Major Gifts Fundraising Recessions Don’t Exist is Hall Powell’s take on the best way to raise money during uncertain times. Here’s what this multi-million dollar fundraising veteran has to share:
Do you remember what the notorious bank robber Willy Sutton said when asked why he robbed banks? He answered, “because that’s where the money is!”
It doesn’t matter if it’s a “bear market” or a “bull market” Major Donors always have money.
Pandemics may cancel your fundraising events. Direct mail income may dry up. Wacky social media efforts will fail. But big gift givers still have cash.
You see, MAJOR GIFTS FUNDRAISING IS RECESSION PROOF. Big givers understand the important role they play when recessions hit, housing bubbles burst or pandemics rage. Major donors know that’s when their gifts are needed most.
Most nonprofit organizations are not prepared for global economic downturns. Recessions affect nonprofit revenue particularly if they are reliant on government grants, special events, direct mail, etc. As a fundraising consultant (and as a Nonprofit CEO) I always challenge charities, large and small, to build reserve funds or unrestricted endowment as a hedge against market instability. So, what is the most effective way your organization can weather a recession? MAJOR GIFTS FUNDRAISING!
Let’s examine some ways you can mitigate against a forthcoming economic recession:
During a recession, major gift donors still have the financial capacity to give, while annual gift donors might not. Whereas a recession might impact a major gift donor’s level of giving, his or her frequency of giving, or the number of major gifts actually given, those who are philanthropic will continue giving (selectively) to those organizations that offer the donor the opportunity to satisfy their need to give. The need to give may be motivated by actual passion and/or conviction as to the impact of the gift, or just knowing that unless they gift certain amounts to charities, the IRS will collect more income tax – money that could be helping someone or some cause. Build a recession plan around strategies and steps to reduce spending, but one that does not deny funding for programs or plans for meeting a unique human or societal need. Economize without compromise. Save where you can so that you can still fund the most important needs your organization offers. For example: Analyze special events fundraising costs and results (return on investment), and determine whether not postponing or terminating a special event(s), and devoting more time to cultivation and solicitation of major gifts would, in fact, result in a much larger ROI.
Here is where I will mention that this entire topic of operating during a recession and hedging against, and being prepared for financial uncertainties, makes a solid case for the need for nonprofit organizations to have a comprehensive fundraising program, not dependent on any one source of funding. Organizations that spend all of their human and financial resource on special event fundraising, and/or annual fund fundraising, or grant seeking, without having a flow of connected strategies e.g., annual fund, major gifts, and endowment gifts, are foolish and vulnerable to whims and wiles of the economy and human choice. Grants can dry up, events can lose popularity, and monthly giving is fickle.
Where is the philanthropic money today? According to Giving USA, the bulk of philanthropic giving every year in America comes from individual giving, not from businesses and foundations. 1n 2021, 76% of all charitable gifts came from individuals, while foundations gave 19%, and corporations gave 4% of the total of $484.85 billion. While we want to receive the charitable giving of businesses and grants (government or private foundations), our focus for maximum return on our efforts, time and money should be primarily directed to strategies of obtaining gifts from individuals, especially major gifts.
I discovered in 2010, a conference event (that frankly, I did not want to attend) that introduced a model of major gifts fundraising that focused on the need of the donor to give, not the institution ‘s desire for philanthropic support. This approach, named Major Gifts Ramp-Up, focused on earning the right to “make the ask” of a qualified major donor prospect, while building a comprehensive fundraising plan as a basis for long-term major donor relationships for the nonprofit organization. The principles in the model so impressed me, and so harmonized with the principles of fundraising I had implemented and lived that I came out of retirement to introduce Major Gifts Ramp-Up to nonprofits who were serious about donor-entered fundraising – to introduce them to free-market enterprise principles that work for the nonprofit sector.
Demonstrate strategies to reduce spending, and focus on priorities for philanthropic support. Make a case for the need of a cash reserve (endowment) and for the immediate need for funding programs and/or capital, while always stressing the uniqueness of your organization. Show-short term and long-term visions for your organization.
Please remember that a Case for Support document is meant to be more than just a printed booklet/flyer; it is meant to be your written strategic plan for fundraising, one that is compelling and easy to comprehend for the potential donor and the one who “makes the ask.” Your donors are your lifeline. Without their loyalty your organization won’t last in the good times, much less during an economic recession. Demonstrate how their loyalty will save lives.
You are going to need them, and maybe even more staff, after the recession. Think about this: your fundraising staff, whether one person, or more, has spent hours, days, years (in some cases) developing relationships with donors. Don’t jeopardize those relationships with a knee-jerk reaction to the recession. Your faithful donors don’t want to lose them either. I will share with you a true, real-life story where sacrificing staff because of financial stress became a terrible mistake for a major nonprofit organization:
Years ago, I was the CEO of a major medical center’s foundation. We were the fundraising arm of the nonprofit medical center system. In my last year with them the medical center system entered into a financial doldrum due to financial mismanagement within the system. The medical center’s CEO, to whom I reported, began laying off medical center employees to offset the financial loss. He next called me and demanded that I reduce my staff. Philanthropic revenue generated for the medical center system, through our foundation, was in excess of $7 million per year because of the hard work of seven staff members of the Foundation who had developed personal relationships with major donors and other donors in our greater service area. To lay off one of them, saving perhaps $45,000-75,000 in annual compensation, jeopardized almost $1 million in annual philanthropic revenue to the medical center! Crazy! I argued my case with the medical center’s CEO and Board Chair to no avail. They were more concerned with “optics” of how it would look good to the public that they were cutting back on expenses than they were about the actual impact, not only on the financial picture for the medical center system, but also on donor relationships and advocation.
I was instructed to layoff two of my team members. I resigned from the foundation within six months and took an early retirement. I found out later that what I feared for the organization came true. Many of the major donors withdrew their charitable support, more foundation staff members left for “greener pastures,” and the annual charitable revenue for the medical center system, through the efforts of the remaining foundation fundraising team, dropped to less that $2 million per year. The unnecessary, “knee-jerk” reaction to the economic predicament came at a great price. Don’t you make the same mistake. A temporary fix could jeopardize a profitable future. By the way, I left for “greener pastures” also. I went back into nonprofit fundraising consulting, and was able to help many nonprofits build successful, comprehensive major gifts fundraising programs by implementing the Major Gifts Ramp-Up model.
In closing, Warren Buffett was once asked by a TV news reporter, what he looked for in a nonprofit organization that would qualify them for his largesse. Mr. Buffett replied, I look to see whether or not they have an endowment. When asked why he shared, “nonprofits with endowment believe in their future and are prepared for financial uncertainties, thus a sign of responsible management of their funds.”
So, do you agree that Major Gifts Fundraising Recessions Don’t Exist? If you find yourself in a tight spot don’t forget Willie Sutton. Major gift donors are where the money is. Well, the banks he robbed weren’t “donors,” but you get the idea. Go where the money is…BIG GIFT DONORS!
Major Gifts Fundraising Recessions Don’t Exist was first posted at National Development Institute
For more articles like Major Gifts Fundraising Recessions Don’t Exist VISIT HERE