Recurring Giving Is Growing, But Payments Are Still the Weak Link

tessera perspective

Recurring giving has become one of the most powerful forces in modern fundraising. Monthly programs provide stability, predictability, and donor lifetime value that one-time gifts rarely achieve.

The numbers underline the trend. In 2023, 28 percent of online donation revenue came from monthly giving(Blackbaud Institute, Charitable Giving Report). The average monthly donation is $25, and recurring donors are retained at rates close to 90 percent, compared with 46 percent for one-time donors (Bloomerang Donor Retention Study).

This shift has transformed the revenue base of nonprofits. It also exposes a vulnerability that has not been fully addressed. Recurring giving is only as strong as the payment system behind it.

The Fragility of Card-Based Recurring Gifts

Most recurring programs are still card-based. Studies show that 85 percent or more of monthly gifts are made with credit or debit cards (Network for Good benchmark data). Cards offer convenience to donors, but they are inherently unstable.

Every month, 10 to 15 percent of recurring card payments fail. The reasons are mundane but costly: expired cards, closed accounts, insufficient funds. Unlike a streaming service subscription, many donors do not update their details when a payment fails. A failed transaction often means the end of the donor relationship.

Sector-wide, nonprofits operate three to five percentage points below commercial authorization benchmarks (Visa and Mastercard issuer data). That gap represents millions in lost donations every year. On a base of $65 to $70 billion in processed giving, even a one percent lift in approvals could reclaim hundreds of millions.

Why Nonprofits Fall Behind

Large commercial merchants devote significant resources to optimizing payment acceptance. They invest in tokenization, account updater services, and sophisticated retry strategies calibrated to issuer patterns.

Most nonprofits do not. Payment oversight often sits with finance teams focused on reconciliation rather than optimization. Donor databases and CRM systems are rarely integrated with payments in a way that allows lifecycle management.

Nonprofits routinely operate several percentage points below the approval rates of equivalent commercial transaction volumes. This is not because donors are riskier, it is because the payments stack is not optimized.

Donor Expectations Are Rising

As recurring giving becomes mainstream, donors expect the same seamless experience they get with commercial subscriptions. They assume that a monthly gift will simply continue. When it fails, many do not notice until months later, if at all. Others are discouraged from re-enrolling, interpreting the failure as friction in their relationship with the cause.

Generational shifts will intensify this pressure since younger donors are digital-first. They are used to card-on-file models that work invisibly in the background.

The Scale of the Opportunity

On the current base of $65 to $70 billion in processed nonprofit donations, recurring giving represents more than a quarter of online revenue. That is billions of dollars every year subject to the fragility of card rails.

If recurring failure rates could be reduced even modestly, the recovery would be significant. A three-point lift in authorization rates would reclaim close to $2 billion in donor contributions over a five-year horizon.

Unlike fundraising growth, which depends on acquisition, this is recoverable funds that donors have already committed.

The Weak Link

Recurring giving has matured from experimental program to core fundraising channel. It now anchors the financial stability of tens of thousands of nonprofits.

But the infrastructure carrying these contributions has not kept pace and failure rates remain high. Authorization gaps remain uncorrected. Nonprofits continue to lose millions of dollars each month to preventable system errors.

The weak link in recurring giving is not donor intent, It is the payment system itself.

Sources
Giving USA 2024: Annual Report on Philanthropy
Blackbaud Institute: Charitable Giving Report 2023
Bloomerang: Donor Retention and Loyalty Benchmark Report
Fundraising Effectiveness Project 2023 Report
Network for Good: recurring giving platform data