Addressing the giving plunge: Advice from the great recession

It’s been 10 years since the Great Recession of 2008. Since then, times have generally been good. But because of the new U.S. tax law that went into effect earlier this year, we’re expecting lean times again in the nonprofit sector.

It’s a good time to look back at fundraising guru Mal Warwick’s advice from his 2009 book. It’s titled Fundraising When Money Is Tight: A Strategic and Practical Guide to Surviving Tough Times and Thriving in the Future.

Donations Will Probably Decrease This Year

In our May blog post Charitable Giving Expected to Plunge: How Nonprofits Can Survive, we described why charitable donations will likely decrease this year. Long story short: the new tax law drastically reduces the number of people who will take deductions for charitable gifts, so donations could decrease for your nonprofit this year. Indeed, there are already signs of a giving plunge: the Nonprofit Times reports that charitable giving declined for the first three months of 2018 compared with last year.

The effect on nonprofits might not be a lot different than what happened in the Great Recession. Mal Warwick, the founder of the Mal Warwick Donordigital agency, wrote his book to address the giving plunge 10 years ago. Warwick’s book is about maximizing your nonprofit’s income in the short term and building a foundation for the long term.

Evaluation, Budget Cutting, and Not Wasting Time

One of his first recommendations to nonprofits is to do a hard budget and program evaluation. If you need to make budget cuts, should you cut fundraising, marketing, and communication activities? Or should you cut program activities? There’s not a single answer.

Warwick suggests “reassessing the whole ball of wax,” with special attention to why your donors give. He suggests nonprofits strengthen their case for giving, adjust their fundraising plan, and get going on their asks. Hard times are not the time for much experimentation and innovation.

Nine Practical Steps

Warwick’s last chapter of the book, called “Nine Practical Steps Toward Peace of Mind,” is a call to calmly fundraise in hard times. We’ve already mentioned his first two steps: quickly reassessing your whole organization, and strengthening your case for giving. Here are his other steps.

Stick with What Works

Different isn’t always better. An economic downturn does not justify throwing out what has worked in the past. Using proven fundraising techniques as well as cautious cost cutting is the ticket.

Cut Costs with a Scalpel, Not an Ax

Don’t go for easy ways to cut fundraising costs like cutting out telemarketing efforts or slashing the direct mail budget. You can never stop building your donor database. Your programs depend on an effective fundraising operation.

Fish Where the Big Fish Are

Remember the Pareto principle, or 80/20 rule. It teaches us that a relatively small number of more generous donors account for the lion’s share of the net philanthropic revenue our organizations receive. Keep cultivating your medium-sized and large donors.

Be Attentive to Your Donors

All donors need to feel appreciated. They need to feel informed, and their confidence in your work needs to be constantly reinforced. At no time can a nonprofit operate as though its donors will continue giving no matter how they’re treated.

Do Due Diligence

Gather personal information about potential donors before approaching them for gifts. Avoid generic “Dear Friend” or “Dear Donor” appeals. Get good information in your donor database.

Here are some key data points. Know (or find out) how much each donor has given, and how frequently, and how long they’ve been giving. Especially know what sort of appeal triggered their initial gifts. Was it a letter, a phone call, an email, a visit to your website, or a conversation with a friend?

Step Up Your Efforts Online

Your digital channels have multiple benefits for nonprofit fundraisers, most of them having nothing to do directly with money. Here are three important ones: attracting younger supporters, providing constituents with opportunities for participation in your work, and reinforcing appeals sent through other channels.

Break Down the Silos

Make sure that execs, fundraisers, and content people are checking in regularly and are on the same page. An integrated program of fundraising, marketing, and communications will boost revenue, even under the worst external conditions.

Mal Warwick’s Fundraising When Money Is Tight: A Strategic and Practical Guide to Surviving Tough Times and Thriving in the Future is still in print and available from Wiley or from major booksellers like Amazon or Barnes & Noble.

Additional Resources: Fundraising for Nonprofits

This article was co-written by Michael Stein and Jim Lynch and was originally published in the TechSoup Blog on July 18, 2018. 

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