Don’t Let a Dark Economy Leave Fundraising in the Shadows

With the economic slump, the significant decline of the stock market, and consumer confidence at historic lows, many in fundraising are watching how the current turmoil will affect charitable giving.

Is there any good news or silver lining in this dark cloud? Yes. Fundraisers can take solace in the fact that Americans are remarkably resilient in their charitable giving. Individuals account for 88 percent of charitable giving in this country, with the donations equaling 2.2 percent of the nation’s gross domestic product — a figure that has changed very little in the past decade.

While it’s true that past economic downturns have cut deeply into the bottom lines of nonprofit organizations, research indicates that it might not be as dire as conventional wisdom might predict.

According to Giving USA, only twice in the last 40 years have donations failed to keep pace with inflation. That was in 1973 and 2001. Even when the economy is in a recession or just under stress, historically giving still grows; it might grow more slowly, but it consistently continues to increase.

The looming question now for all of us in the charitable-giving arena is whether that trend will stick in this kind of downturn, which rivals that seen in 1929.

Since the profession of fundraising barely existed in 1929, it’s difficult to look back and retrieve an accurate prediction for our future. But if the many years since have taught us something, it is that charitable giving is likely to continue to be a priority for most Americans.

Forever the practical optimists, what can glass-half-full fundraisers do to encourage charitable giving? With some planning, and with a clear and compelling mission, you can not only survive, but thrive.

Keep asking
It’s a down economy, yes, but don’t succumb to fundraising paralysis. Keep asking despite the news of the economy. You might get smaller checks, or cash from depreciated stock, but by not asking you won’t get even those. So ask.

Review your case
Many case statements don’t motivate anyone to do anything, and they’re dry and flat. Make sure yours is current and compassionate. Read one of Mal Warwick’s books to learn how words can make the difference. Now is a crucial time to make sure you are clearly making a great case for the cause of your organization.

Tap into retirement
Though their assets might be down also, donors can name your charity as the beneficiary of their retirement accounts, pension plans, life-insurance policies, or even make a gift of the policy itself. Donors 70.5 years or older can make gifts totaling up to $100,000 a year from their IRAs to qualified charities without incurring income tax on the withdrawal. This provision was recently renewed through the end of 2009 as part of the Emergency Economic Stabilization Act of 2008.

Create a wish list
For many donors — and for many companies — it’s easier to part with in-kind items such as clothing, furniture and other material goods rather than cash. Creating a wish list of goods and services your organization needs — and posting it prominently on your Web site, newsletter and other public locations — can reduce expenses and ongoing operating costs. As companies are downsizing, you might even do them a favor by taking items for which they no longer have good use.

Leave a legacy
Go for those bequests! While we all like current donations today, the single largest gift many donors make is when they die. Make sure you encourage your donors to name your organization as a beneficiary in their wills or estate plans so that you secure long-term support for your institution.

Encourage matching gifts
Many companies match their employees’ charitable contributions. For a donor finding it hard to maintain her current level of giving, highlighting this feature might increase the chances of keeping your annual giving at its current level.

Build awareness
People can’t give to you if they don’t know you’re there. People won’t give to you until they’re convinced of the importance of your work. Every nonprofit needs a strategic public-awareness program to support fundraising. It complements your case statement and reinforces the benefits you bring to the people or cause you serve. Don’t be shy.

Demonstrate financial wisdom
Beyond making your case, BUT NOT IN PLACE OF YOUR CASE, take the time to show your donors how well their gifts are being used. Donors want to feel confident that their donations will make a difference, and feel secure that you are wise in how you spend their dollars. Consider how your communication looks and feels; make sure your case is good and clear. If not, buff it up. You will use that information over and over again.

Ask for time
Giving one’s time and expertise can often be more valuable than making a financial contribution to a charity. For some organizations, volunteers are key and can perform any number of important tasks, provide insights on improving practices, and serve on organizations’ boards with distinction.

Create meaningful donor relationships
Receiving a gift is only the beginning of the relationship with the donor. Now is a great time to focus on ongoing stewardship of current and previous donors. Thanking your donors is an important part of stewardship, but strong relationships are built through regularly communicating the mission, seeking donor input and sharing success stories. Increasing donor loyalty can maintain the level of support regardless of the economic circumstances.

So, remember, stay positive. This will turn around. Don’t let overly cautious board members deter you from the critical work at hand, and the necessary planning for the future. Don’t stop asking. Be ready for more robust times, and have a plan for when things turn around.

Look at this as an opportunity to challenge your conventional thinking, and take a fresh look at your organization and how you attract and retain donors. It’s tough out there, but some nonprofits are thriving. They have clear strategic plans. Their donors are committed to the cause, not just the individual appeals. They tell their stories effectively. And they believe that they are up for the challenge because their mission is too important to do any less.

Eileen Heisman is president and CEO of National Philanthropic Trust.