Recession

An Equal Opportunity Stimulus

On Wednesday, the House of Representatives unanimously approved a bill allowing taxpayers who make a donation to victims of the Haitian earthquake to claim a charitable donation when filing their 2009 taxes this spring.  

Nonprofits who have the most to gain from this legislation, such as the American Red Cross and other disaster relief organizations, “wholeheartedly” favor this move because it encourages people to continue supporting their relief efforts. 

My initial thought that this was a good thing.  Anything done to motivate more people to support earthquake victims in Haiti should be encouraged and of course, is greatly appreciated.  A comment made by Rep. Earl Blumenauer of Oregon, who said, “it’s a simple gesture, but it will encourage giving in this challenging economy,” has me rethinking my position. 

The generosity of the American people is well documented, especially in times of natural disaster.  In fact, in the week following the Haiti earthquake, individual donations to the Red Cross, alone, exceeded $130,000,000.  A genuine and compassionate desire to help the people of Haiti is the motivation behind these gifts, not the promise of personal gain and incentive.

What message is being sent to all the other American charities struggling in this economy?  What about concerns that as donations are redirected to Haiti there could be greater hardships here in America?  Why would the House encourage people to give only to the earthquake victims when there is so much need here in our country? 

Are they saying that feeding and sheltering America’s growing population of hungry and homeless, caring for our nation’s sick or preventing life-threatening diseases is any less noble than the relief efforts in Haiti? 

If Rep. Blumenauer is correct and the bill is designed to stimulate giving, then the only equitable solution is to extend the same tax incentives to all tax payers making donations to any approved American charity. 

-Greg Fox

What can we learn from TV’s most popular curmudgeon?

I am referring to Gregory House, the brilliant medical diagnostician who is the poster-child for unconventional thinking.  

Season 4 introduced a group of Fellowship candidates that had to compete to make the final team of three.  In Guardian Angels (episode 404 if you are interested), House axes the oldest candidate because the candidate thinks too much like House (ignore the fake doctor part). House needs alternatives. His professional relationship with his colleague Wilson is similar. He often says that Wilson’s thinking is nonlinear and sloppy, but it takes House down roads he normally wouldn't go.

How does this apply to fundraisers?  Well, in case you hadn't noticed, most of us are working in mature media or in mature organizations; now add in the effects of the “Great Recession”. We have to think seriously about what we do, how to grow, what to do better, faster and more effectively, and what new things to try.

 

We need to challenge ourselves and that means we have to look at things differently. So, while it is comfortable to develop a sounding-board of people who finish your sentences, look for a few who don't. Develop a cadre of people where you often have to explain, argue and resist. It will make you a better thinker and that will make you a better fundraiser.

 

-Becky Graninger

 

What can we learn from TV’s most popular curmudgeon?

I am referring to Gregory House, the brilliant medical diagnostician who is the poster-child for unconventional thinking.  

 

Season 4 introduced a group of Fellowship candidates that had to compete to make the final team of three.  In Guardian Angels (episode 404 if you are interested), House axes the oldest candidate because the candidate thinks too much like House (ignore the fake doctor part). House needs alternatives. His professional relationship with his colleague Wilson is similar. He often says that Wilson’s thinking is nonlinear and sloppy, but it takes House down roads he normally wouldn't go.

 

How does this apply to fundraisers?  Well, in case you hadn't noticed, most of us are working in mature media or in mature organizations; now add in the effects of the “Great Recession”. We have to think seriously about what we do, how to grow, what to do better, faster and more effectively, and what new things to try.

 

We need to challenge ourselves and that means we have to look at things differently. So, while it is comfortable to develop a sounding-board of people who finish your sentences, look for a few who don't. Develop a cadre of people where you often have to explain, argue and resist. It will make you a better thinker and that will make you a better fundraiser.

 

-Becky Graninger

 

Don't let the recession break your spirit

Things are rough for nonprofits.

But not for all of them. Some are humming along at normal funding levels as if the recession were just a disturbing news report from a distant country. Some are even doing better than they've ever done.

I like the way the Jewish Donor Blog puts it: Fundraise Like it Was 2007! Which includes:

  • Have an urgent message.
  • Be relevant.
  • Respond to the recession and call on donors to respond.
  • Pick only the best performing lists....
  • Talk to a trusted expert who knows the business.

You can think and talk and act like a victim of the recession -- but you know where that will get you.

Don't act like there's no recession. It's real, and it hurts. But don't curl up and play possum. Keep raising funds with passion, focus, and an eye on your donors. That way you can minimize the impact of the recession. Or escape it entirely.

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Who's down -- and why

A new study from Target Analytics, Index of National Fundraising Performance - Fourth quarter of 2008 (PDF), has the bad news:

  • Fundraising revenue (among study participants) is down 3.3%.
  • The number of new donors down 6.9% (and that's more worrisome because that's future revenue not to be had).
  • 63% of organizations in study had lower revenue.
  • The fundraising sector that's down the most is health charities, with revenue down 7.2%, number of new donors down 11.3%, and 78% of the health organizations in the survey experiencing a drop.
  • Two sectors are up: animal welfare (up 5.1%) and international relief (up 1.1%).

But to me, the big surprise to me is that the human services sector is down 3.4%. In a down economy, when the very situations these organizations are built to help change are everywhere and top of mind, why are they raising less money?

Several of our Merkle clients in that sector are seeing their best fundraising in recent memory, and none in that sector are down.

Now it could be the quality of their fundraising counsel (ahem), but it's also because their message resonates more than ever during hard times. We're just working to bring fundraising and reality together -- and it works.

Fundraisers in the human services sector should not be down! (Even if they don't work with Merkle!)

My only explanation (which I can't prove): Too many of them lack relevance. They're doing the same old fundraising they always do. They aren't responding to the recession, so they aren't calling on donors to respond. Maybe they're following the old "Don't Admit There's a Problem" myth.

Whatever the case, the path to success is to be real. Whatever sector you're in.

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More about surviving the recession

From the recent AFP conference, a summary of what some of the speakers said about surviving the recession (as reported in the Chronicle of Philanthropy at Focusing on What Works: Veteran Fund-Raising Consultants Offer Their Ideas).

Among the ingredients given for success:

  • Focusing on the mission, not the dollars that need to be raised.
  • Understanding which fund-raising efforts are productive and which are not.
  • Thanking donors.
  • Listening to supporters.
  • Asking donors to give now.
  • Proving to donors what their money will do.

Things that can lead to failure in a bad economy:

  • Cutting programs across the board.
  • Using the economy as an excuse to sit back.
  • Going negative.

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How some nonprofits are surviving the recession

Another survey. This time of the fundraising results of a group of nonprofits in the Pacific Northwest (mainly Oregon): Nonprofit Fundraising Trends 2009 (PDF, from Retriever Development Counsel).

In this one, 46% of the groups surveyed said they got higher fundraising results in 2008, while 39% did worse. Not bad. But here are some findings from the study I find noteworthy:

  • Nonprofits with diverse revenue streams, good management, and what could be labeled "learning cultures" appear to be coping markedly better than others.
  • Organizations that are faring better appear to be putting more focus on development activities, especially individual donor relations including major donor development.
  • Regardless of the size of the organization, the primary reason for fundraising success? "We asked more."

Cross-stitch that last one and hang it on your wall. That's how to thrive in a recession. And every other time, for that matter.

Thanks to About Nonprofit Charitable Orgs for the tip.

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Survey: Not too bad, but take it seriously

Not every look at the recession is equally horrifying. A recent survey by the Evangelical Council for Financial Accountability shows a that fundraising is impacted but not all that much. Survey results here.

Seems among these evangelical nonprofits in 2008:

  • 44% met fundraising goals
  • 28% were within 10% of goals
  • 28% were more than 10% below goals

That's not radically different from the way things are in "normal" times.

Fortunately, the surveyed organizations are not ignoring the recession. Here's what they report doing differently:

  • 53% employed more one-on-one contact with key donors
  • 34% changed the style of the message in communications with donors
  • 34% developed communication materials on how the ministry is responding to the changing economy

Lessons learned:

  1. The sky is not falling, at least not for everyone.
  2. It's smart to respond to conditions with relevant action.

Thanks to Prospecting for the tip.

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What is this blog all about?

If you're serious about raising money from donors, you need to get serious about donors. More than ever before, donors are insisting that you share power with them, not treating them like passive ATMs. This blog is about the ways you can do that -- and the rewards that await you and your donors when you do.

About the Blogger

DonorPower Blog is penned by Merkle's Power Blogging Team, led by Greg Fox, our senior vice president of strategy. Working with Greg is a police line-up of guest "artists", fundraising pros all, who like to pose as blogatorialists when the sun goes down. You can reach this blog, and any of our regular contributors, at
donorpowerblog [at] merkleinc [dot] com. See this blog's policies.


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