Fantastic News and Opportunity for the Nonprofit Sector!

The nonprofit sector received a major piece of good news at the end of July. American Gross Domestic Product in the second quarter of 2018 grew at the annualized rate of 4.1 percent. This represents the economy’s fastest growth rate since 2014. GDP growth in the first-quarter was a healthy, though unremarkable, 2.2 percent.

I don’t really care if you love or hate President Donald Trump. I’m not making a political statement. I’m simply reporting on an economic fact that has profound implications for nonprofit organizations.

The news is fantastic for charities because overall-philanthropy correlates with GDP. For more than four decades, philanthropy has been between 1.6 and 2.2 percent of GDP. In 2017, philanthropy was once again at 2.1 percent (Giving USA). This means that when the economy grows, we can expect growth in charitable giving.

Think of it this way: For more than 40 years, the nonprofit sector has received about a two percent slice of the economic pie. It’s safe to say that that approximate proportion will continue. So, if the economic pie becomes larger, that two percent slice becomes larger as well.

While I’m oversimplifying, my fundamental point is sound: When the economy grows, so does philanthropy.

Some economists and commentators believe the robust GDP growth rate is not sustainable. However, if the impressive economic growth continues, or even if growth continues at a more moderate pace, we can still expect 2018 to be a good year for charitable fundraising.

Given the positive economic environment, you have an opportunity to successfully raise money for your organization. But, it’s up to you to seize that opportunity while the positive economic environment lasts.

Here are 10 things you can do to raise more money while the economy is good:

1. Hug your donors. Ok, maybe not literally. However, you do need to let your donors know you love and appreciate them. Do you quickly acknowledge gifts? You should do so within 48 hours. Do you effectively thank donors? You should do so in at least seven different ways. You should review your thank-you letters to ensure they are heartfelt, meaningful, and effective. Have board members call donors to thank them in addition to your standard thank-you letter.

2. Tell donors about the impact of their gifts. Donors want to know that their giving is making a difference. If their giving isn’t making a difference or they aren’t sure, they’re more likely to give elsewhere. So, report to your donors. Tell them what their giving is achieving and that their support is being used efficiently.

3. Start a new recognition program. One small nonprofit organization I know started a new, special corporate giving club. CEOs of the corporate members are placed on an advisory board, receive special recognition, and are provided with networking opportunities. This new recognition program generated over $50,000 in just a few months. While enhancing existing recognition efforts is beneficial, starting a new recognition program can yield significant results.

4. Ask. Your organization is providing important services. It needs money. Give people the opportunity to support your worthy mission. When you ask for support, just be certain not to limit the ask to cash gifts. Research shows that organizations that receive non-monetary donations (e.g., stocks, bonds, personal property, real estate, etc.) grow significantly more than organizations that receive only cash contributions. Partly as a result of the new income tax code, the number of Donor-Advised Funds has grown significantly. So, make it easy for your supporters to give from their DAFs.

5. Ask more often. If your organization needs more money, ask for it. I’m not suggesting that you send donors another bland, generic, non-specific appeal. Instead, I’m saying that you should contact your donors again for a specific purpose even if they’ve already given this year. Be sure to acknowledge their previous support, and then ask donors to give for the specific purpose. The more specific you can be and the more passionate the appeal, the more likely you will be to achieve success and minimize the risk of offense.

6. Ask more effectively. When was the last time you hired a direct mail consultant or a phone fundraising service provider? When was the last time you read a book about direct mail or phone fundraising? Consider contracting with an expert. At the very least, brush up your own skills. Read a book. Attend a workshop. Judging from the direct mail appeals and phone fundraising calls I receive, most nonprofit organizations can dramatically increase their fundraising results by doing a much better job with direct response appeals. Test different appeals at different times to see what works best for your organization.

7. Enroll donors in a monthly-giving program. Way back in 1989, I wrote an article for Donor Developer that predicted that, within five years, every nonprofit in the US would have a monthly-donor program. I was wrong. I was very, very wrong. I shouldn’t have been, but I was. Today, 29 years later, shockingly few nonprofit organizations have monthly-giving programs. These programs are affordable. They reduce donor attrition rates. They turn modest donors into far more significant donors. They help identify great planned giving prospects. So, if you don’t have a monthly-donor program, start one. If you do have one, consider ways to market it more effectively. If you do have a monthly-donor program, look at ways to more effectively thank, renew, and upgrade your supporters. If you need help, there are some high-quality experts who can assist you.

8. Start or enhance a planned giving effort. While many planned gifts are deferred, not all are. Planned giving efforts today will provide needed funds and stability in years to come. And some simple planned gifts will generate immediate revenue. Charitable Gift Annuities are a more attractive giving option for donors now that return rates have gone up for the first time in years. Gifts of appreciated securities generate immediate cash for charities and allow donors to avoid capital gains tax. Offer these giving options to donors especially as year-end approaches. You should also look at how you promote planned giving. Do you use direct mail? Do you use a phone campaign? Do you use surveys? You should if you want more planned gifts. Only 22 percent of Americans over the age of 30 report that they have been asked for a planned gift (Stelter). However, 88.7 percent of people surveyed said that it is appropriate for nonprofits to ask for a planned gift (Sargeant and Jay). In other words, there is a massive disconnect between the percentage of people asked for a planned gift and the percentage of people that say it’s ok to be asked. If donors are in effect suggesting we should ask, perhaps we should listen to them.

9. Get creative. While many nonprofit organizations continue to run their same old, tired fundraising efforts, smart fundraising professionals embrace creativity to test fresh ideas or tweak existing methods. Be creative and you just might raise more money.

10. Be more engaging. Donors who are more involved with your organization are more likely to stay involved and more likely to give and give more. So, think of ways to engage your donors. Ask for their advice. Invite them for a tour. Send them a survey. Encourage them to volunteer. Ask them to post an action alert on Facebook. Even if they choose not to participate, they’ll appreciate that you asked.

While no one can predict the future, we can anticipate that 2018 will be a good year for the economy. It’s certainly off to a great start. This means we can expect a good year for charitable giving. So, invest more time and resources to maximize giving now while the economy remains strong. You never know when the situation will worsen.

What tactics do you plan to use to raise more money for your organization before the close of this year?

That’s what Michael Rosen says… What do you say?

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