Sponsored Content: Blackbaud — Fundraising During Economic Uncertainty
The Covid-19 pandemic kicked off an era of uncertainty for the nonprofit community, and the resiliency of the industry was put to the test. Most organizations saw a drastic change in their revenue streams with some completely going away. Through passion and grit, the industry persevered and even saw growth through new revenue streams and fundraising tactics. We continue to face the economic impacts of the pandemic, as well as inflation and growing fear of a recession. This, however, is not an unprecedented event. We have dealt with and overcome financial uncertainty in the past by utilizing concrete strategies for maintaining or even growing fundraising revenue during a recession.
Ideas That Work
Regardless of the state of the economy, I find that many organizations I interact with do not have an accurate reading on the number of communications initiated with each of their constituency groups in any given year. Is it not reasonable to assume that the relationship any individual has with the organization is impacted by the entirety of the messaging they receive?
There are many historical reasons that explain why we do not look at the length and breadth of our donor communications. These include but are not limited to:
- A narrow view of donor relations focusing on communications related to fundraising efforts;
- A siloed approach to the structure of our development operations which encourages compartmentalized communication plans; and
- The willingness to not account for, or seek, the donor’s opinions of our communication streams
I am frequently bombarded by multiple direct mail contacts from organizations I support, which increases during peak fundraising months. I wonder if anyone in that organization is aware of this, or is interested in knowing what I think of the frequency? There are simple solutions the organization could employ:
- Determine and chart the average number of contacts—direct mail, telephone, and email—your constituents receive from your organization as a whole.
- Analyze the content and purposes of each communication and chart accordingly (cultivation, solicitation, information, recognition, etc.).
- Identify communications overlap, looking for opportunities to consolidate or eliminate.
- Ask your donors which communications they value or which ones are not personally important to them.
- Implement a communication plan reflecting the donor’s wishes.
Remember that knowledge is both powerful and enabling, and the insights your donors and prospects share with you create opportunities for stronger relationships. Do not assume that an individual’s request to receive fewer communications is a sign of declining interest in your organization. It is likely to be a thoughtful response indicating the elements of your mission that are of particular interest, thus defining that person as a better prospect. Fewer touch points may create a more meaningful relationship, particularly if you communicate your interest in being more cost effective.
- How are we perceived by our giving constituents? Do we want them to see us as an efficient organization?
- Are we able to solicit loyal donors more efficiently? If historical evidence indicates that most of our donors give once annually about the same time each year, why don’t we ask them to give at the appropriate time and eliminate the untimely asks?
- Are we willing to be forthright with these donors and engage them as partners in our efforts to reduce the administrative overhead? It is a positive message to ask our donors to participate in a cooperative effort to make the giving process fit their individual preferences.
- Should we operate the annual fund as a one-year-at-a-time, “thank goodness we made the goal this year” enterprise? If we approach each year as an independent effort to reach certain targets for dollars raised and number of donors realized, should we be surprised that our donor attrition rate is high?
- If donor loyalty lies at the foundation of most ultimate giving, should we not establish donor retention as the chief goal of the annual fund? And is it not worth at least a tested limitation of the solicitation program that asks less often and that encourages and acknowledges donor loyalty at any gift level?
- Does our organization over-solicit? If your most frequent method of contact is in the form of a solicitation, it is likely that you do. In tough economic times, reduced solicitation attempts can yield budget savings, which may be applied to budget relief or reallocated to the cultivation of major and planned giving prospects. And you will earn the respect of your donors.
You will, of course, have donors who give more than once annually. I am not suggesting that you try to convert their giving patterns to one gift per year. Encourage their continuing loyalty through multiple gifts accordingly. However, if you solicit these donors 12 times annually, and many give only in June or December, doesn’t that make you think that some of the intervening requests are unnecessary?
Major giving is all about cultivation. Even if a donor’s ability to give is limited by the economy, the relationship should continue.
It is critical that the cultivation of major giving prospects continues through economic downturns. Do not assume that people who have been prospects and/or donors will not be able to give. Many wealthy prospects will not be adversely affected by a recession. Organizations that curtailed major giving activity in the first two years of the pandemic suffered a corresponding loss of gift revenue.
Major giving is all about cultivation. Even if a donor’s ability to give is limited by the economy, the relationship should continue. At the very least, as the economy recovers, you will still be in the thoughts of your donors. If you withdraw from the relationship, you jeopardize its continuity and the lifetime giving potential.
As you talk with your donors, your effectiveness in communicating the mission of your organization and its ability to cope in this economy will speak well of your nonprofit and its forward thinking. Lead your organization through the process of positioning your mission to succeed despite the anticipated pressures caused by a down economy.
We draft case statements for capital campaigns, and we include mission statements in our funding proposals. So, let’s draft a similar document that details our planning and preparedness for the recession, including:
- A brief explanation of how you will continue to meet mission goals, including an honest assessment of what may need to be reduced or cut back;
- A discussion of your efforts to trim expenses, specifically mentioning our efforts to partner with donors to cut fundraising expenses; and
- A statement of your ongoing gratitude for their loyalty and support of our mission.
Remain in communication with your top prospects and your efforts will be rewarded, if not now, then later as the economy improves.
There is a strong temptation to scale back planned giving cultivation and solicitation in these uncertain economic times. I understand that temptation, as it is true that new planned gift commitments will not bring cash for years to come.
Nevertheless, there are many reasons to continue planned giving cultivation during a recession. Your organization may have already been the beneficiary of an estate gift in recent months. These gifts were planned several years ago, but the proceeds of these gifts are available to you at an especially important time when other funds may be limited.
Don’t you want to ensure that future leaders of your organization have these types of gifts available to them?
I suggest smart and effective techniques for these cultivation efforts based on insightful market research. This may be the right time for increasing the significance of your relationship with many of these prospects, and I don’t think you want to lose potential ultimate gift opportunities for possible short-term savings.
Also remember that tough economic circumstances breed conservative financial behavior, which goes hand-in-hand with certain types of planned gifts (bequests and charitable gift annuities). These gifts offer an opportunity to provide a significant long-term commitment to the organizations we love that match our fiscal needs. Bequests require no current cash outlays and annuities provide an income stream to donors worried about their long-term financial viability. Those are ideas that work in a recession.
In conclusion, there are many positive actions that you may take to better position your organization to raise money and trim costs—actions that will continue to work through economic recovery. Don’t sit back and let an economic downturn act upon your efforts; rather, be a leader and proactively seek strategies that make your organization smarter, more effective, and more efficient.
Lawrence Carroll Henze, JD, is the analytics architect, senior principal consultant for Blackbaud. During his career at Blackbaud, he has worked with nonprofits, colleges, and universities in both consultative sales and consulting roles to encourage and facilitate the use of predictive analytics and related tools to promote fundraising success.