Increase Donations and Donor Loyalty with Pledges

by Sasha Daucus

When BRING Recycling began their capital campaign in 2002, it was a big jump for them but as of this January they have succeeded in raising over a million dollars, which completes the first phase of their campaign.

Kara Brinkman, Adminstrative Assistant at BRING Recycling and a FundRaiser Select user, says "The capital campaign was a major change in mind set for our organization. We started out very grassroots in 1971 as a recycling center. Raising money and courting donors didn't come naturally to us, but we've done well. The community here in Eugene has been really supportive."

Pledges have been key to their capital campaign strategy. "We have pledges ranging from $40 to $40,000. A lot of people are taking advantage of the pledge option," says Brinkman.

What and Why of Pledges

A pledge is a promise to pay a certain amount of money over time. For instance, a donor might pledge to pay $300 over a one year period, making a donation of $25 every month. Pledges are effective at increasing the amount a donor may give and at increasing the bond between donors and the organization.

Dinsmore Fulton, Development Director of AIDS/HIV Service Group and a FundRaiser Professional users, says pledges "definitely and absolutely" increase overall income. "People think about exactly what is in their checkbook at that moment. They can't give more money in one chunk, but what they can do with the pledge concept is give more quarterly or monthly." In addition, "when someone sends us a gift, even if it is only $10 or $15, that donor becomes more engaged."

Kim Klein, fundraising trainer and consultant, says that donors who pledge their gifts tend to contribute two to three times as much as others. This is the reason that pledges are used so frequently in capital campaigns. When donors give more, you are able to continue with your regular programs, supported by your annual fund, and make progress on the special campaign. It is important not to sacrifice annual funds to a capital campaign.

Pledge Cycle

Most pledges follow a typical cycle. First, the donor makes a pledge. That pledge usually includes a commitment to pay a specific amount of money, at regular intervals, and within a specified period of time, ranging from a few months to several years.

This information is entered into some kind of tracking system, such as donor management software.

Once the pledge is made, the regular payment cycle begins. A donor may authorize automatic payments through a credit card or from a bank account. If, however, the payment is not automatic, the donors need to remember-- or be reminded -- to pay.

Letters

Three types of letters may be used with pledges: thank you letters; reminder letters; and overdue letters.

Thank you letters are usually sent when the pledge is first received and again once the total pledge is paid off. In order to keep the work associated with pledges more manageable, they are not sent every time a payment is made.

If a donor forgets to send their payment, the organization needs to decide how to handle this. Many organizations use reminder and/or overdue letters.

Reminder letters are routinely sent to donors paying on schedules other than monthly, such as quarterly or annually. To keep pledge programs as cost effective as possible, monthly payers usually don't receive reminder letters unless there is a specific need. Says Gidget Mosley, of the Oklahoma Lupus Association and a FundRaiser Select user, "if they miss a payment I ask if they want to be sent a reminder."

Overdue letters are sent when one or more pledge payments have been missed.

BRING Recycling uses reminder and overdue letters when needed to keep donors informed and understanding the importance of their gift. Says Brinkman, "We update all of our letters every other month or so." They include "progress on the campaign and updates on the new facility, which is important to keep donors feeling involved. We use the overdue letter as another way to remind them that they want to help us out. They have the same content as the reminder letters, and follow a general format. In every letter we say, "this is what we are doing, this is how we are progressing, and oh, by the way, (reminder or overdue)."

Mosley follows a similar pattern. "We change our reminder letter from time to time, often enough to reflect what we are doing, so they can see how important their pledge is to us. We say, ‘your gift is important to us, this is what your gift has done and what we are looking at in the future.' "

Overdue Pledges

Brinkman and Mosley agree that they don't expect 100% compliance with pledges, even in response to the reminders and overdue letters. Says Mosley," It's a mixed bag. There are always some who don't realize that they pledged. In that case, you say, ‘I guess I just misread the pledge card.' "

Says Fulton about overdue pledges, "I've seen some that are huge and that are way overdue. Maybe someone has lost track or had some kind of financial reversal." She recommends, "write or call or have someone who knows them well call. Ask if they would like to restructure their pledge. You say they've been so generous and you want them to feel comfortable." In addition, "you also ought to figure that 10 to 20% of your pledges aren't going to happen, because that's the way it is. Just know that there's going to be some defaults and try to budget that figure in." Pledge projection reports can really help to identify the projected income and estimate what can actually be expected.

The Hardest Thing About Pledges...

Pledge tracking is filled with details. Even if all pledges are relatively similar, for instance monthly payments of $50, there will always be late payments, missed payments, or payments that are larger or smaller than expected. Keeping track of who owes what and when and following up in a way that will encourage payment can quickly turn into a mountain of details.

For Brinkman, "the hardest thing was trying to get a handle on tracking the reminders." She got it under control with automatic reminders to herself set up on her computer. "I use the tickler system a lot, both within FundRaiser and on my own calendar set up. They give me weekly, monthly, and quarterly reminders to check if there are pledges coming due." The tickler notices make it "really easy." In FundRaiser, she can automatically link a particular reminder letter to a donor. Then, she comments, "I go in and say 'print reminder' and out goes the reminder."

Mapping out payment schedules is another thing that can be difficult. It is one of the biggest reasons to get software to help. For Mosley, being able to map out the payment schedule has been easy with FundRaiser.

For More Than Just Capital Campaigns

Annual Giving

In addition to capital campaigns, pledges are used for other kinds of giving. Oklahoma Lupus Association uses pledges in their annual fund drive. Anyone who donates or raises $1000 is named a Butterfly of Hope. Says Mosley, "we do an annual fundraising letter for Butterflies of Hope. It goes out to previous donors and members. Board members also go to people and ask them to donate." A catchy name like ‘Butterflies of Hope' emphasizes the emotional connection between donors and the organization and is an important component for marketing a pledge program. It gives the program a distinct identity and makes pledgers feel special.

Monthly Recurring Giving

Another exciting option is monthly recurring payments with no specified end date. For these, donors authorize automatic monthly deductions from their credit card or bank account.

The Oregon Center for Public Policy, a FundRaiser Professional user, has offered donors this option for two years. "We have almost two dozen people that give to us monthly. It’s a fundraising goal of ours to increase that number,"says Chuck Sheketoff, Executive Director. "We are averaging $25 a month from all our automatic withdrawal folks," which generates "an almost assured $5,000-plus" a year.

To make it work, Sheketoff uses a local nonprofit set up to be a third party processor for automatic withdrawals, for a "very modest fee. "The third party processor, "knows what schedule to withdraw on, so I don’t have to worry about that." The Center uses the FundRaiser pledge module to record the important donor details, and "track how much we brought in and how much we might likely bring in."

Recurring contributions are like super-charged pledges-- donors are likely to give more over time and continue giving to the organization longer. People can also relate to the monthly amount, says Sheketoff. Forty dollars a month is "less than a buck and a half a day. They can do that by giving up a latte." Or you can tell a friend, "It’s like going out to dinner once a month." For the Center it's $480 a year.

Unpaid RSVP's

Nicky Henderson, a FundRaiser Professional user, uses the pledges feature to track unpaid event reservations. "I use it as a kind of invoicing system," she says. She works for Congressman Devin Nunes. They hold frequent fundraising events. For each of these, "we send out an invitation with an RSVP." Sometimes people send their check with the RSVP and sometimes they don't. This could quickly become hard to track. For each event there may be 40 attendees who pay after the event. "If they haven't paid then we enter it as an unpaid pledge. If they send the check, we enter it as a gift, with the same motivation code."

Bookkeeping Keeps Things Working

Says Fulton, the most important advice for managing pledges is "Bookkeeping! You want it all written down. If it is a verbal pledge write down everything you remember and immediately send a confirming letter." Otherwise, information needed to collect the pledge "is going to drift off. Be very business like."

The reward will be more money and greater donor loyalty. That's hard to beat.

Sasha Daucus edits the FundRaiser Software newsletter, focusing on articles that help nonprofit organizations feel more comfortable with their donor management software tools. In her free time she enjoys cooking and listening to world music from the Mediterranean region.

Resources

Capital and Endowment Campaigns for Small Groups facilitated by Kim Klein

Feature: Overview of the Pledge Module

Article: The Pledge Cycle in FundRaiser by Larry Weaver

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