A Donor Math Problem: How to Grow Donor Lifetime Value Using Blackbaud Raiser’s Edge NXT®

I have a confession to make: I love the back-to-school season and math word problems with the pictogram illustrations. A brand new sharpened yellow No. 2 pencil and some fresh scratch paper still makes my day!

Calculating Donor Lifetime Value has a lot in common with these word problems I love. Let’s walk through this really useful exercise together:

• The setup: In January, Tommy pledged $200 to your annual fund and committed to send the funds before the end of the year. At the same time, Susie commits to a recurring gift of $25 monthly.

• Your challenge: Assume neither Tommy nor Susie makes an additional gift beyond the one-time pledge and monthly sustainer gifts. In December, how much will your organization have received from Tommy? From Susie?

• The answer: In December, your organization will have received $200 from Tommy and $300 from Susie.

The takeaway: Don’t be fooled by the size of the gift. Susie’s seemingly smaller monthly gift can lead to a greater lifetime value for her as a donor. As a functional expert at Blackbaud, I've seen countless <$1,000 pledges—paid and unpaid—in hundreds of databases. Pledges, with the pledge reminders and processing effort often required to collect on them, can be administratively costly and time consuming. Nobody's anti-pledge here, but I would love more donors like Susie in my revenue pyramid, wouldn't you?

Leaning into this little lesson on potential lifetime value (and level of effort), with your team investing some energy into automation and stewardship, imagine if Susie were to give $25 a month for two years (or more). Your organization would receive $600 (24 months x $25) in just two years! That's $200 more than you would receive from Tommy if he pledged the exact same amount two years in a row. Research suggests that specific segments of the population are more likely to give on a recurring basis.

How You Can Start Building Lifetime Value Today

Let’s sharpen our pencils and take some notes on ways Raiser’s Edge NXT and Blackbaud Merchant Services can help your organization build more loyal donors like Susie and benefit from this surprising lifetime value equation for recurring giving:

1. Begin collecting automated recurring gifts with Raiser’s Edge NXT donation forms. Are you still manually processing recurring gift payments in the database view? The time may be right to switch to web view donation forms to build a more automated sustainer program, saving your team time.

• For a recurring gift given via a web view donation form, all subsequent recurring gift payments (or Recurring Gift Pay-Cash in database view) are automatically charged when they are due, after the recurring gift has been approved.

• As subsequent recurring gift payments are on the due date, a new gift batch is created in gift management in the web view.

2. Build a strategic stewardship plan for recurring donors.

• Start by using the gift receipting option for recurring gifts on the donation form. Once Susie's recurring gift is approved, she will receive the customized e-receipt designated on the donation form.

• Susie's name might not be engraved on your donor wall but think of some cost-effective ways to thank her. Use workflow designer to automate quarterly actions or special emails for recurring donors.

• If you need ideas on how to say thank you, enroll in Fundraising: Stewarding Sustaining Givers / Organizational Best Practices from Blackbaud University.

3. Turn on the Blackbaud pays, recurring gift upsell, and first payment processes today options on your donation form.

• With Blackbaud pays (also known as Complete Cover), Blackbaud pays the processing fee on one-time and recurring gifts made via credit card (or US direct debit where available) up to $3,000. This means 100% of Susie's recurring gift payments go right into your organization's piggy bank.

• The recurring gift upsell feature on the Standard donation form displays a pop-up, gently nudging one-time donors to consider giving $35 a month versus a one-time donation of $100.

• Then, toggle on the first payment processes today radio button. Why wait a whole month or until next quarter? Start processing those gifts today!

4. Fine-tune your recurring gifts and use Portal features to save your team even more time.

• In Raiser’s Edge NXT, you can designate the number of retries for a recurring gift payment transaction.

• Minimize disruptions to your sustainer revenue flow with the Credit Card Updater service, included with Blackbaud Merchant Services in the United States and Canada. This service automatically updates credit card numbers when available for cards that expire or get replaced by the card holder.

• Spending some preparation time beforehand to create operational workflows for failed payments and tracking changes weekly or daily can also give you some time back. Blackbaud Merchant Services and Raiser's Edge NXT can streamline your reconciliation with reliable disbursement schedules and reporting.

• Invite donors with automated recurring gifts to your organization's donor portal. Donors can see their giving history, hold/skip payments, update payment methods, and adjust the frequency or amount of the recurring gift.

5. Promote your recurring giving option. I've seen organizations add a “Give Monthly” button in their Raiser’s Edge NXT emails, which takes donors directly to a Standard donation form with only recurring giving options. Or they use the QR Code feature to create "Give Monthly" signage in and around buildings or to display in presentations and slideshows.

6. Save even more time. Did you know that you can use AI acknowledgments (available now in the US, globally within the next few weeks) or an acknowledgment letter application from the Blackbaud Marketplace to send a customized email with a link to the portal where doors can manage their automated recurring gift?
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Just five donors like Susie can yield $1,500 a year. This word problem is an easy one! Definitely, let’s keep the pledges coming, but also be strategic about expanding donor lifetime value by capturing new recurring donations.

Raiser’s Edge NXT and Blackbaud Merchant Services can help your organization secure, steward, and manage more recurring donors. So, what's your team waiting for? Start revamping your recurring giving plan and drop your questions for me in the comments below!