Impacts of an Economic Downturn on Fundraising
She can be reached at nancye@fusefundraising.com.
Every day there is not-so-good news on the economy. Last week’s article in the Chronicle of Philanthropy, “‘Collapse’ in Small Gifts Poses Threat for Nonprofits as Recession Looms, Report Says” has given many nonprofit leaders a scare. What does this mean for year-end direct response and digital fundraising and what lies ahead for 2023?
Let’s first consider this. While a pending economic slow-down (really, the current economic state!) is nerve-racking for nonprofits, Giving USA showed:
During years of economic growth, average giving has increased by 4.7%.
During the years of economic downturn, average giving decreased by 0.5%.
While an economic contraction may slightly impact giving, it also reminds us to always employ strong fundraising strategies like channel diversification and continual monthly giving promotions as strong defensive strategies. In fact, the current economy reminds us of the early days of the pandemic and the months that followed. While the pandemic is in the rear-view mirror, let’s take a walk down memory lane to think about how we responded then and how to reinforce strategies already in practice.
Acknowledgement of these challenging times.
During the early days of the pandemic, many nonprofits spent time within donor communications to acknowledge the uniqueness of the times. Now as we face economic uncertainty ahead, the nonprofit community has another opportunity to connect with donors in a real, authentic way. This can be as simple as mentioning the economic uncertainty and how the donor may be impacted, but also the way in which inflationary increases have impacted the organization’s ability to deliver goods and services. And, it might be worth acknowledging that while the donors may be able to give less than in the past, all gifts of any size are deeply appreciated at this time.
Remember YOUR unique value proposition, and then remind your donors.
Making a case for why donors should give to YOUR organization is more important than ever. With finite discretionary spending power, and an increasing number of nonprofits asking for support – making it clear why YOUR organization is worthy of the donation is critical in securing the donor’s support.
Diversify. Diversify. Diversify.
Nonprofits need to be nimble especially during times of crisis and economic downturns. Like the days of the pandemic, organizations got creative and adaptive to new strategies. This is just another time to think out of the box. Promote donor-advised funds, planned giving, stock gifts or even crypto donations as alternative ways of giving to the organization. (Further proof on donor-advised giving funds being a solid strategy can found from a recent study by Fidelity Charitable.) If direct mail acquisition sees higher costs per donor acquired, lower the investment (don’t fully cut!) and shift to other strategies which may have a stronger ROI.
Convert donors to recurring.
We all know the importance of recurring donors and their value to an organization. This is especially important in our current times, where organizations are having to do more with less, and converting a larger number of single gift donors into monthly donors (quickly!!) can boost reliable monthly revenue streams in marked ways.
Focus on donor stewardship.
Cultivate your donors, showing gratitude alongside impact of their giving. By investing in current donors and showing them love, retention and value per donor will increase. This best practice is something we should always be doing, but sometimes we get caught in the business of the season and lose sight of this fundamental principle. Show the donors the love!
Invest in your foundation.
As always, it is critical that all the systems in place are working properly, especially those processes that are linked to your revenue. Details matter – and while often overlooked, time spent in the area of business process optimization can yield very significant revenue and efficiency outcomes.
The future may have challenges, but we have been to this rodeo – survived and thrived! Just buckle up!
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