Focus On: The Economy: Determining the Ask
The struggling economy has made it a challenging time for fundraisers. With disposable income harder to come by, there are fewer dollars to be had and the same number of nonprofit organizations — or even more — competing for them.
Tough economic times also mean there are more people who need the help that charitable organizations provide.
So how can fundraising professionals determine how much to ask from donors? What formulas should they use — or not use? What else should they consider when determining the “ask”?
Formula vs. case by case
To be sure, slow economic times generate more need.
“You have more families and more individuals who are at risk during these times,” says Donna Fletcher, principal of Mission Driven, a San Francisco-based fundraising consulting firm. “The challenge comes with being able to get the message to folks that money is needed now even more than it was in the past because times are hard and the number of people who have needs is greater.”
Americans are philanthropic by nature, even in the worst economic times. According to a study by the American Association of Fund Raising Counsel and the Indiana University Center on Philanthropy, philanthropy has been a major force in American life through good and bad economies and major public crises.
AAFRC reports that the average annual increase in giving is 7.6 percent, but it declines to 5 percent during a recession. Moreover, giving usually accelerates during the year following a major crisis, such as a war.
For these and other reasons, it can be difficult to determine how much to ask donors to contribute. There are many fundraising formulas from which to choose. For example, a local nonprofit might determine that for a capital campaign, donors generally can give three to five times what they give on an annual basis. If a donor gives $10,000 annually, the formula states, it’s appropriate to ask for $30,000 to $50,000 for a capital campaign.
But Linda Lysakowski, ACFRE, president and CEO of the fundraising consulting firm Capital Venture, says that instead of using formulas, it’s essential to assess donor potential on an individual basis.
“I don’t use strict fundraising formulas because you can base a formula on a person’s net income or assets, but then you have to account for his or her [individual] circumstances,” she says. “A person might have a high income, but he or she might also have four kids in college, aging parents they’re caring for and high medical bills, so it’s very difficult to base things on a formula.
“You really need to go through a rating-and-evaluation process,” she continues, “in which you look at each individual and try to find out what this person realistically is able to give.”
Matt Schatzle, development director of The Ocean Conservancy in Washington, D.C., agrees, adding: “Fundraising is all about relationships, and there’s also the science behind trying to figure out what a person is capable of giving. With the general donors that we deal with on a year-in, year-out basis, we know, based on their past giving, what they’re capable of; we know what their potential is. And we balance that with their interests and the needs of the organization. [We] usually determine the amount we’re asking for on a case-by-case basis.”
It’s logical to assume that a difficult economic climate forces nonprofits to lower the ask amount. But that might not necessarily be true.
“I haven’t found that it’s changing the amount,” Lysakowski explains, “but I think nonprofits are trying to look at more options, like giving people extended periods to pay their pledges or stressing things like matching gifts or gifts of appreciated stock that has been in families for a long time.”
More directly, the economy might be affecting the way non-profits make approaches.
“They’re giving donors different opportunities these days,” Lys-akowski notes. “Rather than just asking for a $50,000 gift, they might ask for a $10,000 pledge for each of the next five years.
“Some organizations are approaching their boards and asking them to make a group commitment instead of an individual pledge,” she continues. “This makes it easier for business people on the board whose businesses aren’t doing as well as they have in the past.”
Schatzle says The Ocean Conservancy’s fundraising strategy has remained essentially the same but that donors are approached very carefully.
“We’re aware that our donors are dealing with the economy just as our organization is,” he says. “When talking to our donors, it’s important for us to be diplomatic and sensitive to the economic position they’re in. But there still are plenty of people who have wealth and the desire to support the mission of worthy nonprofit organizations.”
Other tips from the AAFRC:
- Talk frequently with donors to find out what they’re thinking about the difficult economy and how it’s affecting their ability to make charitable donations. Many of them will still make generous donations despite the economy because they care deeply about the work an organization does. Messages on organization Web sites and at actual facilities are a good way to acknowledge donor generosity.
- When board members, CEOs and other top staffers feel it isn’t the right time to do fundraising, development executives must be prepared to respond with a combination of gentle persuasion, budget figures and solid information about philanthropic trends.
- Don’t interrupt the direct mail and telemarketing cycles. Organizations might need to revise the timing somewhat, but they shouldn’t cancel or delay the full schedule of appeals.
The AAFRC predicts that organizations with strong mission-driven programs and values are least likely to suffer a defection of donors.
Lysakowski adds: “One piece of advice I’d give to fundraising organizations in this difficult economy is to focus more on their internal assets. Sometimes fundraisers think they have to go out and find new donors, new foundations or new corporations to contribute, and they don’t take full advantage of the people who are already supporting them. They should spend some time focusing on the top 10 percent of their current donors and try to cultivate them and make them larger donors rather than focusing on the external pool of donors.”
Another important thing for organizations to remember, Lysakowski says, is that they must remind donors about their missions, appealing to them on both intellectual and emotional levels.
“Some organizations are out there trying to raise money, and they don’t do a good job of explaining themselves and what they’re doing with their money,” she says.
Kevin Gault is a Landenberg, PA-based freelance writer.