At the end of July, the US government report on economic output drove speculation that the US economy had entered a recession. The GDP shrank for the second quarter in a row, which is a common definition of a recession.
While we will leave it to the economists to hash out whether or not the US is “officially” in a recession, there is no doubt that we have entered challenging economic times. With inflation running wild, the financial markets down, and an overall slowdown in economic output, many nonprofit leaders rightly have concern about the economy and what it means for them raising money.
That’s why we launched our “Fundraising When Times Are Bad” series (remember to download your free ebook by the same title!).
None of us has a crystal ball, but still we can safely say that some appropriate, sober planning is warranted at this moment. As my colleague Kyle Vander Meulen reminded us last week, no two nonprofits are the same, which means that the specific measures you take to navigate the choppy waters ahead must be specific to you. Nevertheless, the universals that will undergird your strategy hold true no matter what.
Here are some key strategies to prioritize, even in this unsettling economy.
Major on the majors. Take the time to analyze your sources of fundraising revenue. Where do most of your funds come from? Is it from foundations? Major gifts? Direct mail? Digital? Events?
Whatever it is that your nonprofit excels at when it comes to raising money, focus—and redouble—your efforts and resources there.
While innovation and trying new things is often to be encouraged and commended, in uncertain times it is best to stick with the tried and true—whatever that is for your organization. If direct mail brings in the lion’s share of your fundraising revenue, keep that going. If foundation revenue is the majority of your funds, prioritize those relationships—keep them engaged and informed with consistent formal and informal reports. Set up calls or Zoom meetings with your contacts there—don’t be bashful and shy away . . . lean in.
Prioritize relationships. As many of my other colleagues have rightly noted, you need to stay close to your donors, in particular your major funders and those who have been with your organization the longest. When the going gets tough, the tough get . . . near, dear, and clear with their donors.
This is not the time to back away from communication. You should be honest and candid, but remain positive and forward-looking with your supporters, whatever the circumstances. There is a tendency in times of uncertainty to back off from communication, not wanting to “trouble” your donors, thinking that they might be experiencing financial difficulties . . . that their circumstances might have changed . . . that the timing might not be right.
Don’t do that. Don’t assume. Keep communicating. Keep engaging. Keep meeting with donors.
And when you do so, ask them how they are doing. Find out what it is that they’re thinking or even worrying about. Make sure the conversation is two-way: share with them what your organization is doing, by all means, but allow space and opportunities for feedback. Make and strengthen personal connections.
Focus on renewals. While a healthy and growing organization should always seek to secure upgrades, identifying those opportunities among your existing donors, in a time of economic uncertainty your number-one priority must be securing renewals. An axiom in fundraising is that it is always easier—and more cost effective—to keep a donor than to acquire a new one. With this in mind, allocate time, energy, and resources to stewarding existing donors over acquiring new donors.
To be clear: this is not an either/or proposition. I am not saying you shouldn't seek to acquire donors—you should!—but as a matter of prioritization, make sure engaging and soliciting your existing donors happens before anything else. For example, if you are forced financially to decide between a prospecting mailing or a house file, probably do the house file. If you are planning donor trips, secure those with existing donors first before prioritizing prospects.
Be selective. Fundraising in difficult times necessitates difficult choices. That is the definition of being strategic: knowing what to do as much as what not to do.
It is a mistake to think in terms of “all or nothing” regarding your fundraising program. The key to being strategic through this difficult time is fine tuning—making adjustments and refinements—not just hitting the brakes on an aspect of your program. A great example is direct mail. During the Great Recession of 2008–09, many organizations stopped or significantly reduced their direct mail program. That was a mistake. Instead of not mailing at all, the wise decision is to be more selective when it comes to direct mail (as my colleague Eric Streiff will explain next week).
“Selectivity” or discretion applies in any area of fundraising—and this strategic approach is the most important factor in determining whether you will be successful or unsuccessful through these tough times. If you want to survive—or even thrive in—these choppy waters, you need to be selective. Take the time with your leadership and development staff to figure out where to focus investments.
Know your budget. How can you decide how much to lean in to this or that? How much to prioritize this or that? By having a good handle on your expense budget. That’s the hard-and-fast reality that you need to reckon with when you are making informed, strategic decisions.
However rough the economic outlook gets, you still need revenue—and that means you still need to make investments in fundraising. And knowing where and how best to allocate your financial resources is critical . . . which means knowing where you anticipate money coming from (and how that’s going to change) and what it’s going to cost to help that money come in (and how that’s going to change).
If you don’t have that written down, there’s no time like the present. Lean on your staff to help put together these projections for an informed—and nimble—outlook on the year ahead.
Final thoughts. Coming out of COVID and the related lockdowns, donors are much more accustomed to using video meetings. Instead of doing a donor trip and spending $1,000+ on hotels, car rentals, and plane tickets, you might want to set up a meaningful Zoom meeting with them. If you were going to take them out to dinner or have a drink, maybe send them a bottle of wine to enjoy with you over Zoom. There’s no substitute for an in-person connection, but donors will also appreciate your thrift when times are tough.
Still engage, but do so more smartly and more economically.
In short, don’t avoid the hard work of slowing down, looking at your plans and planned investments, and making adjustments. And remember: this is the time for tweaking—use a scalpel, not a butcher knife.
That kind of focus will pay off when the economy inevitably recovers.