ProSpeak: See the Future by Looking Within

The 800-pound elephant in the room at the DMA Nonprofit Federation’s 2009 Washington Nonprofit Conference that took place in Washington, D.C., in January was, of course, the economy and how fundraising execs planned to cope with what could be a very tough time for charities.

To be sure, many faith-based charities and others serving human needs saw contributions rise. Perhaps media coverage of suffering caused by job cuts helped build a case for giving.

But many others are seeing a real downturn — particularly in responses to prospecting appeals.

Some of the fundraisers at the conference fell into the trap of trying to compare today with the Great Depression, or with the stagflation of the 1970s, or any one of a series of recurring recessions since then. They sought solutions to today’s issues by comparing 2009 to the days when the world was a very different place.

I suggest you look at your own life for guidance. How are you weathering the economy? If you remain hopeful and confident of the future, shouldn’t you translate that same feeling into the fundraising decisions you make?

It doesn’t make sense to recommend cutting back on a fundraising program while you’re still contributing to your own 401k. If you’re doing the latter, you know it’s because it will guarantee a comfortable future when the economy and market recover. So, why approach your fundraising strategy in such a way that will almost certainly guarantee a smaller donations program in future years?

Sure, it’s difficult for a nonprofit to decide between program cuts and continued investment in fundraising, especially when it comes to donor acquisition. Many organizations that are used to paying $40 to acquire a donor are seeing that cost rise to $60 or $70. But, so what? That donor who cost $70 to acquire will still contribute $250 or more over a five-year lifetime.

The cost of fundraising rises, but the program continues to generate net revenue. And most importantly, it will continue to fund the organization in the future.

So, if your organization’s financial house is on fire, take emergency action. Cut all fundraising programs except perhaps renewals and sustainers, and take the maximum amount of net revenue.

But if prospecting results are down and retention rates are within 5 percent or 10 percent of normal, suck it up and plan for the long run. If you’re still investing for your own personal future, then advise your executive director and your board to allow you to do the same on behalf of your organization.

Tom Hurley is president of the not-for-profit division of DMW Worldwide. Reach him thurley@dmwdirect.com.