This article was originally published in my Digital Tip-A-Month Newsletter. Sign up to get more tips like this in your inbox once a month.
Recently, I’ve been thinking a lot about recurring giving and payment processing for very personal reasons: my credit card got compromised last month, which is one of those things that seems like it should be a big deal, but in our age of data breaches has become a routine annoyance. Whenever I need to update my credit card, I watch with professional interest to see what organizations do about my recurring donations.
How failing credit card payments get handled
This time around, I was pleasantly surprised: the majority of my monthly donations (though let’s be honest, this is not a huge sample size) kept going without a hitch. My account got updated through some arcane exchange of information between the credit card company and the payment processor, and I got charged as usual. (Nonprofits actually did better at this than most of the for-profit companies where I have recurring payments set up.)
This is fantastic! Recurring donations are an amazing revenue source, and since failing credit cards are one of the biggest reason recurring donors stop donating, it’s nice to see how systems for updating card numbers have come a long way.
One organization sent me an email with instructions to update my payment info, and did a good job with it: they reminded me of what my donation is accomplishing and gave me three straightforward options to start donating again. It’d have been nice if they included the amount I’ve been giving, but overall, it was clear and to the point:
One organization hasn’t charged my card in two months, and hasn’t contacted me in any way. That’s a great way to lose monthly donors who might otherwise be happy to keep donating.
Three steps to keep your recurring donors when their payments fail
Managing donor retention, especially for recurring donors, can be super time-consuming to do well. It involves reaching out to all your donors with failing payments and individually getting them back on board. But by automating a few processes, you can retain a lot more of your recurring donors.
Depending on the capabilities of your donation system, here are three things to explore:
- Make sure you’re sending notifications when payments fail. If you take recurring donations, you probably have options to send reminders or notifications based on different failure states. Make sure you’ve automated at least one and preferably a short series of reminder emails. Once you set them up, they’ll do all the work for you.
- Make your notifications the best they can be. Take a look at the reminders you’re currently sending and take them up a notch. Getting a recurring donor back onto your file should be the easiest ask you’ll ever make, but these are also your most valuable donors, and you should be treating them with kindness and gratitude. A strong notification for failed payments should:
- Thank them warmly for their past support.
- Remind them about the important work their donation has made possible.
- Don’t blame them for the failed payment, but make clear that you need their help to fix it.
- Tell them exactly how to fix the issue, and make it as easy as possible. Often that means going back to your website and starting a new monthly gift. If you can give them a couple options, that’s good too.
- Give them someone to contact in case they have questions.
- Invest in a credit card updating service. This one depends on your payment processing company. The offerings vary a lot in their features and costs, but if your processer offers it and you have enough monthly donors to justify it, adding on services to update expiration dates and/or card numbers will usually pay for itself in short order.
Monthly donors are an increasingly crucial part of nonprofit fundraising. Monthly giving now makes up 16% of an organization’s online giving, on average, and over 20% in several sectors. If you’re putting work into recruiting monthly donors, don’t lose them just because their credit card expires. Make sure you’re doing everything you can to keep them around.