Nonprofit management during a recession can make or break an organization. Keeping your mission moving during a recession is a difficult task made more challenging by increased demand for services and the potential for declining revenues. As discussed in the Harvard Business Review, the public hopes that nonprofits will expand during a recession but “The expenditure, revenue, and balance sheet size of US nonprofits are procyclical, declining rather than expanding during downturns at the national and local levels. We find that—far from increasing their scope as the public hopes—nonprofits exhibit robust procyclicality with their expenditure, revenue, assets, and liabilities declining in bad times.”
It doesn’t have to be that way.
Convergent Nonprofit Solutions successfully fundraised during the Great Recession, making it possible for our clients to expand and increase their services rather than contract during times of economic decline. The key is to focus on delivering investable outcomes and communicating these to your donors or investors rather than outputs. And since it’s often easier to expand revenue than to decrease costs, this shift in approach can make the difference between sustaining an organization during a recession or shutting the doors.
How to Keep Your Mission Moving Forward During a Recession
Nonprofit management during a recession requires thinking differently and becoming investment-driven. Convergent’s Investment-Driven Model™ of fundraising combines outcomes, ROI, and your value proposition with Mission-Focused Philanthropy to move your donors from a “charity mindset” to an investment mindset. A donor may be willing to give one time if they receive something in return. This could be a table at the gala, their logo on a sign, naming rights, etc. An investor agrees to write a larger check, not just once but annually, for multiple years because they expect a return on investment from that nonprofit organization that they find valuable. They are investing in outcomes or results that will make a tangible impact on the community and, potentially, on their business.
Defining Outcomes Is Key to Maintaining and Exceeding Fundraising Levels
Outcomes are different from outputs, and outputs are what most nonprofits measure. Outputs are the day-to-day activities, the number of sessions, programs, or people served. They are important and tangible measures from an operational perspective but are not the correct data points to secure long-term funding investments.
By comparison, when focusing on outcomes, you are telling potential investors what the results of the outputs are. For example, a nonprofit may offer tutoring to underserved populations. The output would be the number of classes offered and the number of students who attend. It’s difficult for investors to make a personal connection to those data points. However, when talking to a store owner to solicit an investment for the nonprofit, that CEO will surely feel connected when told, “X number of people graduated high school and entered the workforce taking our courses.” You can further connect those outcomes to an investor by demonstrating what the impact of those results would be specifically for their industry or business. You turn donors into investors by focusing on outcomes and making them personal. This is our most important tip for proactive nonprofit management during a recession.
This approach has worked well for organizations like the Hospice of South Texas. “If not for Convergent, we would not have been able to make such quick inroads to our community’s gracious, giving spirit. Their methods are effective and adaptive,” said Terry Robinson, Former Executive Director.
Focus On Leadership: Central to Nonprofit Management During a Recession
The right leadership can manage through fear-based challenges. A strong and focused leader will be necessary to keep your mission moving forward during a recession. If you are uncertain or wavering, others will too. Simultaneously, during times of economic uncertainty, staff, volunteers, and investors will look to you to reassure them. You’ll earn their trust and support if you can successfully do so.
“Fear, uncertainty, and doubt can creep into fundraising campaigns and inhibit their success,” said Jay Werth, Convergent Principal. “You must be effective in communicating the case for why people should continue to invest in your organization during times of economic uncertainty. Whether you are asking for someone to invest their time or money, organization leaders must be clear and let them know that you have a plan to weather the storm.”
Develop Your Asking Rights™
Donors are more selective about who they will support during times of economic uncertainty, in part because they need to be certain an organization can sustain a downturn. If your organization has Asking Rights, it becomes easier to prove that you can.
In Asking Rights: Why Some Nonprofits Get Funded, Tom Ralser explained that Asking Rights are based on credibility, fundraising skills, and outcomes. In other words, is the organization credible and trustworthy enough to warrant an investment? Does the organization have the skills to successfully execute a campaign, and can it demonstrate tangible outcomes/impact? Convergent helps nonprofits determine if they have Asking Rights; if they don’t currently, we coach them to a place where they do. Gaining Asking Rights is a tool for nonprofit management during a recession that will continue to benefit the organization in the future.
Get Help Moving Your Mission Forward During a Recession
Convergent Nonprofit Solutions has helped organizations throughout the world to raise millions for their organizations. We successfully raised money during the Great Recession and can help your organization to prepare for a potential economic downturn. We invite you to contact us for more information on how Convergent can support your nonprofit. For even more insight, you can click below download our whitepaper: A Guide To Nonprofit Fundraising During Economic Uncertainty.