I often hear people say that donations in the form of a monthly direct debit is more useful to charities than one-off donations, since it makes their cash inflow more predictable and easier to budget. Is this true, and if so, how much? If you run a non-profit, what percentage of a donation would you forfeit to have the donation come monthly, rather than yearly?

Context: I donate yearly, in November. I started doing this last year, when I tried (and failed) to get donation matching. This year, I failed again, and given the changes to donation matching terms, it seems unlikely I'll get donation matching again, so I'm considering switching to donation monthly.

New Answer
Ask Related Question
New Comment

2 Answers sorted by

I often hear people say that donations in the form of a monthly direct debit is more useful to charities than one-off donations, since it makes their cash inflow more predictable and easier to budget.

I am not sure how much it is 'really more useful' and how much it's entangled with the charities' belief that people who set up a regular donation will give more in total ... because they 'learn to give', because each individual donation seems less costly, because they forget to unsubscribe (intertia/inattention), because it gives them a regular good feeling, because it changes the anchor so that 'cancelling a regular donation' feels like betraying the charity. The conventional wisdom is "once people start regular donations they rarely cancel or change them."

But the causality is hard to determine here, as you can imagine (I could dig into the literature).

Anyways, it might be that charities say 'please set up a regular donation because it helps our planning' because they feel less comfortable saying 'please set up a regular donation because we think it will convince you to give more in total.

For smaller donations regularity should probably be less important, in a planning sense. Still, I suspect that someone who sets up a regular donation or makes repeated donation is giving a more reliable signal that they will donate more in the future (as Peter suggests).

On the other hand, if you asked a charity 'should I give $10k now or $500 a month for the next 2 years', they may very likely choose the former.

I run a large-ish non-profit and do fundraising forecasting. It's definitely helpful to have a credible commitment for future donating since we can make plans based on that (or some credibility-discounted version of that), whereas otherwise we just make plans based on the initial cash.

I think monthly donations help establish credibility much faster (because over say six months you can see that the donation occurred six times whereas the yearly donation only occurs once) but you could also say something explicit to the non-profit like "I'm going to give you $X now and $X next year".

The main thing though is just being honest about your intentions. If you are going to rethink your donations every year or every month (very reasonable to do) you definitely don't want the non-profit thinking you'd keep donating regularly.

~

If you run a non-profit, what percentage of a donation would you forfeit to have the donation come monthly, rather than yearly?

I'm not sure I'd sacrifice anything for this since the cash is the same either way. It's just you leaving value on the table if you are going to donate in a recurring way but don't let anyone know.