Are we in a recession? If not, will we be by the end of the year? The answers continue to divide economists.
But one thing’s for certain: You shouldn’t fundraise the way you did when the economy was stronger.
Here are tips on how to stay solvent in tough economic times.
Continue to build strong relationships with your donors. Engage them personally. We know, we know. You’ve heard all this before. But truly, it is more important than ever, now. Why? Because the number of individual donors giving to nonprofits has fallen off for five straight quarters.
Before you get discouraged, consider this: Giving increased in Q3 of 2022. Donors down, but dollars up. This suggests the path to resiliency – which is an essential trait for your nonprofit – is paved with re-engaged donors (those who didn’t donate last year, but did in years past). Here’s proof from our friends at the Fundraising Effectiveness Project: A recent study found the number of re-engaged donors rose by 6.3% last year. Great news!
Bottom line: During tough economic times, it’s often easier to re-engage a past donor than it is to procure a new one. So reach out to folks who gave in 2020 and 2021, before you focus your energy on finding brand new donors. Remind them of their previous donation and reiterate what you were able to do with it. The more specific you can be, the better! Then explain how your goal is to fill emergency/rainy day funds to see your org through these trying times. And be sure to let them know where you stand. You’re not struggling, necessarily. You’re simply preparing for the worst, while maintaining service levels and quality.
Some donors may be feeling the pinch of a (looming) recession, as well. Before they stop giving altogether, see if they’d be amenable to decreasing their donations instead. A smaller donation is better than no donation. Donors with whom you have a good relationship won’t be offended by the suggestion, especially if you’re being 100% transparent. Again, always speak mission language. Tell your donors why their support is so essential, especially NOW. Remind them of what you’re able to do, together. What they’ve helped you do in the past, and what you hope to do in the future. Remember, both donor development and fundraising are ALL about relationships!
Think of industries that prospered during Covid and you’ll probably think of technology. Technology is like one of those plants that thrive in darkness (i.e., troubled economic times.) Therefore, the more your nonprofit leans into tech, the more resilient you’ll be in the long-term. For example, tech can help you launch a peer-to-peer or crowdfunding campaign. It can streamline donor matching campaigns, making it easier for your donors to give. What else? Marketing. Volunteer coordination. Data retrieval. So many aspects of nonprofit management become simpler and more streamlined with technology.
Not tech savvy? SOMEONE on your staff is. Maybe several staffers or volunteers are. As part of your resilience plan, the time is right to implement cross-training.
Reskill Your Staff
The strongest companies are the ones in which the bosses are in the trenches. The ones whose executives can do any job in the building. Some of your staff members may only be familiar with their own departments. Invest in your people and train them to do other jobs. Maybe your volunteers would be willing to take on other roles within your nonprofit. Build up your resources so it won’t hurt so much if you lose some of them, which can be difficult to avoid in a recession.
Longer Strategic Planning Cycles
Now’s the time to play the long game. Your service offerings probably changed during the pandemic. Look at where you are today, as opposed to three years ago today. You survived. But how? How did you keep from folding, as so many small businesses and nonprofits did? Will those strategies help you prepare for whatever 2026 may hold?
Answer these questions by viewing your org and your mission through a long-term lens. Are you using scorecards? Scorecards are management systems that apply your and your team’s abstract ideas to day-to-day operations. Use them to evaluate your operations, your events and your activities. Are they contributing to your success and your mission? Providing adequate ROI? If not, do they deserve more time and resources, or should you try a new approach? A different direction? Balanced scorecards are effective tools to keep everyone on your team focused on your mission. Another benefit is that they help ensure you’re not spinning your wheels uselessly. It all contributes to your long-term strategy – AND success.
Fundraising Event Strategy
Your events look different after the pandemic, don’t they? Much has evolved since 2019, particularly what donors want and expect from live events. Therefore, you should plan them differently, but make sure you’re still implementing innovative, data-driven strategies. Your goals haven’t changed – you still want your events to make you as much money as possible, while making your donors as happy as possible. We’ve noted lower level donations ($499 and below) tapering off an average of 6% for the last 4 quarters. Meanwhile, mid-level gifts ($500-$2,499) show small yet steady growth. Most notably, higher level investments ($2,500+) continue to show significant increases when you’re using effective donor development strategies and observing market adjustments.
So how do you win at the event fundraising game? Hire a pro to guide you through what’s changed. Be certain you’re not just regurgitating what you’ve always done. Your donors expect and deserve better. And you’ll make more as a result!
Seek Out Grants
A final two suggestions on raising money during a recession. First, go after grant money. Unlike loans, which you often have to pay back, grants are GIFTS. So if you’re not doing it already, try to procure grant money from government agencies. It’ll take some research: You’ll need to learn what agencies are handing out grants, and which ones your org may qualify for. Keep in mind, you’re going to have a ton of competition from your fellow nonprofit leaders! So think of what you do best and what sets you apart before you ask for grant money. Grants are one of the quickest ways to refill your coffers.
Donor Advised Funds (DAFs)
Another efficient way to fill your coffers is through donor-advised funds. DAFs offer your supporters a chance to donate when they’re best able to – for example, after receiving a bonus. Here’s how they work: Your donor makes a contribution, which becomes its own fund, and they collect immediate tax write-off. As the money in the fund collects interest and grows, it can then be distributed to nonprofits through grants.
You may need to do a bit of homework to get in on this action, but it will pay off! Reach out to your local community foundations and/or investment firms (Fidelity, Schwab, Morgan Stanley) which manage DAFs. Talk to them about your mission, then ask them to talk to their clients about your mission, in particular the clients who have a history of charitable giving. DAFs can open up a whole new world of potential donors, who will be happy to give once they know you – and your org – exist!
Where’s Your Money?
Think the collapse of Silicon Valley Bank in California didn’t affect your org? You might be right – or not. There were nonprofit organizations among SVB’s tens of thousands of clients. Regulators enacted emergency measures to backstop deposits and financial institutions associated with the failed bank, but there are still a lot of unanswered questions: How will this affect the economy? What’s next? WHO’S next? Make sure you don’t have any questions about where your money is and whether it’s safe. Your staff and service recipients are counting on you!