The Subscription Economy and Philanthropy

The concept of the “Subscription Economy” was introduced by Tien Tzuo, the CEO of Zuora[1], and has taken off in recent years. “The subscription economy refers to the general trend of companies shifting from the traditional pay-per-product model to a subscription business model. The subscription model involves selling recurring subscriptions to consumers in exchange for access to a product or service over time.”[2] This concept has drastically changed the retail landscape recently, and is continuing to grow, especially with younger consumers.

These consumers are becoming conditioned to operate this way, and it is the responsibility of the non-profit sector to meet these consumers where they are. That means converting monthly subscription consumers, into monthly recurring donors. Additionally, these consumers actively seek brands which they can identify with, and which bring them into a larger community.[3] Increasingly, especially with the growth of Gen Z in the consumer pool, consumers want to feel a part of something bigger than themselves.

For the non-profit sector, this should be a natural fit. “While your nonprofit can’t offer goods or services in exchange for tax-deductible contributions, what you can do is communicate the impact of monthly contributions. A regularly scheduled e-newsletter curated specifically for your subscribers is a great way to make them personally feel good about giving to your cause.”[4] Newsletters give donors the access they are desiring, and if non-profits can shift to create interactive online communities, this may be an even bigger draw for those looking for connection.

Additionally, the commitment of a monthly recurring donation or a subscription, is one that is longer term in nature. Instead of making the choice to buy a singular product in that singular moment, the consumer makes the choice to commit to a brand or an organization over a period of time. “Once we become members, we don’t reconsider the transaction every month or every year—it’s automatic. And that is very different than something you buy repeatedly—in those situations, like when you buy a candy bar or choose a rental car company, each purchase is an opportunity to reconsider your choice.”[5]

Over time, this shift in behavior could have massive positive benefits for the non-profit sector. Early subscribing donors, build habits of philanthropy, and will continue to be philanthropists at every stage of their lives. Even if a donor cancels their monthly subscription to one organization, the habit, and place in their budget will have already been created, for another organization to fill someday, leading to a consistent and sustained giving pipeline for organizations all across the world.

[1] https://www.zuora.com/home/

[2] https://www.profitwell.com/recur/all/subscription-economy

[3] https://sproutsocial.com/insights/data/social-media-connection/

[4] https://themodernnonprofit.com/nonprofit-subscription-economy/

[5] https://www.classy.org/blog/how-nonprofits-can-tap-into-the-membership-economy/