Archive for August 12th, 2011

August 12, 2011

3 Ways for Nonprofits to Crash & Burn in Current Economy

This week, I was all set to write my blog post. But then, an article at The Chronicle of Philanthropy website caught my attention: “How a Double-Dip Recession Could Affect Giving” by Lisa Chiu. It was a fine article, but it was nevertheless the last straw. I’ve seen way too many articles, blog posts, and Tweets exploring the “What’s going to happen?” question. I have to respond. And, I have to share some meaningful suggestions.

There’s really no mystery. It’s quite simple. I’ll tell you what will happen if there’s a double-dip recession or, for that matter, if the economy improves. Overall philanthropy will follow the growth trend of the Gross Domestic Product. Philanthropy has long correlated to GDP. It averages about two percent of GDP. So, if GDP goes down, giving will go down. If GDP grows modestly, philanthropy will grow modestly. If a miracle happens sometime soon and GDP growth leaps upward, so will giving. We don’t need more studies. We don’t need to guess. We already know what will happen.

Photo by inajeep via Flickr

While philanthropic performance is easily predicted, what is more difficult to determine is how individual nonprofit organizations will do in a bad economy. Since we are nearly powerless to alter the course of the economy, we need to focus our efforts on controlling the thing we can, well, control rather than behaving like a deer caught in the headlights. While I cannot provide a plan that will guarantee success, allow me to share three things that can guarantee that your nonprofit organization will crash and burn during a poor economy:

Stop Asking. It may seem obvious that you should never stop asking, but some nonprofit organizations really do think that the current economic conditions are not good for going out and soliciting money. So, they have scaled back their fundraising efforts. The Vancouver Symphony Orchestra (in Washington state), left their Director of Development position open for a year. They ended up on the verge of bankruptcy. If you ask for contributions, you may not get them. But, if you don’t ask, you certainly won’t get them. Ok, maybe you’ll get a few, but you won’t raise nearly as much money as if you get out and ask.

Do Not Have a Compelling Case for Support. If you’re going to ask people for money, particularly folks who might be struggling themselves, you better have a superb case for support. Just showing up and saying, “Hi, I’m here. Give me money,” might work in good times, though it’s still not a particularly effective idea. But, in these tough economic times, you’ll need to do better. So, get back to basics. Examine your case for support and make it stronger. If you don’t have one, create one. Tell prospective donors how you have wisely used previous contributions and what you intend to do with new dollars. Identify a problem and show prospective donors how they are part of the solution.

Ignore Current Supporters. To save money, some organizations are cutting their stewardship budgets. This is a great way to alienate and lose supporters at a time when you can least afford to do so. During the recession of the 1980s, I had a museum client with a senior executive who wanted to eliminate the member magazine to cut costs. Before doing that, the wise membership director and I put together a member survey to determine whether the membership valued the magazine or not and what, if anything, they valued in particular. We found that the magazine was an important member benefit, even among those who couldn’t remember any of the articles from the most recent issue. The most valued feature of the magazine was the listing of upcoming events. As a result of the survey, the membership department redesigned the magazine with a special pull-out calendar rather than a simple event listing. A follow-up survey found that members valued the publication even more. The membership retention rate even went up! And, yes, the great powers allowed the magazine to continue. In a bad economy, it is time to take especially good care of supporters. It is not the time to alienate them.

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