Fundraising and the Economy: My Thoughts Revisited
L. Scott Schultz, President
November 2011

I honestly don't mind saying I told you so. But I wish I would have been wrong.

Three years ago (October 2008), I wrote an article for Resources Realized entitled Fundraising During Turbulent Times. We were all reeling at the time. Remember? The reality of the economic downturn was finally upon us — the beginning of an era of joblessness and underemployment few saw coming. On top of that, a steep and sudden decline in the stock market had left everyone with shattered nerves. In the article, I encouraged organizations to stick with it, not to panic and to brace themselves — as the “turbulent times” could last a while.

Well, enough is enough. How much longer will nonprofit organizations have to suffer?

A long time, I am afraid.

In fact, as politicians in Washington and communities around the country fiddle with the debt crisis and the tax code, and fight about how to blame each other for the mess we are in, the nonprofit nation burns. Big brand nonprofits such as the American Red Cross and Wilderness Society have implemented significant cuts to their staff and payroll, other organizations are going through difficult but necessary mergers and countless others have, or will, simply go out of business.

In the long run these changes may be for the best for nonprofits, but in the here and now higher demand for services and fewer available dollars, both public and private, have created the conditions for a perfect storm.

That’s not to say that there are not nonprofits who have weathered this situation, and of course, there are bright spots on the philanthropic horizon. Giving USA indicated a 3.8 percent increase in philanthropy in 2010 — but total giving is still 6 percent below the record level in 2007, and organizations who have seen success have just had to work harder for it. Another positive outcome has been a greater awareness of the plight of organizations serving basic human needs — the Philanthropy’s Promise initiative of major grantmakers is just one example of the response to this increasingly visible sector.

The economy, too, is showing enough signs of life to remind us that there will indeed, eventually, be a recovery. So I thought I would repeat some of the advice we were giving to our clients three years ago — advice that is sadly still relevant today — and will be for some time to come. When the recovery arrives, your organization must be ready.

Break down and assess each of your fundraising strategies — this is not the time for business-as-usual thinking. Build a plan for fundraising in these turbulent times and follow it. This might be the time to drop an unprofitable special event, or to reduce your mail schedule. If you are in a building campaign, go back to the facilities plan — can a project be scaled back or phased? When the economy picks up, so can your fundraising.

Continue to build your donor base. If you have a proven donor acquisition program — even if it requires an investment — don’t stop. You should do everything possible to acquire and retain donors cost-effectively, but you do not want to stop and then re-start a program. You could lose top-of-mind awareness, and that will cost you more than you will save now.

Communicate with your donors frequently. Tell them how your organization is dealing with this crisis and let them know that their support is appreciated. Keep them informed with personal correspondence or face-to-face meetings. Fundraising is an “inside-out” process. You need to make every effort — now more than ever — to keep your current donors involved in your organization.

Stay donor-focused. Each of your donors is in a different situation — do not lump them all together. Spend the time needed to understand how this economic situation is affecting each of them and respond appropriately. You may have major gift prospects that have been insulated from the damage on Wall Street and would be more than happy to continue, or even increase, their support. For others, asking at this time would be insensitive and counterproductive. Do your homework and respond to the individual circumstances of your key donors.

Build your brand. People give to organizations they know and consider a priority. Use this period to strengthen your marketing and build awareness of your organization.

Brace yourself — this could take a while. Plan on campaigns taking longer to complete and pledges taking longer to fulfill.

If you’d like to read more about the S&W fundraising philosophy, please click here.

Better yet, if you’d like to learn more about how S&W can help you and your organization during these turbulent times, please contact me at 215-625-9955 or sschultz@schultzwilliams.com.

Schultz & Williams is a national consulting firm based in Philadelphia; providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.