Anne Lowrey has a recent piece in The Atlantic with some advice for dealing with the stock market during the COVID epidemic. She explains herself in more detail, but I’ll give you the Cliffs Notes version: don’t change anything.
Her advice is apposite for fundraisers, too. I know that last week Philanthropy Daily published a piece by my colleague Chris Kuetemeyer on how fundraisers should respond to the outbreak. But the important thing to glean from his article is that the principles don’t change. Everything you do during the “epidemic” is what you should be doing when everyone is healthy.
Trying to “beat the market” is risky business for investors. As Lowrey writes, “Say you were to sell your equities today, and to hold cash or bonds as the market plummeted. What are the chances you would be selling at the nadir? … Even if you got out of the market at the right time, you would probably struggle to get back in at the right time. Trading during a time of extreme volatility means knowing when to buy in as well as when to cash out.”
The same goes for those of us raising money: reading the tea leaves of the COVID epidemic and attempting to adjust your fundraising strategy—or supposing that the market downturn means that you should change your development habits—is risky business, to say the least.
Kuetemeyer’s advice applies regardless of how the market is performing: stay in touch with your donors; request meetings convenient for their schedules and locations; ask yourself whether this trip is really necessary.
This same advice applied when everyone was wondering how the tax law was going to affect development. Will my donors drop off? Should I communicate differently? Should I change my approach? (Spoiler alert: the tax-law hysteria was overblown.)
Unless your approach was problematic in the first place, neither taxes nor diseases should impact how you raise money.
Your job as a fundraiser is to develop relationships with your donors in order to foster a sense of identity and belongingness between them and the organization they support. A COVID-induced market downturn will not cause a donor to upend her own identity. If your donor thinks of herself as a donor to your organization—a member of a donor club, say, or a part of a mission to improve her community—then the market downturn won’t cause her to stop supporting you.
Of course, dramatic fluctuations in cash flow or net worth can affect a donor’s ability to give at a certain level—or at all. That’s why I’m not saying “fret not and rest easy.” On the contrary, my point is not that you can relax, but that you don’t need to change your habits or up-end your strategy.
Of course, we are already seeing the negative impact of COVID-19 on the market. If everyone listened to Anne Lowrey, we probably wouldn’t see these adverse effects—but they aren’t listening. Since many of your major donors are impacted by market swings, the market downturn could hurt your actual revenue.
Nevertheless, the market dip should not affect your fundraising strategy—but it might affect your overall organizational strategy. If you see decreasing revenue simultaneous with a coronavirus outbreak, you can reasonably suspect that they are related, and therefore that the dip will be temporary. So what do you do while funds are tight?
The responsible thing to do during a temporary dip is not to cut fundraising—which may seem less essential to your mission—but to trim down on any unnecessary spending (staff lunch outings, upgraded airline seats, new laptops). If times get really tough, then begin to look at trimming program-related expenses. If you cut this luxury expense or that program feature while the country is in “crisis,” you do no long-term damage to your mission or organizational success. But if you cut fundraising while your competitors don’t, you risk serious long-term damage to your donor relationships and financial stability.
As Kuetemeyer explained last week, “donors tend to continue supporting those to whom they are closest,” even in times of crisis. Now, therefore, is an important time to confirm your strong relationships with your donors. The best organizations and the best fundraisers are reaching out to their donors right now—if you cut back on fundraising, your silence will stand out when you get in touch again.
When businesses see tight times, they don’t cut back on marketing and advertising, because they know that will mean a loss of market share. If they are to turn things around, they need to increase their share of the market and cannot put that at risk. Fundraising is not reducible to, but it is related to, marketing and advertising. Cutting investments in fundraising risks serious loss of market share.
As a final point, keep in mind that many major donors’ giving and net worth is driven by assets that are closely tied to financial markets. Therefore, their ability to give is impacted much more by market shifts than many small and mid-sized donors who give out of their regular job-derived income. Until the epidemic reaches such scales that it affects the income of average Americans—which seems incredibly unlikely—your small and mid-sized donors will not actually be affected by most market fluctuations.
Of course, hysteria is in the air. Donors may tighten the purse strings and play it more cautiously—but this is unlikely to be the norm for your small and mid-sized donors. That means keep mailing them. You won’t achieve anything by dropping out of the mail and by going silent on donors who are used to hearing from you.
In fact, you might stand out even more: while other organizations up-end their strategy in response to COVID and you stay in the mail, you have less fighting for their attention. Incidentally, the hysteria could benefit your mail program, giving donors lighter mailboxes and more time with your letters.
Before the panic began you were busy (or should have been busy!) writing to donors, calling donors, meeting with donors. In the midst of the panic, you should be busy writing to donors, calling donors, meeting with donors. And once the panic subsides—soon we hope—you will be busy writing to donors, calling donors, meeting with donors.
Fundraising, as Jeremy Beer and Jeff Cain write in The Forgotten Foundations of Fundraising, can be boiled down to two activities: bringing in new donors and cultivating the donors you already have. That won’t change even if COVID-19 overtakes us. I have my doubts about the actual “epidemic,” but I’m glad that my job as a fundraiser won’t be changing either way.