Sector Report: Fundraising 2009-2010

What will 2010 look like? Certainly much depends on how nonprofits' current end-of-year 2009 fundraising campaigns go. If nonprofits raise good sums of money from online donors during the October to January time frame, then they will be emboldened to keep investing in online donor acquisition and cultivation in 2010. But if the end-of-year fundraising goes poorly, then some nonprofits may fearfully pare back spending in the new year. While that's just human nature, it actually would be a dubious strategy, since decreasing investment would make it much harder for an organization to start growing again as donors recover. For that matter, even in good times, an organization's e-mail list experiences a natural "churn rate" of about 30 percent, meaning that about a third of the list turns inactive (with or without the users unsubscribing) every year. So just to offset this natural churn, you need to attract an additional 30 percent to your e-mail list every year — and more if you want to grow the list.

This is called the "Red Queen Principle" because, in the story of "Alice Through the Looking Glass," the Red Queen character keeps having to run as fast as she can, just to keep from falling behind. It's like that with nonprofit fundraisers who want to just maintain — never mind grow! — the donations they receive from individual donors.

Vinay Bhagat, founder and chief strategy officer, Convio
I am hopeful that things will get better, though I'm not expecting a rapid recovery. I am at core an optimist, but more importantly the discussions I've had with my economist friends who work at the World Bank/IMF suggest that we are in a recovery, albeit a slow one. GDP will grow even factoring out heavy government stimuli, and philanthropy has historically correlated well with GDP. I am concerned about the impact of long-term unemployment on giving at large.