How Non-profits Can Build Subscription Revenue from Donors

Can nonprofits benefit from a membership mindset and enjoy the power of subscription revenue? Absolutely!

Any organization can benefit from a membership mindset, and enjoy the benefits of subscription revenue if these things are true:

• the organization seeks long-term relationships with the people they serve
• the people they serve have other options to achieve the same objectives

One nonprofit, charity: water, has taken the membership mindset to a new level, in hiring a SVP of subscriptions, MZ Goodman, to run their mass market fundraising efforts.

MZ is a true innovator, bringing the best practices of subscription, engagement, and brand from her work at The New York Times, Ralph Lauren, Glossier, and goop, to charity: water, a nonprofit that provides clean water to people in developing nations. The organization has been phenomenally successful by taking a different approach to fundraising. The 14 year old organization has raised over 450 million dollars.

I recently talked to MZ on my podcast, SUBSCRIPTION STORIES: TRUE TALES FROM THE TRENCHES. In it, MZ shares the secrets of charity: water's success and how to bring these principles to any organization. Below are the highlights from our conversation.

If you lead, work for, or support a nonprofit, you'll definitely take away some great tips to help your organization build deeper and more engaged relationships with your donors.

Robbie Baxter [00:01:50] SVP of Subscription. That is not a title that I'm used to hearing at nonprofit.

MZ Goodman [00:01:59] I think it was, leadership was incredibly smart when they decided to pivot the business at the nonprofit in this direction, in that our COO, Lauren Letta, who's incredibly visionary, she was already evaluating whether it made sense to create a subscriptions team focused on a North Star metric of predictive revenue so as to enable significant growth across the organization. And our model is very complicated. But it took a lot of moving parts. So it was a very intentional move on the part of leadership to create a cross-functional team focused on a North Star goal of building membership and growing recurring revenue.

Robbie Baxter [00:02:46] Got it. How would you define the mission of charity: water?

MZ Goodman [00:02:49] We work closely with local partners to bring clean water solutions to people in developing countries.

Robbie Baxter [00:02:57] And how would you describe your promise to your members? What's your promise to them?

MZ Goodman [00:03:02] You know, that is such an interesting question. So as an organization, we have really built our promise and our reputation on transparency. We go to great lengths to connect our donors to their impact and to demonstrate their impact to them. And I would say we've done that extremely well on the key relationship side of the business.

Robbie Baxter [00:03:27] What is a key relationship?

MZ Goodman [00:03:28] The the high net worth cultivation side of the business.

Robbie Baxter [00:03:33] Okay, so just to make sure that we're following along. Can you explain what it means to have subscriptions at charity: water? What the subscription is to and whether you have different tiers or whether you treat all of your members the same?

MZ Goodman [00:03:48] Sure, it's a great question. And some of that we're still trying to figure out. My team is essentially consumer revenue, so we are accountable for all onetime donations received by the website or on the website, as well as subscription revenue. So our high net worth donors give on a recurring basis, particularly the ones who support the operations of the organization, make a three year commitment to that support. But it's not a subscription product. So ours is the only subscription product and it is a mass consumer product.

Robbie Baxter [00:04:23] And what do subscribers get? What is the promise to them? You give us money every month and we will promise that...

MZ Goodman [00:04:31] That we will steward it appropriately. We will make sure that 100 percent of it goes to the field to where it's most needed. And beyond that, honestly, you don't get a ton yet, although we are working on evolving that. So we historically Spring Members, our subscription program is called the Spring, Spring Members have gotten a monthly newsletter with some stories from the field showcasing where Spring dollars have gone and who some of the people are who are recipients and beneficiaries of the programing. And that's pretty much been it. But we have been doing a lot since the beginning of the year to test events. We have a lot of plans around how to expand the value proposition. But that to me was what was super interesting when I was evaluating the opportunity. Obviously, if you sign up for a subscription to The New York Times, you know what you're gonna get if you sign up for a subscription to quip you get a toothbrush in the mail every month. What do you get when you subscribe to charity: water? And fortunately for us, we have a group of extremely generous donors who get gratification just from knowing that they're continuing to support good work.

Robbie Baxter [00:05:44] It's a really interesting question and one that a lot of organizations deal with, where a key reason that you get subscribers or a key reason that you get donors in the nonprofit world is because they support your mission. And so that's the starting point. And what I've noticed is that in some cases that's enough. There are certainly many, many people who will choose organizations that they believe in. And the whole forever promise is I give you money, you steward it appropriately and help solve a bigger problem. And the value I get is the confidence that the money is well spent and maybe a feeling of goodwill when I you know, in some cases where a pin or carry a bag with your logo on it, that I get a little bit of affiliation with your organization. But it seems like there's so much room for additional value to be created, even in the nonprofit world, which organizations are just starting to explore connection with other like minded people, education and experiences that help them understand the problems in the world and expand their own ability to understand what's happening, products that align with the goals. What are you thinking about in terms of how to you know, I always talk about how you layer in more value over time in a subscription. How do you think about that?

MZ Goodman [00:07:08] We're doing a few interesting things to test the value of community here and whether it's a key part of the value proposition. So in the last few months, as example, we've hosted a couple of book clubs. So our founder, Scott Harrison wrote a terrific book called Thirst. We seated a few book clubs. He made a couple of guest appearances. People were super engaged and really enjoyed talking with each other about our story, which was fascinating. We hosted some Lunch and Learns connecting our community to our staff, programs, supporter experience, our creative production team, and got a lot of positive feedback from that. Last week we hosted a terrific spring event for new members, new Spring Members, and Scott took them through his founding story, as well as talked a lot about the work that we're focused on in the field and the priorities for the organization. But what was super interesting to me was seeing in the chat, we did it over Zoom, and seeing in the chat members saying hi to each other, which was super cool. And we have to figure out how to leverage that. So we're testing a bunch of stuff there. We are building a really interesting product called Lifetime Impact, which lets you, as a Spring Member, build or grow your own lifetime impact by referring others to the program, making longtime donations, launching campaigns, and so that that is another proof of concept around Lifetime Impact, obviously, and whether you as a subscriber will be motivated to grow your impact. But it's also a proofpoint on community. Just are you, you know, when you find a terrific moisturizer, you tell your friends about it. Right. You can try this with me. I've loved this. It's fantastic. So we're seeing whether the same thing plays out here. I'm a member of the Spring. I get a ton of work gratification from it. Join me. We can grow our impact together. And eventually we see really being able to map the Spring monthly giving community directly to programs that have been wholly funded by the Spring community, which is pretty powerful.

Robbie Baxter [00:09:15] Yeah, it's really interesting and I just want to call attention to a couple of interesting points that you made. One of them is almost an MLM, a multi-level marketing kind of an approach where you bring people in and then they get a chance to kind of build their own communities, which I think is really interesting and novel. And I really like that. The other thing that I want to touch on you brought the point that Scott is a very charismatic leader and, you know, he's written a book. He creates his own content, which has been tremendously powerful at growing the charity: water brand. You've also worked with Ralph Lauren and Gwyneth Paltrow. These are some very charismatic celebrities in their own right. And yet you're building a brand that hopefully transcends their own celebrity. How do you do that? What advice do you have for people who are kind of torn between building a loyal, engaged membership around their own personality versus trying to build something that will be a legacy and outlast them?

MZ Goodman [00:10:19] I would say I think goop has done a really wonderful job there, particularly within goop health. And and obviously the conferences in goop health is really spearheaded by, you know, Gwyneth's network and the things she's curious about and interested in. So it is very much her point of view. But you have access when you attend that event to the wider goop team, the wider goop community. And she's done a really nice job in that regard, I think, kind of scaling beyond herself. We are trying to figure that out at charity: water. Scott has been a fantastic and very productive driver of growth for the whole organization. But certainly for the Spring until this year, we effectively had one paid performance asset out there, which is a 20 minute long video of Scott's story that I think at minute 18 makes an ask for the Spring and it's incredibly performant and conversion driving.

Robbie Baxter [00:11:22] By the way that is amazing.

MZ Goodman [00:11:22] I know it's crazy.

Robbie Baxter [00:11:24] Basically a 20 minute ad that people love and that actually converts them to become members of the Spring.

MZ Goodman [00:11:30] Right. And we get a ton of feedback. I was crying when I saw the ad. How could I not do this? Just yesterday, there was a guy who posted an Instagram story after watching the video, and he's starting a thing called hashtag the spring challenge, trying to compel his community to give it a hundred dollars a month just because he watched. He watched the very powerful Spring film. Going back to why I took the job like, you know, as a product person I think you look for a product market fit in any opportunity you're evaluating. And, you know, when I first started talking to the organization, they had grown a community of 40,000 members on the back of one 20 minute long pre roll asset. Right. And really hadn't organized the organization around a North Star metric or really done anything much with the product to drive growth. So looking at that, I thought, well, how can there not be a ton of upside if they've already done this and they haven't put much more of an investment in it? Right. So the Spring film is a very compelling story.

Robbie Baxter [00:12:33] What kinds of metrics did you bring to kind of put more discipline around your process of growing the subscription?

MZ Goodman [00:12:40] I mean, we were you know, we have a really strong base ops team and we were, of course, tracking, you know, MRR, and ARR and member, just our general active member count. We didn't have as much visibility when I joined into churn as we do now. We're doing a lot of work to more clearly understand LTV lifetime customer value. Yeah, we really we didn't really have much of what I would call a business intelligence practice, and we have spent much of this year I mean, certainly the last nine months, very focused on understanding the performance metrics of the business. How many people are we acquiring every month? What channels are they coming from? How many people are we losing every month? Is, you know, what is churn by channel look like? What is our LTV? So we've gotten a lot smarter, thankfully.

Robbie Baxter [00:13:41] Yeah, it's it's great. I mean, those are those are the metrics, you know, monthly recurring revenue, annual recurring revenue, lifetime value of customer, acquisition rates, engagement, churn. Those are the metrics of any, subscription business. And it's interesting to hear them in play at a nonprofit. I'm curious, what are some of the reasons for churn and what are some of the remedies that you're finding that work at deepening engagement or extending the relationship?

MZ Goodman [00:14:06] We see a few interesting things. There's definitely a subset of members who support us for a year and then at the end of year say, say, I've done my turn. I'm gonna go support something else, which is interesting psychology, and we're trying to figure out, I think, lifetime impact and the product we're building is meant to address that community. And, you know, the more we can connect our members with the impact in the field. I think the more will offset churn for that reason. Just when you see how much work there is yet to do out there, I mean, we've made tremendous progress as an organization in the course of our lifetime. But there are hundreds of millions of people who still lack access to clean water. And as you begin to see the impact of the spring community on solving problems and bringing clean water to millions and millions more people, my hope is that that will be compelling enough to keep people in the program. We did see very high, which is not surprising, very high churn rates in March and April of this year when kov it hit largely based on the qualitative data that we received. You know, based on economic hardship, people fearful of losing their jobs, just everything that was going on in the macro economy. We in response to that, we made a couple of changes in the product to enable people to pause their subscriptions and pause still counts turned. But we're hoping and we don't yet have the data, but we're hoping that if we can continue to send people their monthly good news statement of impact, that after some period of months when they're feeling a little bit more back on their feet, they will remember us and join us once again.

About Robbie Kellman Baxter

Robbie is the founder of Peninsula Strategies LLC, author of The Membership Economy, and the Instructor for ten LinkedIn Learning courses including: Create a Membership-Based Business and B?ecome an Entrepreneur Inside the Company. Her clients have included large organizations like Microsoft, the NBA and Electronic Arts, as well as smaller venture-backed start-ups. Over the course of her career, Robbie has worked in or consulted with clients in more than 20 industries.

As a public speaker, Robbie has presented to thousands of people in corporations, associations, and universities. She has an AB from Harvard College and an MBA from the Stanford Graduate School of Business. Find Robbie on Twitter, @robbiebax

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Would you like to see your nonprofit get more predictable, recurring revenue from your donors? If you would, you'll want to learn about what Marla (MZ) Goodman is doing at the nonprofit charity: water, where MZ is responsible for driving subscription revenue.

Any organization can justify subscription revenue by focusing on the long-term goals of their members. In the case of a nonprofit, those members might be donors.

And when you identify the reasons they're engaging with your organization, your "forever promise" you can layer in all kinds of value that will result in greater engagement and loyalty.

Check out our recent conversation in its entirety.

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