Greater Demands on Fewer Resources

Non-profit organizations are faced with especially difficult challenges during a recession. While businesses struggle with reduced demand for their goods and services, non-profits actually see an increase. A reduction in funding from donors and a drop in volunteers only compound a non-profit's problems. Meeting the increased needs of the community during an economic downturn can have far reaching effects for the people a non-profit serves, and is reflected in more than just a non-profit's bottom line. This guide will compile resources and strategies for non-profit organizations on how to best navigate their way through challenging economic times. 

Strategies for Fundraising^[1]

The Defensive Approach

Cost-cutting is paramount. Cancel donor acquisition activities. Reduce the frequency of donor appeals while cutting back on mailing and telemarketing quantities. Eliminate thank-you letters, or at least replace those personalized letters with post cards. Bring gift processing and donor file maintenance in-house. Cancel all marginally profitable special events.

The Selective Approach

Maximize net revenue in the short term and maintain the long-term value of your donor base. Economize on such fair-weather activities as direct mail testing, costly cultivation events, and glossy magazines or newsletters. Strengthen the case for giving to match the reality of the times, and avoid cutting back on solicitations. Instead, increase the frequency of solicitations to those donors who normally generate high net revenue. Examine the long-term value of your donors, ranking the acquisition lists from which they came and favoring those lists that come out on top with re-orders. Step up donor acknowledgment and donor cultivation activities to strengthen your relationships with donors. Find low-cost ways to learn more about the most loyal and generous of your donors, and integrate new information into personalized appeals to them.

The Aggressive Approach

Pull out all the stops to take advantage of the opportunity created by the undue caution your competitors are exhibiting. Step up donor acquisition activities, even knowing that response rates will be lower than in the past. Innovate actively, testing new direct mail packages and new appeals online. Push hard for more and bigger gifts from donors while maintaining current stewardship policies without change.

Recommendations^[2]

Review Financial Assets

Look at cash deposit risks. Is the money insured and distributed among different banks? Evaluate investments and make sure that they are varied and diversified. Also avoid becoming dependent on one source of revenue that could disappear.

Don't Fake It

When going into a recession do not pretend nothing has changed if your financial situation is shifting. It is necessary to share information and concerns with boards and advisors to better manage the downturn.

Contingency Planning with Board Members

The end clients that the non-profit serves are the ultimate goal. It is necessary to look at what will happen if the organization can no longer operate. How will the clients manage? Also consider the clients changed financial conditions in light of the changing economy and how you should adjust your services. Emphasize the importance of survival for the sake of serving your clients and consider partnering with other organizations to stay afloat and better serve.

Examine Revenue Patterns

What has revenue looked like in past recessions? Does it rise or fall? Take steps to adjust to these changes early. Some organizations are able to pursue funding from the government and should do so more agressively. The government can assist with expansion to help meet growing demand during a recession.

Resources and Guides

• The Non-Profit Finance Fund has created a recommendation guide for non-profits based on data and information from the past recession.(http://www.nonprofitfinancefund.org/docs/2008/Dec08_CommWealthVanguard.pdf)   

          They also have a page with resource collections from other sources on weathering the downturn.

          (http://www.nonprofitsassistancefund.org/pages/economy)

• A guide by Mal Warwick Associates on fundraising in tough economic times. Includes different approaches to fundraising and concrete steps that can be taken immediately to bolster fundraising efforts. Also contains reading list for further research into fundraising. (http://www.malwarwick.com/fundraisingintoughtimes/)

• Third Sector New England (TSNE) is doing a series of workshops to help non-profits survive the economic crisis. Topics include fundraising and financial analysis. (http://www.tsne.org/site/c.ghLUK3PCLoF/b.4845027/k.1119/Workshops_for_Surviving_the_Economic_Crisis.htm)

• The Foundation Center has a list of articles and publications from different sources on topics such as philanthropy and fundraising for non-profits. (http://foundationcenter.org/getstarted/topical/econ_crisis.html)

• The Fieldstone alliance has a guide to "Opportunities in Lean Times" complemented with books and other publications. (http://www.fieldstonealliance.org/client/focus-opportunities_in_lean_times.cfm?disccode=TOOL102308)