Between stock market downturns, inflation, and rising interest rates, the state of the economy is keeping many fundraisers up at night.
Uncertainty seems to be the word of the day because no one knows what’s coming next—if we’ll be in a recession, or if the economy will rebound.
In this economy, what can we do to ensure we reach our fundraising goals and provide the revenue our organizations need to fuel their missions?
First, we should never make assumptions on behalf of our donors.
In financial downturns like the pandemic and the Great Recession, organizations that stopped fundraising because they assumed their donors didn’t want to hear from them or couldn’t give are still feeling the impact of their decisions. Organizations that postponed capital campaigns lost two or three critical years of progress because it was a challenge to regain traction. And their donors invested elsewhere—in projects that moved forward.
Second, be realistic about the budget and set projections together with your leadership.
July 1 begins the fiscal year for many organizations, so it may not be too late to engage in scenario planning for the coming year. Create three revenue options that correlate to different scenarios and paths the economy may take over the next 12 months. It will be imperative to review your budget monthly to determine which scenario is playing out and course-correct if necessary.
Lastly, and perhaps most importantly…don’t panic. The economy is cyclical. Today’s downturn will be tomorrow’s record growth. That’s why it’s so important to stay the course. Keep engaging your donors and your constituents so they don’t look elsewhere to invest.
Do not be weighed down by overly pessimistic board members. Given their fiduciary responsibilities to the organizations they serve, board members are understandably concerned about the economy’s impact on programming and annual operations. It’s our role as fundraisers and nonprofit leaders to listen, but also to present a plan that addresses and mitigates revenue declines.
We published a blog last month about recession-proofing your fundraising. I’m including its key takeaways again here to give you even more ideas to thrive—even in this challenging economy.
Giving Rebounds Quickly—and Is Often Unaffected by Downturns
Take a close look at this Giving USA 2021 chart, particularly 2008 and beyond. The Great Recession—arguably one of the worst economic challenges in our history—impacted giving for only a short period. Giving quickly rebounded and has skyrocketed to record levels since then. A similar trend in giving occurred after the 2018 downturn.
In 2020, even at the height of the pandemic, total giving rose by 5.1 percent according to Giving USA (2021). The recent Blackbaud Charitable report indicates giving in 2021 was up another 9 percent (Blackbaud Institute, 2021).
We don’t know if a recession will fully materialize over the coming months, but we do know that your efforts to drive philanthropic revenue should not fundamentally change. Instead of staying silent, reach out and listen to your donors. Follow your fundraising plans. If necessary, adjust annual revenue targets if you learn your major givers are altering their investment levels.
How to Recession-Proof Your Fundraising
Never assume that every one of your donors is facing economic hardship. Just look at the skyrocketing housing market. If you stop giving your donors opportunities to invest in your mission, you are making decisions for them.
Instead, double down on fundraising now and be well-positioned for growth when the economy turns around. Here are our six recommendations to recession-proof your fund development efforts.
Don’t Go Silent
The need doesn’t stop during an economic downturn.
Share with your donors how you are responding to today’s crises. Ask them to once again become your partner in solving challenges and advancing your mission. Give them opportunities to invest and fulfill their philanthropic agendas. Prioritize your major donors for personal outreach but continue to personalize communications with all donors—through email, on social media, or with handwritten notes.
If your organization or institution encounters serious financial challenges, think long and hard before playing the crisis card. Unless your organization or institution is on the brink of closing, avoid creating a panic. Crisis messaging may raise money in the short term, but it often backfires in the long term and can seriously erode the confidence your donors have in your organization.
Retention Over Acquisition
Spend no more than 20 percent of your time and effort on donor acquisition. Spend the rest on stewarding the donors who are already in your database (including LYBUNTS and SYBUNTS). Strengthen your moves management program and cultivate your donors by building meaningful relationships. Encourage lower-level donors to move to a monthly giving program.
Post-COVID, retention is more critical than ever. If you saw a rise in donor giving during the pandemic but saw a drop-off afterward, there is still time to recapture those donors. Have a special initiative to let them know how valuable their support was to those you serve—and invite them to come back.
Donor retention is important for many reasons, primarily for your bottom line. The chart below shows the revenue generated when retention rises just 1 percent. In addition to revenue, your long-term donors are your key stakeholders and your fiercest supporters. They are your capital campaign’s lead donors, and also the ones who are with you even when times are tough.
Learn more about the why and how of donor retention here.
Steward Your Staff
It’s hard to provide services or advance your mission if you have a revolving door of staff. Treat your staff the way you treat your donors so they will stay and continue to contribute. The blog To Stop the Great Resignation, Shift to the Great Retention has tips on how to retain your key employees.
Don’t Postpone Campaigns or Major Giving Projects
There will always be external factors that threaten a capital campaign or major gifts initiative. Postponing these projects merely prolongs the need. And because we don’t know what the economic future will bring, it may all be for nothing.
Furthermore, capital campaign solicitations are not made until at least six months after launching the campaign/feasibility study. It’s impossible to predict what the economy will look like then.
Involve Your Key Stakeholders
Remember the adage, “when you ask for advice, you get investment.” Keep your key stakeholders in the loop as you recession-proof your organization or confront serious realities. Involve them in key decisions whenever possible. This recommendation is not disingenuous; it’s likely that your key stakeholders are successful in their careers and can provide significant wisdom should you need to grapple with challenges.
Pull Out Your Strategic Plan
If your strategic plan has been gathering dust on your shelf, it’s time to pull it out. Make sure it’s still relevant and still designed to move your mission forward. If not, consider revising it. Because the pandemic brought each of us new challenges and new opportunities, conduct a new SWOT analysis. Engage in best- and worst-case scenario planning.
Reviewing your strategic plan should not be a staff-only exercise. Pull back in the original members of your strategic planning committee which hopefully included some external voices.
Now is not the time to panic. By recession-proofing your fundraising program, you will be ready if a recession does materialize. Either way, by implementing fundraising best practices and focusing on relationship-building, your fund development efforts will reach new heights.
Schedule a free consultation with one of our fundraising specialists for a customized approach to recession-proofing your bottom line.
About the Author
Jim Bush, Winkler Group Principal and President, has been a fundraiser for more than 30 years. Recognized as an expert in his field, he’s helped nonprofits, universities, and healthcare systems raise more than $300 million and increase their organizational capacity through strategic planning. A noted lecturer, trainer, and teacher, Jim’s articles on fundraising have been published in leading nonprofit journals. He serves on the Giving USA Editorial Review Board and holds a bachelor’s degree from Elon University.
Blackbaud Institute. (2022, February). 2021 charitable giving report. https://institute.blackbaud.com/charitable-giving-report/
Giving USA. 2021 Annual Report. Giving USA. (2021, June 15). https://store.givingusa.org/products/2021-annual-report.