While it can feel like there is no roadmap to direct us through this period, the nonprofit world has weathered past challenges that have offered valuable lessons that continue to be relevant. These past lessons, along with trends we have seen so far during this latest crisis, can help us make good decisions and avoid reactive responses. As the weeks of quarantine have turned into months during the COVID-19 crisis, trends have emerged and developed. We hope that knowing these trends both validates your own experience and helps to illuminate a path forward for your organization.
Fundraising from the general public is more similar to 9/11 than the Great Recession of 2008.
The current giving behavior more closely resembles a “disaster” or “wartime” response rather than one resulting from an economic downturn. To this end, donors at all socio-economic levels are making gifts, and some are even contributing to the COVID-19 response by making masks and other equipment/supplies needed by first responders. Donors feel like they are making a difference and are part of the solution when they are involved and engaged at this level. After 9/11, fundraising remained strong for some time as a response to the tragedy and, like today, saw donations being made by people at all levels of capacity.
In contrast, the giving response during times of economic distress and recession can contract overall. Historically, the technical definition of recession has been two consecutive quarters of negative growth in the GDP. The Giving USA Foundation annually canvases giving in the United States and for more than 60 years has produced credible data on giving patterns by individuals, corporations, and foundations across all nonprofit sectors. In all those years, the Giving USA Foundation has only reported three years where overall giving has contracted (1987, 2008 and 2009) despite the existence of technical recessions during other years. This means that during some economic downturns – during wartime, during civil unrest, and during disasters (manmade or natural) – fundraising has marched on. It is probable that we will experience the historical technical definition of a recession in 2020, but it is not necessarily probable that we will see an overall contraction in fundraising. In fact, with the outpouring of support to date for COVID-19 causes, 2020 is likely to be another year that overall philanthropy advances in the United States.
Fundraising through the COVID-19 crisis has been strong but redirected.
While overall giving appears to be robust, donors were initially most interested in responding to the COVID-19 crisis by providing gifts to organizations that provide critical and essential needs, or to organizations that are first responders to the crisis. Some organizations have made it clear that most or all their first quarter and perhaps their second quarter giving was or will be directed in this manner. More recently, donors pivoted towards Arts and Cultural nonprofits as well as Educational institutions when the breadth of the impact on these organizations from the COVID-19 pandemic became known. Donors became concerned about the long-term viability and sustainability of the organizations they have loved and supported over many years, and many donors have now provided these institutions with some level of support through spontaneous giving. We expect this trend to continue as nonprofits struggle with lost earned income that cannot be recouped.
Emergence of the “mini-campaign” to achieve annual fundraising goals.
In a typical annual giving program, the concept of a “mini-campaign” is generally not favorable. A mini-campaign within the context of annual giving for a specific purpose can cannibalize existing annual giving and cause significant cash flow problems down the road. However, mini-campaigns under the current circumstances are different – and can be effective. Start the process by identifying what revenues you will lose through the year (such as ticket sales or program costs; anything that is dependent on people showing up). Concurrently, identify what operating expenses will increase as a result of working in a different environment. Subtract savings garnered from staff working at home or other operational savings and you will determine the gap in your annual operating budget needed to ensure you finish the fiscal or calendar year in the black. This gap may range from a few thousand dollars to a few million (generally, gaps in the $250-$500k range are not unusual).
Once you have identified the gap caused by lost revenue streams, increased expenses, and subsequent operational savings, first consider opportunities that are available to regain revenue (for example CARES Act opportunities, MCACA, Chambers of Commerce or United Ways) and apply for each opportunity available to your particular organization. Donors appreciate that organizations are trying to mitigate their gap through these opportunities before coming to them. Once these opportunities are exhausted, then fundraise towards the remaining gap.
Like all fundraising, successful fundraising to the gap begins with a winning strategy. If your organization conducted a “one and done” online appeal in the early days of the COVID-19 crisis it most likely was not successful for any number of reasons. Fundraising appeals that are very specific and targeted, recurring over the course of a few weeks with an accompanying digital strategy and a matching gift have been much more successful. Further strategies to meet the gap may include turning events that were intended to be “in person” into virtual events, major gift solicitation, and grant writing.
Individual major donors are more important than ever.
In any given year, according to the Giving USA Foundation, the percentage of gifts that come from individuals is approximately 80%, with 15% of gifts coming from foundations and 5% of gifts coming from corporations. In a downturned economy, the percentage of the pie given by individuals grows as corporate giving and foundation giving declines or stays steady. This means that it is more important than ever to seek gifts (of all sizes) from individuals. It is important to take time to identify donors that can help make up the fundraising gap and reach out to them. Begin by discussing their personal experience with COVID-19; many people want to share what they have experienced. Let the donor know what your organization is doing and how it is adapting to the ever-changing circumstances caused by the pandemic. Outline the steps the organization has taken and is taking to mitigate financial challenges caused by the crisis. Ultimately, use your judgement about the final step to take in donor calls. Your call may be a cultivation call, but if the conversation goes well and their personal circumstances warrant it, you may have the opportunity to discuss your funding gap. If support is offered, be specific; give donors tangible examples of what their support would allow the organization to accomplish. Donors can become overwhelmed when a problem feels too big. Show them how their gift will make a difference to your organization’s constituents.
You now have time to plan.
Under our normal everyday circumstances, we are pulled in many different directions and rarely have the time to strategize and plan. As you consider the current situation for your organization and how the pandemic may impact operations and fundraising going forward, use this time as a valuable planning opportunity. The organization that carefully thinks through what lays ahead, will be legions ahead of organizations that believe they will be able to pick right up where they left off before the pandemic gripped our worlds. Think about all aspects of your programming, operations and fundraising and create realistic, achievable plans for the remainder of this fiscal year and the next.
Opportunity to do things in a new way to move your mission forward.
One of the most inspiring aspects of the COVID-19 crisis is the overwhelming commitment and dedication on the part of nonprofit organizations, hospitals, educational institutions, and faith-based organizations to deliver their important missions to their constituents. From the rise of telehealth to online learning platforms and programs to Zoom rehearsals, organizations have been creative and innovative, helping to move them forward for the future.
This is, of course, the silver lining to the current crisis, and the thing many of us will remember far into the future as a turning point to delivering services in a different way to potentially far more people. As organizations have learned, the work is still important – it just must be delivered in a different way. Share these new approaches with your supporters and how you anticipate continuing to use them in the future. They will be happy (and relieved) to hear that you are still moving your mission forward.
But most importantly, if your organization is not doing these things, your organization may lag far behind others when we finally return to “normal.”
Those who learn, grow, and become more resilient will be stronger on the other side.
One of the most important lessons I learned myself during 2008 was that growing, learning, and becoming more resilient made me stronger when the economy improved in 2010. And I watched as our nonprofit clients experienced the same thing. If they were bold, persistent and compelling in communicating with their donors, and continued to move their mission forward in creative and innovative ways, they not only weathered the storm better, but were able to grow faster when the economic crisis finally passed.
While this is an historic and challenging moment in time, it is also an opportunity to find new and creative approaches and to reassess how you have been doing things. Organizations that continue to make their case and continue to communicate with those who love and support them will learn, grow, and be stronger on the other side. Keep calm, and keep moving!