Recession Fears Shouldn't Stop Fundraising

17 Jun 2022

Arts and Culture

It's hard not to let concerns of an impending recession creep into one's thoughts. You avoid looking at your 401 (k) because it's depressing. You consider taking out a loan just to fill up your SUV's gas tank. You find yourself talking about the good old days when mortgage rates were 3 percent. More times than not, the actual word 'recession' is mentioned on the evening news.

These thoughts naturally creep into a nonprofit's mindset also. Do we revise our fundraising projections down for next year? Do we need to ramp up our fundraising efforts or diversify revenue streams just to stay financially even? Will our demand for services go up at the exact wrong time, when revenues are down? All of these concerns are valid, and the proactive nonprofit executive already is thinking about solutions.

Solutions and Insights for Recession Fundraising

Recession is officially defined as a decline in GDP for two successive quarters. While that primarily equates to increased inflation and reduced economic activity in the industrial & service sectors, the ripple effects whether actual or perceived permeate the thinking of almost every sector and every household. On a personal level, economic slowdowns may lead to job loss, which of course leads to reduced spending, which leads to even less production because demand is lower, which leads to even more job losses, and the cycle continues. Even the perceived possibility of a job loss, whether it actually happens or not, impacts how people behave in their spending habits. The impact on giving to nonprofits can be real indeed.

How did people react during the last time we experienced this, known as the Great Recession? The Lilly Family School of Philanthropy at Indiana University summarized it this way:

‘While the generally accepted narrative of U.S. philanthropy assumes that roughly two-thirds of adults give to charity every year, the participation rate declined considerably between 2000-2016. From 2000 to 2008, the share of U.S. households donating to charity held relatively steady, dropping only from 66.22% to 65.41%. However, 2010 marked a turning point, as the share who gave declined to 61.11% following the Great Recession. The overall giving incidence was only 53.09% in 2016, the most recent year of data available. This represents a significant decrease of about 20 million households since 2000.’

Convergent was started in the depths of the 2008 recession. We knew our approach worked, and we thought it would work better in economic downturns when every nonprofit was financially challenged whether from decreased revenue or an increase in demand. We were right.

An Approach that Works

Here's what I mean by 'our approach It's not that we are necessarily better at asking people for money (though I think we are), or that we have a better process for running a campaign (I think we do), but that we focus on what really matters to peopleâ¦ delivering the results that are important to them. Put in the vernacular that I most often use, we deliver outcomes that investors value.

That five-word phrase contains four very important concepts: delivering, outcomes (the most important), investors, and value. While space limitations prohibit going into detail in this message, look for future blog posts in the coming months that will to go into each concept, explaining why each is crucial to reaching funding goals for a nonprofit.

Help Fundraising in a Recession: Convergent Nonprofit Solutions

When you deliver outcomes that investors value, you will raise money, even in the depths of a recession. We have done this before and proved it to be true. Now of course we hope that a recession doesn't materialize, but we all know that hope is not a strategy. If it does, don't panic a proven strategy exists.

When times are unpredictable, professional Fundraising Services can help your funding grow keeping your nonprofit moving forward. From capital campaign consulting to Resource Development services and feasibility study support Convergent Nonprofit Solutions is here for you. We invite you to contact our experts to get started today!

About The Author

Tom Ralser, CFA

Principal & Director of Asking Rights

Department: Team

“Why should I give your organization money?”

When I began in this business in 1995, this is the question I was first asked to answer. Not only was this asked in my first feasibility study by a prospective donor, but from a company perspective, it became the driving question that would allow us to become leaders in the industry.

Since then, I have strived to not only address this question but improve and refine the answer. In the early days of economic development projects, it was relatively easy to answer. Since then, I have applied my approach to answering this question to virtually every type of nonprofit. The narrower term “ROI” has given way to the broader “OVP” (Organizational Value Proposition®) which is more appropriate for social missions and my focus on outcomes delivered has led to a revolution in addressing the motivations of givers, transforming them from nominal donors to major investors.

My work is not yet done. As investors in nonprofits become more sophisticated and demanding, the bar is continually being raised. Stay tuned.

Tom has worked with organizations of all kinds, from Chambers of Commerce to religious organizations, national museums to rural health networks, and local youth organizations to international research institutes. He pioneered the concept of applying return on investment (ROI) principles to nonprofit fundraising, and fundraisers have described his work as the “silver bullet” that justifies larger investments in nonprofit organizations.

Hundreds of organizations have utilized Tom’s sustainability planning techniques to ensure they can thrive in a tight money environment. He holds the Chartered Financial Analyst (CFA) designation, which provides the framework for his Investment-Driven Model™ of fundraising, and led to the development of the Organizational Value Proposition®, which is widely used by corporations, foundations, and individuals as confirmation that the nonprofits in which they invest are truly delivering outcomes with values. His specialty of utilizing for-profit concepts and methods in the nonprofit world has helped nonprofits raise over an estimated $1.6 billion in the 22 years he has worked with them.

Tom is a frequent and highly acclaimed speaker, addressing topics about attracting new funders, outcome-based sustainability planning, and delivering value to investors.

Summary of Experience

Personally involved in over 600 nonprofit funding projects in all 50 states.
Author of the books ROI for Nonprofits: The New Key to Sustainability, Asking Rights: Why Some Nonprofits Get Funded (and some don’t), and the companion workbook, Developing Your Asking Rights.
Holds the Chartered Financial Analyst (CFA) designation, ranged by Economist as the “gold standard” for investment analysis.
Session leader and/or keynote speaker at dozens of conferences throughout the nonprofit sector and country. A sampling includes:
- Planet Philanthropy (2016) Keynote Speaker.
- National School Foundation Association Annual Conference (2016, 2017) Presenter.
- Association of Healthcare Philanthropy Big Ideas Conference (2017) Presenter.
- Council for Advancement & Support of Education’s Conference for Community College Advancement (2017) Presenter.
Founding Director of Western Colorado Bureau of Economic and Business Research at Colorado Mesa University, where he was a tenured professor.
MS in Finance from the University of Utah and BS in Marketing from Illinois State University.