Dynamic Fundraising Tips for the New Recession Era
Many of the world’s top economic minds think that a global recession is coming, while others think it’s already here. Either way, the word “recession” is coming up more and more in nonprofit conversations. Unfortunately, this is a time when people and institutions have less disposable income, meaning nonprofits often receive fewer donations and may struggle to keep their charities running.
Data from the Great Recession validates this: From 2000 to 2008, the share of U.S. households donating to charities held relatively steady, dropping only one percentage point. However, 2010 marked a turning point, with the share of those who gave declining much more precipitously. Similarly, during the COVID-19 recession (February to April 2020), one survey showed more than 70% of charities worldwide witnessed a significant reduction in contributions.
Believe it or not, there are some silver linings in all of this. During a recession, not all causes are equal, and a good number of nonprofits end up faring rather well, particularly those focused on issues caused by economic hardship and perceived as filling pressing needs, such as homelessness, food banks and healthcare. Additionally, history has demonstrated that fundraising tends to rebound quite well after a downturn.
But let’s consider for a moment that not all nonprofits are perceived as filling a pressing need — for example, museums, symphonies, historical societies and others. How can they best persevere through a recession? Here are five tips.
1. Clearly Communicate With All Stakeholders — Including Managers and Donors
When it comes to calculating and communicating projections to managers, be conservative and remember that it’s always better to surpass modest projections. With regards to donors, remind them that your organization’s purpose does not go away when the economy suffers. In fact, your need may very well increase — and keep your mission and vision firm. Now is not the time to tone down awareness efforts.
2. Focus on Retention
Nonprofits are always competing for attention and gifts. During a recession, those nonprofits not necessarily focused on filling pressing needs may deem it appropriate to turn down the volume on their support requests — for example, by reducing ad spend.
Emergency donors — those acquired during rapid response moments — don’t always have the best reputation for staying engaged and making ongoing contributions once a crisis has dissipated. This is where other nonprofits who aren’t facing the same level of urgency can benefit from shifting focus from acquisition to retention of existing donors. The first advantage of this approach is that the nonprofit will likely be pursuing an entirely different audience than emergency donors, meaning that any extra noise in the larger fundraising landscape will be less of a competing factor.
Second, when a nonprofit focuses on retention, it positions itself to capture that all-important second gift, which is vital to long-term fundraising stability, as repeat givers have an almost 1,000 times higher average value over five years than a donor who only gives once. In this sense, a recession gives nonprofits a unique opportunity to really hone in and pinpoint those donors that aren’t just impulse givers, but truly care about their cause. Donors who give at the height of recession are telling their chosen nonprofits a lot about their values.
3. Don’t Be Afraid to Renew at a Loss
Aligning with the previous point, never be afraid to renew a donor, even if it’s for a lesser amount than his or her previous gift. When a nonprofit is renewing and retaining donors, even for smaller amounts, this not only maintains a strong donation pipeline — thus future-proofing the organization — but also potentially positions the nonprofit for a nice lucrative bounce-back once the economy returns to normal. Past recessions have shown that those “non-essential” nonprofits are often the best rebounders. Following the Great Recession, it was the arts, culture and humanities sector that achieved the largest giving increase across all nonprofits.
4. Acknowledge and Contextualize the Moment
While a “non-essential” nonprofit may not be competing directly with those deemed essential for emergency donations, it’s still important to acknowledge and contextualize the moment in your ask. If appropriate, explain how current economic conditions are making your work more important than ever. Also, per the above point, acknowledge the economy and be willing to ask for a lower amount than a previous donation. Just as magazine companies often target existing subscribers with increasingly better offers to finally get them to renew, nonprofits must be prepared to make increasingly acceptable asks, as this is the key to overcoming the inertia of giving, which is particularly strong when money is tight.
5. Don’t Turn Off Donor Acquisition Unless Necessary
It is often much cheaper to secure gifts from existing donors than to cultivate new ones, which is why I advise putting more resources toward retention during a recession. But a recession can also be an ideal time for nonprofits that have the reserves to shore up any weaknesses in their acquisition strategy, like improving SEO and retargeting every single visitor to their website. The key for those that can afford it is to be smart and surgical about it, turning off donor acquisition only as soon as it starts to far exceed the cost of donor reactivation.
A looming economic downturn is understandably spurring anxiety among nonprofits, but it doesn’t necessarily have to. The most important thing for nonprofits is to never give up, remembering that in four out of seven recent recessions, giving continued to increase, albeit sometimes at a slower rate than in non-recession years. You just may need to pivot a bit.
Keeping your mission and vision firm, focusing on retention, recognizing the value in all gifts, being deliberate and mindful in asks, and getting really smart and resourceful about acquisition can be the keys to surviving a recession and perhaps even coming out stronger on the other side.
Dan Reed, CFRE, is the senior account director of digital fundraising for Media Cause. Since joining Media Cause in 2018, Dan has enjoyed the opportunity of working with a wide variety of nonprofits that are striving to make the world a better place. He’s been inspired on a daily basis by helping passionate clients achieve their fundraising goals.
In 2021, Dan earned his Certified Fund Raising Executive (CFRE) designation. Dan also holds his master's degree in strategic fundraising and philanthropy. Prior to Media Cause, Dan held positions at Us TOO International Prostate Cancer Education and Support Network, the Smithsonian Institution, and World Food Program USA.