Will You Survive?

November 15, 2008       Chip Grizzard      

This fall was already shaping up to be one of the most challenging fundraising environments in recent memory. Most organizations had spent months finalizing strategies to combat the economic uncertainty, rising gas prices, the housing crisis and the presidential election.

The consensus seemed to be that in the past presidential elections and recessions didn’t have a significant impact on results. So with both added together in the same year, everyone thought the fall would be difficult, but with a few well-planned adjustments, most organizations would be OK.

Now, we’ve experienced a near total collapse and $700 billion bailout of the financial system, daily swings of 300 points in the stock market, spikes in oil price, declining discretionary spending, and reduced consumer confidence. It only elevates the level of uncertainty and anxiety.

Already, we are seeing declines in charitable giving the first half of 2008. Not only is revenue down, but also the number of donors giving, reactivation, retention and acquisition of new donors continues to be a major challenge. At the same time that fundraising results are dropping, the demand for services is skyrocketing. In many sectors, demand for services has increased more than 20 percent, causing severe financial stress on many organizations. What is an organization to do? Articles and blogs are filled with great advice on short-term strategies to weather this current storm, but what about long-term?

This is no doubt a difficult and painful correction, but it is just that: A short-term correction that will improve in the second half of 2009. Charitable giving has overcome every obstacle in its path before and the American people will respond again once consumer confidence improves.

It is critical to make necessary adjustments to your short-term strategy, but stay the course. Keep your current communications schedule. Don’t stop nurturing and upgrading your existing donors. And certainly don’t stop attempting to acquire new donors.

Case studies have consistently shown that organizations that try to "save money" by cutting new donor acquisition pay a steep price for it in reduced growth and revenue for years. It is more important than ever to not overreact and to stay as committed to the long-term as possible.

The next big trend that this correction will cause is a "shake-out" period for nonprofits. Shake-outs are a relatively common cycle in business. When too many companies are chasing too few customers, the result is that only the best companies survive. Think of the dot-com bust in 2001.

There has been an explosion in the number of nonprofits during the past decade. And just like in business, when we have too many nonprofits chasing too few donations, those groups not utilizing best practices in fundraising communication risk being "shaken-out."

However, for those organizations with strong brand awareness the shake-out will actually be a good thing. They will end up having fewer competitors and, if they stay vigilant in their marketing and communications, they will reap significant rewards.

Once the market has corrected itself, the economy has improved and consumer confidence picks up, total charitable giving will continue on an impressive upward trend. This will be led by the early Baby Boomers who are reaching retirement, the transfer of wealth that is starting to take place, increased giving from a growing number of family foundations, and the hundreds of thousands of new donors who made their first charitable gifts during the presidential election.

But, only those nonprofits with the strongest brands will thrive.

The donor population is growing very diverse and it is critical to test and develop new strategies for each segment. Are you positioning your organization to ride this wave to new heights? Those that adapt to the changing donor will experience unprecedented success during the exciting times to come. NPT

Chip Grizzard is CEO of Grizzard Communications Group in Atlanta, Ga. His email is chip@grizzard.com