Freelancers for charities

Membership schemes: Are they a successful income stream for small charities?

Posted by Kerrie on 08/01/2025
Watch Dragon’s Den and it won’t be long before an idea is presented that involves a subscription service. Membership is the new ‘business model’ for the private sector. But it has been in use within the non-profit sector for a lot longer.

Back in medieval period, the Guilds and Worshipful companies were created as a pre-cursor to today’s professional bodies and trade unions. Their aim was to create a community of like-minded people that could protect their own professional interests such as rates of pay, drive higher educational standards and support each other through challenges and economic downturns.
As a business model or income stream, membership has infiltrated most of the charity world. You can become a member of an organisation to support your passions and hobbies such as the Royal Horticultural Society, join a charity that offers membership to show your support such as The Woodland Trust, join a private member’s club to take advantage of their exclusive venue, join a national governing body for sport who ensure you are fully insured to take part, join a business association such as a local chamber of commerce to grow your business and even join a political party to vote for its leader. Membership is everywhere.

But is it really a profitable income stream for you, particularly if you are a small charity with limited time and resources?

Here are some important things to consider:

PROS
  • Members are a highly engaged audience. They are also therefore more likely to volunteer for your charity, leave you a legacy or vote at your AGM.
  • Members have an incentive to increase their spend with you. They are more likely to buy tickets to your events or spend in your shop especially if they get a member’s discount.
  • Members give you a regular income source especially if they set up a direct debit with you. It enables you to budget for income spikes at certain points in your financial year if annual renewal or a steady cash flow if monthly renewal.

CONS
  • The return on investment can be low. The costs of servicing members is higher than many of the other forms of fundraising. The direct costs of delivering the membership benefits (such as member magazines, cards, packs and events) can be as much as 50% of the income generated. There is also a high indirect cost in administering a membership scheme such as staff to maintain the database, reply to member communications, chase non-payment etc.
  • Membership is, above all, a transaction. Members pay you a membership fee in exchange for their benefits package. If you stop delivering value to members, they will stop renewing their membership because they will see it as a luxury, not a necessity.
  • Membership can compete with your other income streams. If you have multiple audiences (such as donors, visitors, event attendees, and customers), you may end up marketing the same people on your database with multiple propositions. Offering the same benefits to people via different funding streams will ensure you compete for their money. Ideally, each proposition should be distinct and offer different benefits.

If you want to increase member retention, engagement, and recruitment with your current membership scheme or are considering setting up a new scheme, arrange a chat with Kerrie.