Stop Deciding What Your Donors Can Afford

Stop Deciding What Your Donors Can Afford

Fundraising During a Recession

I've fundraised through more than one economic downturn. And if there's one thing I've learned, it's this: Stop deciding what your donors can afford. Economic uncertainty changes philanthropy. It changes what people have available to give, how they choose to give, and sometimes what assets they're willing to part with. But it doesn't mean people stop caring about the causes they care about. And it certainly doesn't mean nonprofits should stop stating what they need.

What I Learned From the Housing Crash

When Wall Street crashed in 2008, the effects rippled through the economy. Wall Street had also been a major source of charitable giving. As financial institutions struggled and some disappeared altogether, nonprofits felt it.

The impact didn't hit every part of the country at exactly the same time. I was working in affordable housing in the Pacific Northwest, an industry sitting right in the middle of the fallout.

Housing had changed dramatically. Owning a home wasn't necessarily what people wanted anymore. Rentals were in demand. Properties were sitting vacant. Land and homes that had once represented wealth had become burdens for some owners.

And that's where I learned an important fundraising lesson.

Look at what the economy has created, not only what it has taken away.

Some people who owned land or vacant homes were willing to donate real property to nonprofits. Some properties could be held. Some could eventually be developed. Vacant homes could potentially become affordable housing.

There were also public funding opportunities supporting community and economic development. Programs such as Community Development Block Grants and the New Markets Tax Credit could help communities respond to changing economic conditions.

The housing crash was devastating. But within the devastation, there were also assets, programs, partnerships, and opportunities that looked different than they had when the economy was booming.

Fundraising had to look different too.

A Recession Shouldn't Take Down Your Nonprofit

Another lesson from that period isn't as comfortable to talk about. If losing one major donor can collapse your organization, losing the donor isn't the only problem. Your organization was financially vulnerable before the donor disappeared.

Revenue needs to be diversified. That means grants shouldn't be your entire funding strategy. Neither should individual donors. Neither should one major corporate partner. Neither should one annual event.

When times are good, it's very tempting to expand. There's more money, so we add another program, another employee, another event, another expense. Growth is exciting.

But before you spend every additional dollar expanding, build some protection against the next rainy day. Create reserves. Consider whether an endowment makes sense for your organization. Build multiple revenue streams. Because eventually it will rain.

Then Came COVID

COVID was different. Nobody knew what was going to happen. Some funders immediately threw money toward needs they believed would become critical. Others essentially went into a moratorium while they waited to see what needs would emerge from a global pandemic.

And nonprofits got scared.

I heard versions of the same thing repeatedly: "How can we ask people for money right now when people need ______?" Fill in the blank. Food. Housing. Medical care. Emergency assistance.

Here's my problem with that thinking:

Why are you deciding where someone else should give their money?

Your responsibility as a nonprofit is to clearly state your need. The donor gets to decide whether they want to fill it.

My Dad Didn't Pick My Nonprofit

My parents were charitable people, but they had causes that mattered specifically to them. Animals. Veterans. My mom also supported the local domestic violence shelter.

Before COVID, I hosted a charity cornhole tournament. The winner got to choose which nonprofit received all the entry fees. My dad won. He did not choose my nonprofit. He chose the local Humane Society. Because that's what he cared about.

And that's exactly how philanthropy works. You can explain your mission. You can tell your story. You can state the need. You can make giving easy. But you don't get to decide what matters most to the donor.

And you shouldn't decide on their behalf that your cause isn't important enough to support because something terrible is happening somewhere else.

I Don't Like the Phrase "Ask for Money"

I don't really think of fundraising as asking people for money. You're stating a need.

"This is what we're trying to accomplish."

"This is what it costs."

"This is what we need."

Then you give people the opportunity to participate.

During COVID, I was consulting with an arts and culture organization with significant fundraising needs. We couldn't fundraise the way we'd always fundraised. So we changed how we did it. The gala went online. Site tours became videos. Everything moved onto screens because that's where everybody was.

We found ways to put the organization's needs in front of the community when we couldn't put people in the same room.

The mission didn't stop because there was a pandemic.

Neither did the need.

So we adapted.

Your Donors May Have More Than Cash

I noticed something else during difficult economic periods. People started talking about assets other than cash. Stock. Securities. Real property. Other noncash gifts.

There's something psychologically different about giving an asset rather than writing a check. A donor may be reluctant to pull $100,000 out of a bank account but feel very differently about donating an asset they already own.

For the nonprofit, some of those assets can ultimately be converted into cash to support the mission.

Of course, nonprofits need appropriate gift acceptance policies, and donors should talk with their own financial and tax professionals about the consequences of making noncash gifts.

But nonprofits should know these options exist.

If the only giving button you're showing donors is "write us a check," you may be overlooking other ways someone could support your organization.

Here We Are Again

Economic uncertainty is affecting fundraising again. So what do we do? We use what we've already learned.

1. Don't panic.

2. Don't disappear.

3. Don't stop communicating.

4. Don't assume your donors are broke.

5. Don't decide that another nonprofit's mission is more important than yours.

6. And don't rely so heavily on one source of revenue that losing it puts the entire organization in jeopardy.

Pay attention to what is happening in the economy.

• What has become scarce?

• What has become available?

• What assets are people holding?

• Where are government and foundation priorities shifting?

• What does your community need now that it didn't need two years ago?

Fundraising during difficult economic times isn't about pretending the economy is fine. It's about adapting to the economy that actually exists.

State the Need

Your donors are adults. They know what their bank accounts look like. They know what they own. They know what causes matter to them. Let them decide what they can afford.

Your job is to make sure they know what you need. State the need. Tell them what their gift can accomplish. Give them different ways to participate. Then let them decide whether they want to show up. Because the economy gets a vote in how we fundraise.

It doesn't get to decide whether our missions still matter.