Is a one-off lump sum or a recurring donation more useful?

December 30, 2020 2:46 PM

I'd like my donations to be as useful as possible. Is a one-off lump-sum donation more useful than a recurring donation that adds up to the same amount, e.g. is it better to donate $240 today, or $20/month for a year? Presumably the recipient loses less of the one-off donation to processing charges and other per-transaction overhead, which seems good. But I would imagine the ability to more confidently project income that comes with recurring donations is also valuable. So, which kind of donation is better?

Please assume: the recipient is a charity or political campaign in the US, and the lump sum is on the order of hundreds of dollars (not thousands, not tens). And if the answer is "it depends", feel free to get in to the gory details!

posted by caek to Work & Money (17 answers total)

My understanding was that recurring donations were better* as the organization can better budget around it. I know that the mosques I used to go to would always try to prioritize monthly recurring donations.

*Obviously any donation is better than none though.
posted by any portmanteau in a storm at 2:50 PM on December 30, 2020 [6 favorites]

I think the reason they like recurring donations is just because it makes it more likely that they will get money from you next year too. I don’t see how it helps them much with budgeting, since you can cancel at any time. But inertia works in their favor once you start monthly automatic donations.
posted by jkent at 2:55 PM on December 30, 2020 [10 favorites]

I worked in grants, not individual donations, but I think my old coworkers who handled those donations would say they preferred recurring. Yes, people do sometimes cancel those recurring donations, but usually they don't, and they factor that possibility into their budget projections. But more to the point, if you donate once in December, they can't know in January that you'll make a new donation the next December, so they can't include it in their projection at all, except maybe as part of a broad estimate.

They also spent a LOT of man hours every November/December tracking down people who'd previously made end-of-year donations and soliciting a new gift. Snail mail, email, phone calls. Making a recurring gift saves them that work.
posted by showbiz_liz at 3:04 PM on December 30, 2020 [8 favorites]

Recurring donations help orgs when it comes to getting other types of funding from grants, awards, etc. It helps the org to show stability and a predictable budget, which are criteria that other funders look for.
posted by quince at 3:16 PM on December 30, 2020 [8 favorites]

In my canvassing days (political, 15 years ago) we always preferred recurring.
posted by (Over) Thinking at 3:36 PM on December 30, 2020 [2 favorites]

If you are only planning to donate for 1 year, then money now is worth marginally more than money later. Many of the advantages of recurring only apply if you intend to keep it going.
posted by Lanark at 3:44 PM on December 30, 2020 [8 favorites]

Besides the above reasons, recurring donations help orgs get through the leaner months--at my agency, we have a couple of high-profile events a year, plus the year-end donation push, but we need money all year round--recurring donations are a big part of that.
As far as processing fees, some platforms allow you to pay that, too--I just set up a recurring donation in someone's name and the payment is an additional $1/month to cover processing.
posted by assenav at 3:55 PM on December 30, 2020 [3 favorites]

my workplace matches charitable donations up to a certain dollar point per year, with certain other thresholds and requirements in place. It basically means that if my monthly donation will total X at the end of the year, and that meets the matching threshold, if I do it in a lump sum through the employee system i've contributed 2X to the org. So i've cancelled some monthly donations in order to double the money being contributed.
posted by th3ph17 at 4:36 PM on December 30, 2020 [1 favorite]

Excellent point about workplace donations and matching!

As one who processes donations and budgets for a non-profit, we nevertheless like monthly gifts more than yearly gifts for increased reliability for planning.

As a giver without an employer matching contribution, I prefer that an automatic mechanism send my monthly donation, so I don't forget it. The mechanism emails me, often stimulating me to encourage the recipient and participate in other ways that money cannot.

Donations incur various fees to giver and recipient. Details: • You can write a check and send it. You spend a little on replacement checks and postage. • Banks can mail a check automatically each month. This can cost the sender "nothing" apart from a minimum balance or cost some fixed amount per check. • My preference as a giver is ACH / direct deposit. This can be recurring or one shot. The recipient might arrange this on their website or by a paper form. This follows the route of a paper check without the exposure of mailing, and so is as secure as ye olde cheque. The service we use bills 25 cents (US) per transaction. If you send us $100 we get $99.75. If you send $500 we get $499.75. • The recipient's website may accept recurring and ad hoc donations via credit card. To the donor, this works like ACH and has the added security of credit cards and consolidates spending reports. The recipient pays steeper fees than ACH. With our service, each credit card transaction takes out 30 cents plus 2.3% of the amount. Thus if you send us $100 the fee is $2.60, and our bank receives $97.40.
posted by gregoreo at 4:52 PM on December 30, 2020 [4 favorites]

If you have specific community-related or small/local charities in mind, you might want to reach out to them and ask. The duration of the pandemic has been terrible for many organizations, and they'll be doubly grateful for being able to suggest the timing as well as receiving the support. For example, zoos, museums and cultural centers are experiencing acute emergencies in retaining staff and paying for maintenance because of their dropoff in ticket income. Perhaps obviously, food banks, shelters and local medical facilities could also use the help sooner rather than later. In contrast, political organizations may indeed benefit from recurring funds for the many good reasons listed above.

Thank you for giving!
posted by BlueBlueElectricBlue at 5:29 PM on December 30, 2020 [3 favorites]

For simplicity and to minimize transaction costs, I make annual contributions in December. I note the amounts/organizations and refer to last year's list when deciding on this year's donations.

It makes sense that having an overall stream makes budgeting easier, but a $240 annual donation will affect the planning of only the tiniest organizations. If your annual donation is, say, less than 1/1000 of their annual budget, I can't see how it would make any difference.

To basically eliminate their marketing costs, I request email solicitations only - no calls or snail mail. The only personalized solicitations I've received are from orgs that I gave 5 figure contributions to, and even those wouldn't take more than a couple of minutes of staff time. Again, this might be different for very small groups for which a few hundred dollars would make a difference.
posted by Mr.Know-it-some at 7:16 PM on December 30, 2020 [2 favorites]

Orgs usually prefer recurring, for the reasons other people have articulated here. And with most transaction processors, the fees are almost the same in both cases, since they are heavily percentage based.
posted by splitpeasoup at 7:35 PM on December 30, 2020

I ran a non-profit until about 3 months ago (new job, go me). Recurring is better (reasons above are accurate). The fees are a wash. Give monthly and increase each year by $5/month if you can.
posted by Toddles at 9:39 PM on December 30, 2020

I feel like almost no one read the numbers in the question. Orgs I work with definitely would prefer a lump donation now rather than the same amount doled out fractionally over several years. Any excess of what can be spent on program expenses doesn't get wasted as it can be rolled into the next year or used to advantageously time purchases. Planning accounts for a certain amount of one-time or irregular lump donations and yours would likely fit into that.
posted by michaelh at 12:22 AM on December 31, 2020 [6 favorites]

But they didn’t say “several years”?
posted by showbiz_liz at 6:48 AM on December 31, 2020 [1 favorite]

If you’re planning on donating this year only, make it a one time donation. If you’re planning on doing it every year then make it recurring.

Having the recurring donation might make them think you’re not going to cancel it at the end of the year. It will also keep you from forgetting to cancel it at the end of the year.
posted by cali59 at 9:52 AM on December 31, 2020 [1 favorite]

Sorry, embarrassing! The preference stands. One-time donations don't cause havoc.

Would additionally mention that if available, the annual option on a giving form is a good way to give the lump sum and provide that assurance that further giving is planned.
posted by michaelh at 6:17 PM on January 1, 2021 [1 favorite]