The following article was written by Jeffrey D. Byrne, President and CEO of Jeffrey Byrne & Associates, Inc.
Since the fall of 2008, nonprofit organizations, fundraisers and donors alike have kept a watchful eye on the economy. I’d go so far as to say that I’ve had few fundraising conversations where the state of the economy didn’t come into play. More often than not, people are trying to get an accurate prediction for the future. It’s completely understandable. However, fundraisers are not psychics.
Fundraisers have been forced to don financial analyst hats over the past 2½ years. As we transition into the “new normal” of our economy, our clients expect us to be able to overcome economic uncertainty among their donor ranks. Psychic ability aside, this takes meeting donors where they are and supplying them with hard facts. Not to do so is not doing our job.
Good or bad, we have to own the economy. Of course, meeting campaign goals is easier in a good economy. But the needs of nonprofits and charitable organizations wait for no economic upswing. They intensify. Couple spiking need with a collective insecurity in consumer confidence and you could end up with an uphill campaign battle in which doom and gloom overshadows the spirit of generosity.
Blackbaud’s 2010 State of the Nonprofit Industry Survey reports, “A majority (more than 70 percent) of respondents reported they expect demand for their organization’s services to increase this year [2010] and next year. Approximately a quarter expects demand to stay the same.”[1]
Parallel to a growing need for services is an expected increase in all types of funding. The current fundraising climate is improving. And donor warming is evident. According to Blackbaud’s survey, respondents receive funding from a variety of sources. Funding sources cited most frequently by respondents are total individual donations (98 percent), individual donations from major giving (92 percent), memberships (89 percent), government grants (88 percent), individual donations from recurring giving (86 percent), individual donations from planned giving/bequests (86 percent), and so on.
When asked about expected changes in funding sources, respondents reported, “The sources most likely to increase in 2010 are total individual donations (55 percent), individual donations from major gifts (45 percent), special events (42 percent), and individual donations from recurring giving (37 percent).” We’ll soon discover whether or not these expectations were accurate when The Center on Philanthropy at Indiana University’s publishes its Giving USA 2011 report in June.
But even if statistics swing the other way, it is still possible to run a successful fundraising drive. One area it takes is to surround the campaign with smart, motivated, forward-thinking individuals who aren’t afraid to take responsibility for addressing what is on the donors’ minds. Right now, what’s foremost on their minds is an excruciatingly slow economic rebound and uncertain future.
Given that we fundraisers are pros at wearing a variety of hats, financial analyst being just one of them, we must arm ourselves with facts and sources to ease donor anxiety.
The Center on Philanthropy, which will release Giving USA 2011 in June, is regarded as the primary leader in philanthropic study and research. The Center’s research finds that short-term, mid-year stock market volatility is not indicative of what happens to overall giving. Change in the Standard and Poor’s 500 Index at the end of a year is one of several predictors of giving (others include change in personal income, tax rate changes, and recent changes in actual itemized deductions).[2]
For total giving, Giving USA estimates have fallen “within 2 percent of the final numbers once the actual data are available for all years since 2001 except 2005, when the Katrina Emergency Tax Relief Act inspired additional giving. The relationships between charitable giving and broader economic trends are less certain when people change their giving because of an infrequent event—such as a tax law change, very high rates of mortgage foreclosures, or a natural disaster.”[3]
Dropping unemployment rates and a rising stock market are reported across the media. It’s encouraging news like this that Rich Bailey, Director of Philanthropy, Nature Conservancy, Kansas Chapter, intends to call to his donors’ attention.
Bailey explains, “We’re anticipating a smaller 2- to 3-year bridge campaign to fill the gap between our last and next major fundraiser. We’re cautiously optimistic because the stock market has bounced back and unemployment is down. Though we’ve stayed in touch with our donor base, raising $5 million for conservation in Kansas is going to require addressing economic concerns and financial uncertainty. Along with pointing out the rising stock marketing and dropping unemployment, we’re offering flexible donation options: delaying and extending pledge periods.”
The economy dictates the fundraising climate like no other factor does. Fundraisers and organizations have absolutely no control over the economy. But we can use the resulting climate to bring about donor warming. All it takes is accepting the fact that we are not only fundraisers, we’re also financial analysts for the time being. Our contribution to donor warming should be redirecting our expertise in making sense of our clients’ organizations’ facts and figures to putting donors at ease with the larger economic trends and statistics, which are available from resources readily available to us. You just have to know where to look.
[1] Blackbaud. (n.d.) 2010 State of the Nonprofit Industry Survey. Retrieved from http://www.blackbaud.com/files/resources/downloads/Research_SONI_NorthAmericanResults.pdf.
[2] The Center on Philanthropy at Indiana University. Retrieved from http://www.philanthropy.iupui.edu/Research/GivingAndEconomy.aspx.
[3] Retrieved from http://www.jeffreybyrneandassociates.com/docs/2010GivingUSAMediaKit.pdf.
