As most nonprofit leaders would agree the recent recession wasn’t our favorite time. As the economy has staggered or sputtered most charitable organizations don’t feel out of the woods yet. Through the recession our charity was fairly fortunate we successfully completed a capital campaign and we were able to meet our fundraising targets. Although our fundraising team would inform you that it wasn’t easy and it wasn’t without a lot of struggle. Our fundraising team works very hard but during parts of the recession we would estimate that they worked four times harder to raise the same operational revenue they had raised in previous years. When I say they worked four times harder –I mean they got used to a lot more “no” answers which meant making about 4 times as many requests to generate the same fund raising revenue that was raised in previous years.
This past June Southern Alberta was ravaged by floods which amounted to the worst natural disaster experienced in Canada ever. Billions of dollars of personal and commercial property was damaged or lost. Many communities, cities and towns were affected. Eighty five percent of the small town south of Calgary that I live in was underwater. This flood was catastrophic for many, but also very damaging for nonprofit organizations operating in Southern Alberta. Quickly individuals and corporations came out to support flood victims. The volunteer spirit was amazing and both individuals and companies were very quick to donate to the Red Cross and other charities responding to flooded areas. I personally benefited from this volunteer spirit, we had many volunteers help us the day we were able to return to our House and rip the drywall and all our possessions out of our basement. (We had 7 to 8 feet of water in our basement and 2 to 3 feet in our garage). Heck the Prime Minister of Canada, his wife, our Minister of Finance for State and the provincial associate Minister responsible to flood recovery actually helped us with this task of ripping out our basement. We had some great help personally and I was thrilled to see how communities came together to support those affected.
However in my day job I quickly realized how this generosity would affect us. Many of our corporate and individual supporters who might typically support us had given a great deal by the time we asked for their support at our events or for their annual donation. In many ways a disaster which was so close to home had a worse effect on us than an international recession. Or it may be that an economy which hadn’t quite recovered and then a local tragedy had a doubly negative effect on local charities fundraising efforts.
Kim Klein (2004) has some great advice as to what to do during and after a crisis. Having a diverse funding base is one of these suggestions. She suggests that the leadership ask the following questions to analyze the organizations fundraising sources and potential solutions to the crisis:
1) Do our financial sources and human resources have the capacity to grow (financial resources in terms of amount of money raised: human resources in terms of learning new skills as well as bringing in new people)?
2) Can the same number of people working the same amount of time raise more money next year?
3) Does any one person or funding source account for more than 20% of our total funding? Does any one person account for more than 20% of our fundraising effort?
4) Are at least some of our sources recession proof? In other words, how important are external circumstances to the safety of each funding source?
5) Do we have a strong team of people, most of them volunteers helping us to raise our money?
6) Does that team have a built in transition plan so that as one member leaves another is seamlessly brought in?
The answers to these questions will help you determine how resistant to a crisis you are in good times and in bad times they will help you figure out what you need to change. This economic and local crisis could have been financially catastrophic to our organization. However we had the right answers to enough of these questions (certainly not all of them). For example we don’t always consider this an advantage (but in tough times it is), but in any given year no one individual, company or funding source is responsible for more than 10 percent of our annual operating revenue. Usually when I state this publically people ask” not even McDonalds’?” In some way or another McDonald’s does support over 300 RMHs throughout the world. In our local market McDonalds supports us in a few different ways, and some of these ways include doing fundraisers or promotions like McHappy days. The level of support we receive from the corporation and the charity is dependent on how successful they are in these events. The short answer to the question is some years this support has amounted to 1 % of our operating revenue and some years as high as 10%.
Having diversity in your fundraising base does in a way teach you to pay attention to attending to developing every level of your donor pyramid and to focus on building the number of donors at each level. I suppose during crisis there is a temptation to become focused on trying to find new donors. Not that I would suggest that new donors may be part of your crisis strategy, however the best time to find new donors is before a crisis, next best time is right after a crisis. For our own charity finding new donors makes us sustainable. However during the crisis we have definitely paid a lot of attention to our stewardship activities. Being top of mind with your current donors whether they are able to give a gift this year or not is important. Additionally we have really focused on strategies to increase the percentage of our donors who do not just give a one-time gift but instead become regular annual or monthly donors. Burnett (2002, p. 156) warns us that:” … only about 50 percent of first-time givers go on to make a second gift when left to their own devices.” Nonprofit organizations need to do everything they can to increase the likelihood that they are increasing the likelihood that their donors continue to support their cause As Burnett (2002, p.157) also warns that:”…new donors cost around five times more to recruit than lapsed donors cost to reactivate.” So from a financial and economic perspective retaining donors makes a lot of sense.
Burnett,K. (2002) Relationship Fundraising: A Donor- Based Approach to the Business of Raising
Money: San Francisco: Jose- Bass
Klein, K. (2004) Fundraising in times of Crisis: San Francisco: Jossey-Bass.