks to the subscription economy and donors’ increasing willingness to give monthly have led to the rise of this third type of subscription-giving program.

Benevolence sustainer programs are marked by several key things:

• The donor is not a beneficiary.

• Benefits are typically intangible and limited.

• A one-to-one relationship is not possible.

• Value proposition becomes paramount.

• Most dependent on donor motivation and insights.

Some example programs that I shared that fit into this category of non-one-to-one and non-membership include:

• Charity: Water – The Spring. Charity: Water’s monthly giving program is The Spring. Starting in 2016, the program has around 70,000 monthly donors committed to giving clean water.

• International Justice Mission – Freedom Partners. IJM’s Freedom Partners give monthly to fight human trafficking and injustice. 

• Mission Aviation Fellowship – Flight Crew. Flight Crew members help power the work of MAF to take the gospel to the ends of the earth. 

• St. Jude Children’s Research Hospital – Partners in Hope. Partners in Hope with St. Jude help spread hope. 

Conclusion: Subscription Philanthropy is here

Monthly recurring giving has been around for millennia, but thanks to the Subscription Economy, we are entering a new age of Subscription Philanthropy.

Nonprofits historically left on the sidelines can now get in the game and build a thriving, growing, and steady income stream. This is good news for donors and nonprofits alike.

Until next week… Surfs Up! 🌊

   - Dave

About the Author | Dave Raley

Consultant, speaker, and writer Dave Raley is the founder of Imago Consulting, a firm that helps non-profits and businesses create profitable growth through sustainable innovation. He’s the author of a weekly trendspotting report called The Wave Report, and the co-founder of the Purpose & Profit Podcast — a show about the ideas at the intersection of nonprofit causes and for-profit brands.

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