Occasional Notes from the izone


September 17, 2008 / Issue V
Philanthropic Support During Challenging Economic Times *Perspectives on giving…* When the economic weather gets rough, what do you say to your volunteers who worry about fundraising? After surviving some of the most challenging economic times, such as the dot.com bust of 2000 and the September 11th downturn, it seems that Americans are resilient, always up to the challenge. If you find yourself wondering what to report to your board members or fundraising volunteers, you might wish to look at some of this wisdom. I’ve noted both positive and negative possibilities, so that you can look at this from a balanced approach. From a positive perspective: Despite more than two years of negative economic news, American charitable giving is at record levels, consisting of more than 2% of the gross domestic product of the United States. In tough economic times, donors are circumspect and perhaps even more rational about their giving, showing conservative pledge behavior…spending only what they can afford. This means, for instance, that few, if any, of the pledges are defaulted on in capital campaigns. Members of the community often “donate” more time than money, giving more volunteer time than before. Now might be the time to ramp up your volunteer recruitment plans. The concept of “snowflaking” occurs—when many more people give many more smaller gifts, making just as significant an impact. Special events that are community driven may make more sense as a fundraising activity. Community needs are somewhat heightened when the economy turns down, making it easier to illustrate the case for support to more people in the community. In times when most everyone feels the pinch of an economic downturn, people are more sensitive to the plights of others. Strong cases, compelling missions, and wisely reasoned capital campaigns have a very strong capacity to succeed even during bad economic times. From a negative perspective: During capital campaigns or special major gift-driven projects, when larger gift commitments are paid from donors’ equity holdings (versus their daily discretionary accounts), such donations tend to be leaner. Many donors elect not to pledge their gift commitments over time, taking a “one-year-at-a-time” approach to supporting larger projects. Annual support begins to show a slowdown after the second year (of longer-term economic downturns), resulting in smaller gifts in subsequent years. This has long been the general trend. On the flip side, this offers us an opportunity to reinforce our donor relationships and seek flat giving levels, rather than trick ourselves into believing that we will see 10% increases, as an example. Successful capital campaign commitments are more strongly predicated on the relationship with the charity, based mostly on a history of supporting the organization through the years. (The converse to this: during challenging economic times, it becomes increasingly harder to successfully solicit new capital donors who have never donated to your organization.) These are only some of the perspectives that may be helpful when planning your fundraising approaches. My advice is to share these perspectives with your fellow staff members and volunteers, and invite open discussion on how best to position your organization during these challenging times. Mario Capozzoli

September 17, 2008 / Issue V

Philanthropic Support During Challenging Economic Times
Perspectives on giving…

When the economic weather gets rough, what do you say to your volunteers who worry about fundraising? After surviving some of the most challenging economic times, such as the dot.com bust of 2000 and the September 11th downturn, it seems that Americans are resilient, always up to the challenge.

If you find yourself wondering what to report to your board members or fundraising volunteers, you might wish to look at some of this wisdom. I’ve noted both positive and negative possibilities, so that you can look at this from a balanced approach.

From a positive perspective:

Despite more than two years of negative economic news, American charitable giving is at record levels, consisting of more than 2% of the gross domestic product of the United States.

In tough economic times, donors are circumspect and perhaps even more rational about their giving, showing conservative pledge behavior…spending only what they can afford. This means, for instance, that few, if any, of the pledges are defaulted on in capital campaigns.

Members of the community often “donate” more time than money, giving more volunteer time than before. Now might be the time to ramp up your volunteer recruitment plans.

The concept of “snowflaking” occurs—when many more people give many more smaller gifts, making just as significant an impact. Special events that are community driven may make more sense as a fundraising activity.

Community needs are somewhat heightened when the economy turns down, making it easier to illustrate the case for support to more people in the community. In times when most everyone feels the pinch of an economic downturn, people are more sensitive to the plights of others.

Strong cases, compelling missions, and wisely reasoned capital campaigns have a very strong capacity to succeed even during bad economic times.

From a negative perspective:

During capital campaigns or special major gift-driven projects, when larger gift commitments are paid from donors’ equity holdings (versus their daily discretionary accounts), such donations tend to be leaner.

Many donors elect not to pledge their gift commitments over time, taking a “one-year-at-a-time” approach to supporting larger projects.

Annual support begins to show a slowdown after the second year (of longer-term economic downturns), resulting in smaller gifts in subsequent years. This has long been the general trend. On the flip side, this offers us an opportunity to reinforce our donor relationships and seek flat giving levels, rather than trick ourselves into believing that we will see 10% increases, as an example.

Successful capital campaign commitments are more strongly predicated on the relationship with the charity, based mostly on a history of supporting the organization through the years. (The converse to this: during challenging economic times, it becomes increasingly harder to successfully solicit new capital donors who have never donated to your organization.)

These are only some of the perspectives that may be helpful when planning your fundraising approaches. My advice is to share these perspectives with your fellow staff members and volunteers, and invite open discussion on how best to position your organization during these challenging times.

Mario Capozzoli