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Recession-proof your fundraising

Howard Lake | 28 April 2008 | Blogs

At the recent Perfect Pitch on direct marketing organised by UK Fundraising, there was a lot of talk and questions to the speakers about the effects of the current financial climate on fundraising. There seems little doubt in the minds of most commentators that we are in for a rocky time economy-wise and it is something I’ve been thinking about of late. Certainly in the US and Europe consumer confidence is falling, in the UK to its lowest ever level according to economists at the Nationwide Building Society. But where the financial downturn of 2001 was born out of the reactions to 9/11, the current ‘credit crunch’ is being fuelled by media bombardment of dismal financial news, especially about the property and stock markets, which depresses confidence and leaves our current and potential donors unsure about their financial commitments. Interestingly, employment levels are still buoyant, especially in Europe – although it’s apparent that fewer fundraising jobs are being advertised at the moment, especially in corporate – but the major problem for all the developed world economies is the level of personal debt and this more than any other factor is what might impact on giving levels.
But it’s not all doom and gloom. In past economic downturns not-for-profits have fared much better than other sectors and the last recession proved to be a buoyant time for those who were prepared to have the courage of their convictions and make the most of the opportunities to fundraise. So how should charities, and fundraisers in particular, react to the changing financial landscape to protect their income? The potential for this economic downturn has been widely signposted for some time, and many non-profits may have budgeted for potential negative impact in fundraised income for the next year or two. This needn’t be the case, and those responding with a positive message and robust fundraising strategies are in a good position to steal a march on their competitors.
Strategy – If your current strategy has included a robust risk assessment, you will have provision within the strategy to move resource to where it is most likely to deliver the best returns. Now is not the time for prevarication: if your strategy needs updating or more flexibility built into it, then get on with it, and keep all your senior colleagues briefed – nobody likes surprises where bad news is concerned. Fundraising directors need to have a long hard look at the different revenue streams and ask the question, where are we likely to make best use of resources? We also need to take a look at our long-term fundraising programmes to make sure they’re giving us the best chance of improving our income. It could be easy to feel that a complete strategy re-think is in order, but while markets are in a state of flux it’s important not to panic and to keep your long-term strategy firmly in mind.
Acquisition – Fundraisers know that it costs more to recruit a new donor than retain or upgrade an existing one, so take a careful look at acquisition programmes; perhaps an extra warm appeal or mailing designed to build on donor relationships might be more appropriate in the circumstances. We mustn’t make assumptions about what donors will or won’t respond to and where possible we must keep asking. On the upside, the pressure on all media means there will be more distressed space and airtime available giving non-profits a better opportunity to use otherwise very expensive channels. Remaining results-focused will ensure you stay on track and maybe improve your ROI.
Retention – Retaining our hard-won donors is a priority, and those charities that have been busy building long-term relationships and regular donation programmes with supporters will now be in the best position to ride out the forthcoming storm. We need to reassure donors of their value to our organisations, but if it looks like times are getting rough, we should also be flexible enough to offer donors choice in the levels and methods of their support – a cash gift rather than regular gifts if people feel unable to commit to a more structured programme at the present time.
Profiling – How effective is our data segmentation? Can we avoid targeting low income supporters with asks they cannot afford? This sort of segmentation will ensure donors are only asked for appropriate gifts which could increase future loyalty to the cause. With our higher-value donors now could be the time to ask for a bit extra. Remember that donors are generally motivated by the cause, not the organisation, so concentrate your appeals on the needs of your beneficiaries.
Donor care -When asking for donations in difficult times, it is more important than ever to do the simple things well. Reassurance that we will make every penny work as hard as we can in delivering our services to beneficiaries, a commitment to treat donors as individuals with complete control of their gift levels to us, and a sincere, prompt and accurate thank you are the cornerstones of donor care that help build donor loyalty – and right now we might need it more than ever.
Online – Time to look again at our online fundraising. Emergency appeals by email deliver instant results but now you will also find out how good your website is. Sites must be up to date, invite donors in, and offer the kind of immediate donor experience that supporters expect from online engagement. Try mystery shopping a few of your competitor sites to make sure you’re ahead of the game, get the thank you messaging right and offer flexibility in donation levels.
Tax effectiveness – Are we on top of all our tax-effective giving and tax reclaim opportunities? Now would be a good time to audit our fundraising for benefits such as Gift Aid in the UK, but how about making sure that higher income donors know about gifting their extra tax relief to charity?
Whatever happens with the global economy, charities must not hope to chance that it will not affect them. Indications from the US are that it is in major donors that the first indications of trouble ahead will appear, so keeping an eye on these giving levels could provide an early warning of possible downturn among general donors later. Taking prompt action now to stay on top of our game might well save a lot of pain later. We have seen that during previous financial downturns charity giving in the UK held up remarkably well. As fundraisers we need to look to maximise any opportunities that come our way and during times of uncertainty your competitors might be looking inwards, but you should not just react to others’ introversion. I’m sure donors cancel their support to their chosen cause as a matter of last resort not first, and in tailoring our fundraising to the current economic climate, being flexible enough to take advantage of opportunities, and meeting our donors’ fears and expectations we will be better placed to survive the R word.