Is it wrong to offer membership perks during your pledge drive? Will giving art museum members a keychain and a 10% discount at the gift shop turn all your fundraising into a cold transaction? Not necessarily.  

A relationship fundraising approach is increasingly critical for long-term success and sustainable revenue, but that doesn’t mean that transactional fundraising is bad, and relationship fundraising is good. You don’t have to pick one and swear allegiance to it forever. Transactional and relationship fundraising are simply different approaches to raising money that get different kinds of results and appeal to different kinds of donors. 

Transactional fundraising focuses on single donations over donor retention, immediate ROI over lifetime value, and short-term wins over long-term gains. Relationship fundraising prioritizes a long-term, donor-service-oriented approach to create lasting donor relationships. 

Relationship fundraising and transactional fundraising can both play a part in your members’ journeys.   

Is a Membership Transactional or Relational? 

When you buy season tickets to the symphony or become a member at your local zoo, you’re likely supporting a nonprofit organization. Arts and culture organizations offer their supporters tangible benefits — you hear the concert, you get a parking pass and free admission to the zoo, you get streaming content from your public radio station. Clearly, there is some element of transaction here — you gave money to receive something. 

However, this transaction isn’t the same kind of transaction as buying a pack of gum. Would you buy season tickets to the ballet if you weren’t interested in dance? Become a member of a public television station you never watched? These “transactions” allow your supporters to express what they value. Whether it’s animal conservation, the opera, or an alma mater’s sports team, people join what they care about. Membership offers intangible benefits, too, including reinforcing supporters’ identities as “people who support that thing.”  

A membership can also result in long-lasting relationships — the people who have been season ticket holders or station supporters for decades. A clear-cut “transactional vs. relational” divide doesn’t really apply.  

It Can Start with a Transaction 

What we see from memberships is that transactional fundraising may be a perfectly adequate acquisition strategy. Maybe someone just wants to get free parking at the zoo. Perhaps the first step of your donor’s journey will be realizing that if they were already planning to see three plays in your season, they’ll save money with season tickets. Maybe they just really, really want to skip your pledge drive. 

Even in non-membership organizations, a transactional premium may be a good starting point for acquisition. Holiday cards, mailing labels, calendars… for some organizations, these are an effective way to attract donors initially, or even to continue engaging them.  

However, if you only use a transactional fundraising strategy, you’ll miss out on the long-term benefits of cultivating donor relationships. “Transactional fundraising is not a bad strategy, but if it’s your standalone strategy, the stakes are extraordinarily high,” says Trent Ricker, CEO of Allegiance Group + Pursuant (AGP). “Your churn will be high, which means you have to continue to replace those supporters that you’ve lost. This sets up a cycle where you continually need to renew them through a premium or another component of the transaction. Then your costs go up. If you’re not diving deeper in and trying to build some level of sustainability and loyalty, you’ll be caught in a dangerous cycle.”  

What Matters Most is What Happens Next 

Imagine that you’re sitting in traffic, impatiently listening to your public radio station’s pledge drive while waiting for your favorite program to start. While the cheery anchors are making the fundraising asks, they emphasize over and over, “Members have access to our pledge-drive-free streaming.” Sold! You become a member as soon as you reach your destination. No more pledge drive for you! 

So far, this has been almost entirely transactional. What makes the difference is what happens next.  

Consider Version A: 

You receive a thank you note, along with access to the streaming. Then, a week later, you get a quick survey to find out what you like about it, and if there are any changes you’d like to see. You get a quarterly newsletter, sharing interesting behind-the-scenes content. A few months later, you’re invited to a members-only Q&A with one of your favorite hosts. A year later, when the time comes to renew your membership, it’s about so much more than skipping the pledge drive: you’re part of a community of supporters. 

Contrast that with Version B: 

You receive a thank you note and streaming access. You don’t hear from the station again until it’s time to renew your membership. The only question is, are you still motivated to skip the pledge drive? 

Version A uses the transactional premium to incentivize membership, but that’s just the beginning. The pledge-drive-free stream is an entry point to a series of communications and conversations that build an ongoing relationship. Version B remains a simple transaction. Which member experience do you think best promotes long-term commitment? The relationship! 

If you use a transactional premium to acquire donors, it’s important to consider what comes after the acquisition transaction. This is where you start the conversation to transition what began as a transaction into an ongoing relationship with your supporter.  

When someone buys the season ticket, or joins the zoo membership, what happens next? Do they get an educational newsletter? Does someone call to thank them for their gift? The supporter has taken the step of engaging, and it’s incumbent upon the organization to create the case for ongoing, deeper support.  

Not every transactional giver will take you up on that case. They will sift out through the process – it may be that they only want the transaction, and that’s fine. But by offering consistent opportunities to go deeper and connect more, you’ll attract your supporters who want a mutual relationship long-term.  

Memberships Are More Than Either/Or 

Member acquisition and retention are both challenging, but relationship fundraising can help you go deeper with your members. Connecting more with the members that are aligned with your mission and identify with your cause will take you farther than a keychain ever could alone. (But you can keep giving people keychains.)  

Learn More About Relationship Fundraising 

Read the blog: Beyond the Gift: What Your Donors Need to Keep Giving

Our new eBook, Embracing Relationship Fundraising: A Path to Sustainable Philanthropy combines comprehensive fundraising research with practical advice to build long-lasting, sustainable relationships with your supporters. Get your copy today!