Recurring donations keep nonprofits running, but managing those payments takes time and care. Cards expire, payments fail, and donors drop off if you’re not paying attention. Complicated backend processes can create extra work for your team, which makes it more difficult to focus on keeping supporters invested and programs funded.

When they’re working well, recurring donations make it easy for donors to keep giving and stay connected to your mission. Successful recurring donation systems automate payment recovery, give donors a way to manage contributions, and use smart engagement tactics to keep people invested for the long haul. Below, we’ll explain the most common challenges with recurring donations and show you how to tackle them.

What’s in this article?

• Why are recurring donations important for nonprofits?
  
• How do recurring donation systems work?
  
• What are the challenges in managing recurring donations?
  
• How can nonprofits fine-tune recurring donation processes?
  

Why are recurring donations important for nonprofits?

In 2023, charitable donations by individuals dropped 2.4% in the US. Recurring contributions keep nonprofits afloat by offering financial stability, predictability, and room to grow. Here’s why they’re important:

• Reliable income: Recurring donations create a steady stream of funding, while one-time gifts can be unpredictable.

• Lower fundraising costs: Finding new donors is expensive. When people give regularly, nonprofits don’t have to spend as much time and money pursuing new contributions.

• Stronger donor relationships: Monthly donations create ongoing involvement and can make donors feel more connected to the mission. That kind of loyalty translates into greater long-term support.

• Long-term planning: When funding is predictable, nonprofits can make smarter decisions about programs, staffing, and growth without worrying about financial gaps.

• More donation value over time: People who give smaller amounts recurringly will often donate more overall than those who make one-time contributions.

• Convenience for donors: For many donors, it’s easier to commit to a small monthly gift than to make one larger payment once a year.

How do recurring donation systems work?

Recurring donation systems automate the process of collecting and managing ongoing contributions without requiring donors to take repeated action. Here’s how they work:

Donor sign-up

A donor opts into a recurring giving program through a nonprofit’s website, email campaign, or fundraising event. They select a donation amount, frequency (e.g., monthly, annually), and payment method (e.g., credit card, ACH transfer).

Some platforms let donors manage contributions through a personal account, where they can update payment details, change amounts, or cancel their contribution.

Payment processing

The nonprofit’s donation platform stores payment information and automatically processes transactions at the chosen interval. Many nonprofits use third-party payment processors to process payments and store payment data.

Recurring donation systems include dunning management—automated retries for failed payments and notifications prompting donors to update their details. Some platforms use AI-driven smart retries, which attempt payments at optimal times to increase success rates.

The system sends receipts or confirmation emails after each successful transaction.

Donor communication

Automated thank-you emails, impact updates, and exclusive donor content help maintain long-term relationships. Some nonprofits offer donor perks, such as exclusive newsletters or behind-the-scenes access, to strengthen commitment. Some organizations experiment with tiered giving levels, matching gifts, or “round-up” donation options (in which customers round up purchases to the nearest dollar for charity).

CRM and accounting

Recurring donations sync with nonprofit customer relationship management (CRM) platforms (e.g., Salesforce Nonprofit Cloud, Bloomerang, Blackbaud) to track donor history, segment supporters, and personalize outreach.

Accounting software integration ensures donations are properly categorized and reported, simplifying financial management and compliance.

Analytics and optimization

Nonprofits monitor metrics such as churn rate (donors who stop contributing), average monthly gift size, and lifetime donor value to refine their tactics.

A/B testing messaging, donation amounts, and engagement strategies can help improve conversion and retention.

What are the challenges in managing recurring donations?

Managing recurring donations can become complicated once you’re dealing with failed payments, donor drop-off, and messy data. Here are the biggest challenges nonprofits face and how they can overcome them:

Dealing with donor churn

Cards expire, get replaced, or hit their limits. Bank accounts change. Whatever the reason, involuntary churn leads to losing recurring donors.

Smart payment systems help by retrying failed transactions at the right times. Sending a heads-up before a card expires can also make a difference. Some platforms let donors update payment information via text to make it easier for them to keep giving.

Not keeping donors connected

People sign up with good intentions, but if they stop feeling connected to the cause, they might forget they signed up or cancel donations.

Regular updates that show real impact make a difference. A quick email with a success story or a behind-the-scenes video keeps people emotionally invested. Some nonprofits send small surprises—such as handwritten notes or exclusive content—to reinforce their appreciation.

Balancing flexibility and commitment

If it’s too easy to cancel a recurring donation, retention can suffer. But if it’s too difficult, donors can become frustrated and hold that against the organization.

A good approach is to give donors control via a self-service portal where they can adjust their donation amount, skip a month, or pause instead of canceling outright.

Accounting for processing fees

Small donations are great, but transaction fees can eat into them.

ACH payments typically cost less than credit card transactions, so encouraging this type of transfer helps. Some platforms let donors cover fees, which can add up to thousands in extra revenue over time.

Managing donor data

If donation records don’t sync correctly with a CRM platform or accounting software, it can create duplicate records, reporting problems, and unnecessary manual work.

The best systems integrate with donor management and financial tools to automatically update records without human intervention. Automating even basic tasks—such as tagging high-value recurring donors for a VIP experience—can help organizations stay organized.

Encouraging increased donations

Once a donor signs up, they might not increase their monthly donation unless they’re asked. But asking too often can turn people off.

Make these requests as natural as possible. For a donor who has been giving for a year, consider a message like, “You’ve already helped X number of families—bumping your gift by $5 a month could do even more.” Test messages to find the right balance.

Staying compliant

Managing recurring donations means dealing with tax laws, financial regulations, and data security requirements. Using a payment processor that handles compliance eliminates most of this burden for you. It’s also worth running occasional security audits to make sure donor data stays safe.

How can nonprofits fine-tune recurring donation processes?

Refining recurring donations means making the donation process easy, securing ongoing donor support, and minimizing the work on your end. Here’s how to get the most out of recurring donations if you’re using Stripe:

Make sign-up as simple as possible

• The more steps in your donation form, the more opportunities people have to drop off. Stick to the essentials: name, email, and payment info.

• Offer multiple payment options. Stripe makes it easy to accept credit/debit cards, ACH transfers, Apple Pay, and Google Pay, so donors can choose the method they prefer.

• Pre-set giving amounts help guide decisions. Most people pick a middle option if it’s clearly presented.

Push monthly giving over one-time donations

• The easiest way to grow recurring revenue is to make it the default. Instead of asking for a $100 one-time gift, frame it as “$10 a month keeps this work going.”

• Make monthly donors feel like insiders by sending them exclusive updates, early reports, or small perks.

• If you default to “monthly” on the donation page but keep a one-time option available, many people will stick with the default.

Minimize failed payments

• Stripe’s Smart Retries automatically reattempt failed payments at times when they’re most likely to go through.

• Set up automated emails for when a donor’s card is about to expire, with a direct link to update the payment details.

• Stripe lets donors update payment information through a self-service customer portal.

Keep donors interested to reduce cancellations

• If donors lose interest or don’t feel involved in the organization, they’re more likely to cancel. Keep them in the loop with impact stories, thank-you messages, and behind-the-scenes updates.

• A quick email such as “You’ve been giving for six months—here’s what you’ve helped accomplish” makes a big difference.

• A personal touch, such as a handwritten note or a short video message, can turn a casual donor into a long-term supporter.

Make it easy for donors to upgrade their gifts

• After a year, send a message like, “You’ve been making a difference for 12 months—would you consider increasing your gift by $5?” Some donors won’t mind the small bump.

• Set up one-click donation upgrades so donors can increase their giving without any hassle. Stripe makes this simple with saved payment methods.

• Some nonprofits use “tiers” where donors at higher levels get access to exclusive content or special updates.

Automate as much as possible

• Stripe integrates with donor management systems such as Salesforce, so make sure your data is syncing automatically. Eliminate as much manual tracking as possible.

• Use automation to segment donors based on their giving history, average gift size, or engagement level so you can send the right messages to the right people.

• Set up Dashboard reporting to track metrics, such as retention rates, average gift size, failed payments, and upgrades. If you’re not measuring it, you can’t improve.