Most of us would be familiar with the annual letter from our health insurance company informing us that this year’s premium will be automatically increased by a small amount. However, would you employ the same tactic to increase donations? David Pettigrew explains the process and the issues.
Most of us would be familiar with the annual letter from our health insurance company informing us that this year’s premium will be automatically increased by a small amount. However, would you employ the same tactic to increase donations? David Pettigrew explains the process and the issues.
How strong is the relationship between you and your donors? If you went out tomorrow and informed them that in two months time their monthly donation would increase by 12%, what would their reaction be? If you know your donors well, if you know how connected to you they are and if you know how well they understand what you do, you should hopefully have the answer to that question.
Many nonprofits are now operating regular giving programs which are working very well. But how can the value of these programs be maximised and revenue growth be achieved year in year out?
Traditionally regular givers have been upgraded to higher donation levels using phone and mail. An upgrade call will ask the donor to make a voluntary increase on their current monthly donation. Upgrade programs like these can be quite successful and draw a response rate of 25-30%.
However, they have their limitations, as only a percentage of donors will increase their monthly pledge amount, leaving many more still giving the original pledge amount.
An alternative method of increasing the number of donors who upgrade is through an auto upgrade program, which simply automatically increases all pledges on your database, and can result in more than 90% of donors making the upgrade.
Anecdotally it seems only a handful of nonprofits have an auto upgrade program. The practice began in the UK about five to six years ago, and in Australia, ChildFund plans to run an auto upgrade every two years.
The benefit of an auto upgrade is obvious – a large net increase in revenue, the opportunity to communicate with donors and, most importantly, more beneficiaries helped.
When ChildFund Australia last undertook an auto upgrade in June 2006, we informed regular givers that their pledge would automatically increase by 12%. The net income from the exercise was in excess of $1.1 million (over a year). The mailing cost us no more than $15,000.
Is there a downside? Of course. Some donors will cancel their support because they don’t want to increase their contribution and some feel it is inappropriate to run an auto upgrade. The numbers that do this, however, are surprisingly small – 1% on our last upgrade – and this is where I come back to my original statement. If you have done the groundwork with your communications program, and if your mail piece for the upgrade is strong, then you will carry your donors with you.
Our donors understand what we do, and they also understand that the cost of delivering programs and supporting them from Australia increases over time. By being honest about your needs, by explaining fully why you are doing this, you can bring your donors with you. The increased amount needs to be reflective of economic realities and the particular needs of your organisation. So, if you’ve not changed the donation level of your regular giving program for five years, a 10% increase is probably quite reasonable.
The upgrade should also include an opt-out option for the donor. At ChildFund Australia, we asked our supporters to contact us by a certain date if the increase did not suit their circumstances.
The one thing I would encourage you to do is to invite your donors to contact you to discuss the upgrade. Many will call, but not to complain. They want some reassurance and they need the opportunity to talk to you – it’s another donor care call, an opportunity to talk to your supporters.
Will an auto upgrade work for any nonprofit? There is no reason why not, but the best way to be sure is to test it first with a representative sample of your donor base. A good regular giving program will already have the core donor care strategies in place, so it is quite easy to test and roll out an auto upgrade program.
Auto Upgrade – Key Stages
1. Set the date for the donation increase
2. Set the date for the mailing
3. Set the date for donors to opt out by
4. Segment your database, eg, by giving level
5. Prepare your communications piece
6. Lodge the mailing
7. Field any calls from donors
8. Upgrade the donation at the next regular giving transaction
