Inflation and the possibility (if not current reality!) of a recession are huge challenges to raising funds for nonprofit organizations. With inflation currently over 9%--a 40-year high—and the equity markets like the S&P 500 down over 20% year to date, nonprofit leaders are justifiably concerned about raising the funds necessary to support their important work.
Economic downturns aren’t new; in fact, economists tell us that there have been 13 recessions since WWII, including the so-called “Great Recession” of 2008/09. What can we learn from those past challenging times about giving?
1. Total giving will most likely decline if economic conditions don’t improve. In2008 during the Great Recession, giving fell by 7% in inflation adjusted dollars and dropped another 6.2% in 2009. But as the economy began to improve in 2010, so did fundraising, ultimately exceeding its pre-2008 levels by 2012.In fact, total charitable giving has increased or stayed flat in current dollars every year except for three since 1981—1987, 2008, and 2009. In addition, the total given in 2021 is three times larger (again adjusted for inflation) than it was in 1980. People give generously during economically challenging times and ultimately increase their giving as the economy recovers and grows.
2. Fewer people are giving, even in times of economic prosperity. The number of Americans giving fell from two-thirds in 2000 to less than half in 2018, and this includes the economic recovery years following 2008/09. The most recent Fundraising Effectiveness Project report on Q1 2022 giving found that comparing giving in the first quarter of 2022 to the first quarter of 2021, “the number of donors decreased by 5.6%, and the donor retention rate, the percentage of donors who gave in 2021 and then gave again in 2022, decreased by 6.2%year-over-year.” Also, there is some evidence to suggest that new donors who were inspired to give during the pandemic to address its critical needs will drop away as those needs subside or are unfortunately forgotten.
So, if giving most likely will be down this year and fewer people are giving, what can we do as nonprofit leaders and fundraisers during these financially challenging times?
1. Be realistic in your fundraising expectations for 2022 and most likely 2023.If total giving will be down, adjust your program spending and expansion aspirations accordingly. Good planning, for example, will go a long way toward avoiding an emergency appeal. Such appeals often scream of desperation and thus undermine donor confidence in your organization.
2. If fewer people are giving, make sure you retain the donors that you have—that should be your top priority. Past giving data suggests that in times of economic downturn, donors will prune the number of charities that they support. So how can your organization make the cut? Donors are retained when they are thanked (early, often, sincerely, and graciously), when they are communicated with and engaged on a regular basis (and not always about giving a gift), and when they are invited, when appropriate and with conviction, to a deeper investment in the organization and its mission.
3. Finally, emphasize or, if your organization doesn’t have one, initiate recurring giving programs. Recurring givers are retained at a very high level. Moreover, these programs are a great way for nonprofits to manage inflation. They create a dependable cash flow and are great ways for donors to give larger gifts over the long-term if they are feeling particularly cash-strapped in the short-term.
The needs that nonprofit organizations address continue to persist and often increase during an economic downturn, so it is critical that we plan, utilize the best strategy, and deepen our connections to our supporters. When we do these things well, and when we aren’t afraid to ask for support because of the importance of our organization’s work and impact, then giving can be maintained if not grown during times of recession. The resiliency of our organizations will depend on it.
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