Inflation is Impacting Charitable Giving-How to Grow Your Nonprofit Anyway

Inflation is impacting charitable giving as people spend more money on necessities like food and gas. Still, Americans have $13 trillion in savings, according to Giving USA, a number that rose during the pandemic.

So, is it inflation that decreases charitable giving or fear?

Most likely, it's a combination of both. We find that when fear, uncertainty, and doubt creep into a fundraising campaign, it can completely derail it. Fortunately, it is possible for nonprofits to grow despite inflation and recessionary concerns. The key is to have strong leadership, get specific with your messaging, and focus on the outcomes or impact of what you are doing rather than the outputs. In my workshops with nonprofit leaders and boards of directors across the country, I often spend most of my time teaching organizations how to stop talking about their activities and start communicating ROI-based results or Investable Outcomes. 

This is the foundation of our Investment-Driven Model, an incredibly effective fundraising philosophy of turning donors into investors who are likely to invest at a much greater level. Individuals and businesses who are already familiar with a nonprofit organization (have a connection) are more likely to give during times of economic uncertainty. Changing their mindset from being a donor who contributes small sums to an investor who invests transformative sums is the smartest way to raise more money during a recession.

Tips for Growing Your Nonprofit Despite Inflation

Inflation is impacting charitable giving. In addition to turning donors into investors, I would recommend doing the following to increase your success:

#1 Support your best people

Prioritize the people who make it possible for your nonprofit to maintain operations and thrive. Support those individuals with training, time off as necessary, and encouragement. Inflation could lead to an increased need for your organization's services, creating a more challenging work environment. Supporting your best people may require expanding your team or bringing in outside experts, so your internal resources are not stretched too thin. Don't be afraid to include funding for new positions or outside consultants in your fundraising campaign. Investors will understand that you need to increase your capacity to serve an increase in demand.

#2 Tie fundraising needs to inflation

Inflation and a possible recession are in the news and on everyone's minds. Investors will understand that your organization has been financially impacted by the current economy and that more people may need your services. When honing your messaging, include information on what can be accomplished right now with more funding. How could your outcomes increase or improve with additional funding? The more specific you can be on the anticipated results, the more investors will give. Convergent's resource development services can help you evaluate your current development efforts and effectively communicate this message to your current and potential donors and investors.

#3 Target investors by using data effectively

Wealthier individuals tend to diversify their assets across sectors and asset classes. This makes them less likely to be impacted by a recession. Consider asset diversification when making a list of potential investors. To be most effective in evaluating investment levels, utilize current wealth analytics data on capacity along with donor data you may have collected over the years. We often help the nonprofit organizations we work with drill down to balance their mix of public and private funding, smaller givers and major investors, and foundations, businesses, and individuals.

#4 Communicate your outcomes

Outcomes are even more important in uncertain economic times. Connecting emotionally to investors through your mission and activity/outputs is good. Communicating your outcomes is crucial to prove how valuable your nonprofit is to investors. During a recession or downturn in the economy, when every nonprofit is asking for money, outcomes and impact on the community are the best way possible to get an organization to the front of the funding line.

Employ the Right Funding Strategy

Inflation is putting pressure on nonprofits throughout the world. If we enter a recession, there will be winners and losers nonprofits that can sustain and grow with increased demand and those who must shrink or shut their doors in the face of these pressures. The plans you put in place today will determine which category your nonprofit falls in. Convergent Nonprofit Solutions is here to help with that planning process. Contact us to learn more about conducting a feasibility study and how we can help your nonprofit to raise more money to fulfill your mission. Though inflation is impacting charitable giving, it does not have to impact the sustainability and future of your nonprofit. For further insight, click below to download our whitepaper: A Guide To Nonprofit Fundraising During Economic Uncertainty. 

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