Benevolence, goodwill, and philanthropy are honorable principles to adhere to and abide by, but when the bills start piling up, a charity or non-profit organization will not be exempted from paying despite its lofty ideals and goals. inherent. To ensure that all expenses are paid, to guarantee that their programs and services will remain in operation indefinitely, any non-profit and/or charitable group must consistently raise income. In fact, fundraising is so important that organizations often hire professional fundraising firms to better determine how to continually fill their coffers.
In the post-9/11 United States, the task of obtaining financial support has become increasingly difficult. As our economy continues to change, as many of our citizens continue to experience personal money problems, the act of giving generosity itself is threatened.
Also, when tragedy strikes (eg, an act of terrorism on 9/11, Hurricane Katrina, etc.), much of the charity shifts to “ground zero organizations” or others that provide direct aid; other charities and non-profits are affected and receive less support. Resources have never been distributed equitably, and it behooves any agency to stand out as perhaps the “most worthy,” at least as the preferred charity in a donor’s mind. (It is a sad reality that organizations that rely on public donations compete with each other for scarce resources.)
Consequently, charities and non-profit organizations must have business savvy to maximize funds. Marketing to increase revenue should be pursued, as potential donors can learn about the group through a variety of sources: the media, telemarketing, special events, and direct mail can be coordinated and used to “get the word out.” “. From these efforts, people pledge and give financial assistance, building a donor base.
However, it is interesting to note that most donors make a one-time payment, and that generally represents a lifetime contribution. Some organizations don’t even call donors back at a later time to ask for more money, eliminating good prospects and additional income. In fact, it is imperative that an organization establish a regular dialogue with former donors. However, what is not apparent and is regularly practiced is designing a pledge schedule where people can contribute on a consistent basis (eg, every month).
Recurring donations can be received with a pre-authorized payment, as individuals authorize the organization to deduct money from their bank accounts at certain time intervals. For example, a person can specify that he wants to give $100 each month, to be automatically deducted. Funds will be transferred from the donor’s account to the organization’s account, usually via electronic funds transfer. In the above example, the organization will have raised $1,200 by the end of the year.
The monthly commitment program (time frame can be modified) offers a multitude of advantages. The following list provides eight great reasons why a charity and/or non-profit organization should implement it as soon as possible:
1. Explosive Income Potential – Just ask and you may receive. Donors may very well contribute if a direct request is made. Instead of only receiving a single payment, an organization can, for example, receive 12 payments per year. Also, donors are likely to give more if their total gift can be spread out over the course of the year.
2. Convenience: New donors are attracted to the ease of giving. They don’t have to sign and return a check, just authorize automatic deductions.
3. Better relationship: the connection between the organization and the donor grows closer over time. Donors feel they have an even greater “vestment” in the well-being of the organization and are more likely to volunteer their time to participate in special events and other fundraising activities.
4. Increases retention rate: Donors are more likely to stay with the program. Long-term value studies reveal that those with preauthorized payments will contribute to the organization in the long run, many until their death. One person contributing $100 a month for twenty years can result in $24,000 for the non-profit and/or charitable group!
5. Reliable source of income: The organization has guaranteed income every month, which can cover a variety of monthly expenses (eg, electricity bills, phone costs, etc.). The agency can budget its cash flow accordingly.
6. Savings: Administrative costs are drastically reduced as there is much less paperwork. One person at the agency can easily oversee and manage a recurring payment plan.
7. Claiming Part of Resources – An organization that wants to claim limited resources and financial reserves must ensure that people join their preauthorized payment plan, rather than a competitor’s. If donors participate in another agency’s recurring payment plan, they may not want or be able to join your program’s plan.
8. Simplicity: It’s very easy to set up a preauthorized plan agreement. A donor fills out a simple form stating that they authorize a transfer of money to an organization on a monthly basis. An electronic funds transfer is then made with the help of a payment processing company.
In light of the many advantages of a recurring payment plan, the operational question is not whether a charity or non-profit organization should adopt it, but “Why haven’t they until now?” Any organization that is in the business of fundraising (which applies to all charitable and non-profit groups) must avail itself of pre-authorized payments and commit to doing so with due diligence.
Copyright 2006 William Hamilton