Five Reasons Not to Panic

Recession is looming. Direct mail is dying. E-mail has fallen short of its bright promise. Donors are cynical. Contributions are drying up faster than the ice caps are melting. It seems like everywhere you turn these days, prophets of doom are predicting dark times ahead for fundraising.

If you’re not careful, you might almost start to believe that things aren’t going so well.

Maybe it’s time to take a deep breath. Yes, there is cause for concern. But there also are plenty of good reasons to hold on to your seat and ride out the storm. Here are five truths to help you keep your perspective, stay active, remain focused and even feel hopeful.

1. We’ve heard this story before.
Change is inevitable. So, apparently, is the doomsday prophesying that always seems to accompany it. Radio, it was once darkly predicted, was going to stop people from going to the movies. Television, said others, would be the death of radio.

Only a few years ago, people said the low cost of e-mail would put the final kibosh on direct mail. Others said TiVo would be the death of DRTV.

But in every case, the new technologies turn out — just like the old technologies — to each have their shares of strengths and weaknesses. And ultimately they find their places as valuable parts of an increasingly diverse fundraising process.

Today, for example, study after study is showing that direct mail still is a vital part of the fundraising mix. Those who thought e-mail was the new shining city on the hill are finding that direct-mail donors continue to respond and renew at higher rates.

Maybe more importantly, direct-mail donors are more likely to be “institutional supporters,” i.e., they’re more likely to support your cause and mission, rather than a single issue.

2. Bad times can bring good donors.
Investment advisers often encourage clients to keep investing during economic downturns by reminding them of the benefits of “dollar cost averaging.” In other words, if you regularly invest a consistent amount, your dollar is going to buy more shares when prices are down. Then when prices go up again, you have more shares, as well as shares that are more valuable.

Perhaps nonprofits can benefit from a similar “donor cost averaging.” After all, it’s only logical to assume that the donors you acquire in lean economic times are more likely to be: a) wealthier and more “recession proof,” and b) more emotionally wedded to your mission than impulse givers who make casual gifts to many organizations during good times. Either way, those donors who give in an uncertain economy seem considerably more likely to be long-term supporters with higher lifetime value.

Of course, like every theory, it needs to be tested for your particular organization. But if those high-loyalty donors are out there just waiting to be asked, can you really afford to ignore them?

3. Giving is cool again.
The financial markets are a powerful influence on people’s giving behavior, but as author Kurt Vonnegut reminds us, peer pressure still is the most powerful force in the world.

And right now giving is hot. According to the December 2007 issue of Outside magazine, an influential travel and recreation monthly that targets affluent readers, “generosity hasn’t been so cool since the days of Carnegie and Rockefeller. This frenzied altruism,” the magazine says, “may be driven by a collective urge to right our nation’s karma or a competition to one-up Bono and Brangelina.” But the reasons for this new giving trend are less important than it being spotted and promoted by all kinds of mainstream media outlets.

Moreover, according to the Giving USA Foundation, 65 percent of families earning less than $100,000 contribute almost 60 percent of all individual donations. In 2006, private contributions in the U.S. totaled $223 billion — “roughly the GDP of Poland, and about the same as what we spent on the war in Iraq between 2003 and 2006,” Outside added.

4. Strength through diversity.
To carry the financial metaphor a step further, we all know that a diversified portfolio is an important tool for reducing your investment risk.

In the same way, a diverse, multichannel fundraising approach can provide a safety net for your results in uncertain financial periods. The more avenues you use to reach your donors and prospects, the greater results you can reasonably expect.

Pick up any trade magazine or go to any conference, and you’ll see story after story about organizations that found success and happiness by addressing donors and prospects across a wide range of channels.

Direct mail reinforces e-mail, which reinforces the Internet, which reinforces print and broadcast, and they all reinforce each other by increasing message consistency, raising your profile, and — perhaps most importantly — expanding your potential donor base across a range of age and income groups.

It may seem ironic that these new technologies are finding their legs just as the economy is getting so shaky. On the other hand, using them effectively just might be the smart bomb that helps many organizations make it through this economic downturn.

5. Take the long view.
If you look at a graph of the Dow Jones Industrial Average over the past 60 years or so, you’ll find plenty of ups and downs. Many of the rises and falls are pretty steep. Yet over the decades, the trend always has been upward. Progress has been painful — some businesses survived, others did not — yet over time there has been consistent growth in the overall economy.

I think the same will be true of fundraising. We have to remember that, compared to the rest of the economy, direct-marketing fundraising is still a very new industry. So perhaps we can be forgiven for having a relatively short-term perspective.

The good news and the bad news is that the rise of direct-marketing fundraising also happened to coincide with a period of tremendous economic growth, especially in the U.S. So this troublesome economy might very likely be a painful reality check.

I hate to say it, but deep in our hearts, most of us know that the glory days of easy fundraising ended years ago. We just can’t keep expecting 1990s results in a 21st-century world.

The unfortunate likelihood is that not every organization will survive the challenging economic times ahead. But what has always been true for commercial businesses will prove true for nonprofits as well. Organizations will adapt, change and rise to meet new challenges.

At the end of the day, the vital, life-saving work of charitable organizations, the missions that drive people in the nonprofit community to be the best they can be, will continue. Are there going to be difficult times ahead? No question. But taking on tough challenges to achieve a greater good … well, isn’t that what being a nonprofit is all about? FS

Got something to say about nonprofit fundraising? Write an Op Ed for FundRaising Success. Send your opinion piece (900 words max) to mbattistelli@napco.com. Please put “Op Ed” in the subject line, and be sure to include your full name, title, organization and phone number.