ProSpeak: Fundraising and the Economy

Whenever the economy enters a recession, parts of the fundraising industry and much of the commercial industry enter “crisis mode.” The two most vulnerable giving channels are probably 1) corporate donors, sponsors and partners (particularly among corporations hit hardest by the recession) and 2) foundations, because their assets have decreased so significantly.

Direct-mail and online donations are significantly less affected by economic downturns.

Most small gifts are not tax-motivated. In addition, the more press the plight of the poor or disadvantaged gets, the greater the apparent willingness of those with lesser means to share with others. We have seen this before in other recessions, and unlike commercial mailers who cut their marketing budgets quite severely when conditions worsen, charities tend to try to raise funds come rain or shine. Thus, to a large extent, direct-response fundraising is countercyclical — or at least less subject to cyclical influences.

Among organizations raising money through direct response, the hardest hit are likely international third-world relief charities and domestic human-services charities. Other organizations tend to continue on their paths without severe damage from modest economic declines.

For more information about the impact of the economy, download the PowerPoint presentation and other resources recommended by CDR Fundraising Group from our Nonprofit Consulting division Web site.

Multichannel fundraising
One strategy that many charities are exploring to build a broader and more sustainable revenue model is to expand the means through which they solicit donations, often referred to as fundraising channels.

Many charities that already raise money through multiple channels demand more sophisticated coordination or integration among those channels. Some have established direct-mail programs, which may include monthly giving, high-dollar programs, deferred giving, middle-donor programs (for very large charities), etc.

A good number have developed online marketing programs. Others have well-developed major-donor programs, corporate sponsorships, cause-marketing programs, and foundation and government grants programs. Very few (but highly successful) charities have developed direct-response television, general outdoor and indoor advertising, speakers’ programs, extensive event programs, and active involvement in public relations.

As charities attempt to secure more funds by opening additional fundraising channels, they increasingly demand that the consultants that serve them coordinate those activities. This demand presents charities with several challenges and opportunities. The challenges are:

• Training and developing staff that understands the strategy and implementation of multichannel programs and not just independently operating fundraising programs.

• Training and developing staff that can create, develop and implement coordinated strategies; secure appropriate metrics; and provide analytic information on all channels and how they work together.

• Coordinating staff and volunteer teams so each knows what the others are doing.

• Identifying high-quality, economically productive external services in each of the channels.

• Identifying and working with integrated database solutions so organizations can have one view of multichannel donors rather than operate from differing databases.

The opportunities include:

• Increasing net income.

• Securing a more demographically diverse funding base and diversified revenue sources, which lessen the charity’s economic dependence upon a single channel.

• Securing a larger market share and greater brand recognition.

• Putting a premium on economic productivity and not volume-based fundraising.

• Starting with current strengths (major donor, monthly giving, online, corporate and cause marketing, direct mail, etc.), but then expanding into other channels, thus reducing risk and increasing reward.

(To share your thoughts on how your organization is coping with fundraising in a down economy or adopting a more multichannel approach, e-mail mbattistelli@napco.com.)

Geoff Peters is CEO of CDR Fundraising Group. Reach him at gpeters@cdr-nfl.com