There are different types of donations you can receive from individuals. Distinguish which suits…
A membership scheme (or, in the case of schools, an alumni program) allows you to bring together all the people who are interested in what you do, while also providing an important fundraising backbone for your organisation. If you don’t feel ready for a fully fledged membership scheme, a friends-of program can do much the same job.
Membership, alumni and friends-of schemes can be invaluable in generating a constant stream of revenue, providing a little more income flow certainty.
Of course, you need your members’ enthusiasm more than you need their money, so it’s important to balance the need to draw funds from your members with the need to keep them happy.
Why set up a membership scheme?
There are two main reasons to set up a membership, alumni or friends-of scheme.
1. To generate a recurring and (hopefully) ever-growing revenue stream for your group.
One major advantage of this source of money, unlike one-off funding sources like grants, is that it can be used on an unrestricted basis for general operating funds rather than for individual programs.
Another advantage is that your group can structure such a scheme so it generates a constant stream of revenue across all 12 months of the year. This revenue can be used to cover the operating costs that crop up during the year.
2. To offer your supporters a chance to deepen their commitment to your organisation and what it does.
A membership scheme can increase this type of loyalty from supporters, who, with the right sort of encouragement and personalised treatment, will become great advocates for your organisation and its work.
Not only that, but these members may end up converting their appreciation of your services to regular donations outside of their regular membership fees.
What are you going to charge?
How much is membership to your organisation going to cost? Make sure what you charge is commensurate with what you are willing to offer to members (see below).
Make sure it also covers the cost of any of the membership benefits they are getting while still providing you with a good revenue stream – profit margins are important.
Also think about how your membership and joining fees are going to be charged. For example:
- Will your group have a joining fee to cover any administrative or printing costs, or will there be no joining fee?
- Will your group have a discounted first-year membership fee, or will there be a discount in the second year as an incentive?
- Will you have a tiered membership system, or one that has different membership categories? For example, some groups have a basic membership tier that costs next to nothing (usually designed to encourage participation by people with little ability to pay), accompanied by additional tiers with bigger benefits and bigger fees attached; other groups base their fee structures solely on the ability to pay – everyone gets the same thing but children, the elderly or people with health care cards, for example, pay less.
OUR TIP: You’re not the first not-for-profit group to grapple with the question of “How much to charge”. You don’t have to start from scratch. Find similar groups (either those doing a similar thing or those with a similar supporter base) and do some secret shopping – check out the membership scheme on their website, or give them a call and ask them how they go about it.
You also need to consider how you’re going to administer your fees – will you charge members a portion of the annual fee when they join up (depending on how much of the year is left to run) and then levy your fees on everyone at the same time each year, or will each person pay annually from when they joined up?
How will they pay – will you provide an online service (perhaps through PayPal), or will they need to pay by cash or cheque?
How will you ensure that payments are receipted and banked and the membership records are kept up to date?
What are you going to offer?
It can be a tricky business setting membership fees. You can't set your fees so high that they'll deter people from joining, and you can't squeeze them too hard or they'll leave.
But you probably don’t want to make it free – you’re going to have to spend money servicing and informing and inspiring your members and as a not-for-profit you really can’t afford to make a loss.
Plus you don’t want to “cheapen” your offering by throwing it away.
That being said, you really do have to have an offering. In return for their payment, members will expect to receive something in return:
- Freebies: Movie tickets, stickers, a membership card
- Benefits: Preferential seating at events, exclusive access to your venues or facilities (e.g. reference books, a gym) a members-only newsletter
- Discounts: Discount for your products or services, or those provided by your business sponsors or partners. Hold a brainstorming session to work out what you can afford, and what will be enticing.
OUR TIP: Don’t wonder, ask! Bring together a focus group of people who have been involved with your group as clients, donors, board members, volunteers and staff members. Ask them what you could provide that they would value.