A Challenging Year Ahead for Fundraising
There's been a lot of ink used on the pandemic that has wreaked havoc, and rightly so. However, as a professional fundraiser, I think there's one story that hasn't been noticed too much by nonprofit leaders. As the philanthropic community moves to overcome the challenges happening within their organizations concerning revenue, it's one of the positive areas where nonprofits should focus.
Later in this article, I'll share some other insights about what nonprofit leaders need to consider to get beyond surviving, but let's first start with a discussion around donor-advised funds.
The Surge in Giving From Donor-Advised Funds
We know that this year, there’s tremendous need to overcome the nonprofit revenue challenge, which was caused by the pandemic and the looming recession, with massive job losses not seen since the Great Depression. Nevertheless, something fascinating has occurred with donor-advised funds.
In a response to the pandemic, earlier this year, Fidelity Charitable challenged its DAF donors to give $200 million in grants to nonprofits before May 5. The good news is that it reported an astronomical $2.5 billion in grants made so far in 2020 — $236 million of which will go directly to the COVID-19 relief, supporting over 9,600 nonprofits and surpassing the $200 million goal it had originally set. In effect, it represents a 18% increase over the prior year during the same period.
“The $2.5 billion in grants from our donors so far this year will go a long way in helping sustain all nonprofits through this crisis and beyond,” Pamela Norley, president of Fidelity Charitable, said in a press release. “We believe our donors will continue to act generously as the needs facing the nonprofit community and society at large have never been greater.”
3 Must Dos for Any Nonprofit and Charitable Organization
What the example about DAFs tells us is that there is an enormous opportunity for nonprofits to tap into that money. Nevertheless, I think that three things are absolutes for nonprofits and charitable groups for the foreseeable future:
- All contact with supporters has to be personal. Unfortunately, there’s no playbook for this situation, but it’s essential to come across as transparent, genuine and caring.
- It’s vital to stay engaged with supporters. It is not the time to be shy. There's a lot of competition for the aid of donors and volunteers, and it's vital to stay top of mind by remaining engaged with your constituents.
- Do virtual events to keep things moving along. Although it's not the same as doing in-person events, the fact remains that technology can keep things going. Do events through Zoom or other livestreaming platforms whenever possible.
Donors Take the Lead, But Savvy Nonprofits Can Benefit
The points above are the common, but essential, suggestions that any smart nonprofit consultant or marketer is going to share with you. Now, let's drill down a bit more to enumerate what other things your nonprofit should consider during these challenging times for fundraising. Again, there's money out there for nonprofits, as Twitter's CEO, Jack Dorsey, demonstrated when he pledged to give $1 billion to COVID-19 relief.
- Look ahead six months, a year, two years. Planning is essential, and you have to plan and understand your revenue not only for the near future, but for the long-term.
- Start thinking of combining forces. During economic downturns, it’s inevitable — nonprofits merge and consolidate for economies of scale. Explore the legal and practical ramifications for your organization uniting with another.
- Evaluate how leadership has governed in a crisis. I have one client whose board chair held back his $50,000 annual gift — he had the money, but was concerned about the economy. What would you do with that board member?
- Understand the stock market implications for giving. The assets of many donors are tied up in fixed assets (e.g. homes) and the market. So it’s time to think about creative philanthropy and even planned gifts.
- Understand and promote the benefits of the CARES Act in terms of giving. Your leadership team has to understand the CARES (Coronavirus Aid, Relief and Economic Security) Act and apply it to your nonprofit. Here’s one resource to understanding it.
- Don't make assumptions about donors and whether they can or will give or not. Some donors are doing great through this and will continue to do well. So the bottom line is to make an ask for support.
- Understand the shift in focus on the poor and needy in the U.S. One donor told me that he and his wife wrote seven big checks on Easter Sunday to charities that only serve the poor. In other words, giving priorities are shifting.
- Expect an overburdened fall with events. By fall, perhaps every nonprofit will be doing an event, which will cause donor fatigue. So plan events before that time and spread them out to ensure attendance and support.
- Plan for financial stability by having six months in the bank. The fact of having six months of operating revenue in the bank should be something your nonprofit should do at any time. However, now it's even more essential to increase reserves.
- Don't believe doomsday articles about giving. Those articles are usually wrong and meant to get you to read the piece. Be thoughtful, plan and take action. With calm and rational thinking, you can thrive in this environment.
Finally, there is one last significant event that happens in November of 2020 and could make things even more uncertain. That's the presidential election. The months leading up the election, and perhaps the weeks after will cause donor interest and priorities to shift, so be ready.
Editor's Note: This article was originally published in the May/June 2020 print edition of NonProfit PRO.
Paul D'Alessandro, JD, CFRE, is founder and chairman of D'Alessandro, Inc., a fundraising and strategic management consulting company. He is also a lawyer and a tax law specialist for nonprofits.