This most recent recession was as bad as Larry May has ever seen, and he’s seen a few. “I’ve been through four,” said May. For the others, he said, “By the time we realized we were in a recession it was over. Nonprofits usually didn’t even adjust their budgets. This has been radically different.”
May, along with fellow veteran direct marketers Geoffrey Peters, Jack Doyle and Lynn Edmonds, spoke during a panel at the recent National Catholic Development Conference (NCDC) 2014 conference in Chicago.
“A lot of organizations are reporting a higher average gift and a lower response rate,” said May, senior vice president for strategic development based in the New York office of Infogroup Nonprofit Solutions, headquartered in Papillion, Neb. “What does that mean?”
Peters, CEO of Moore DM Group and based in its Bowie, Md., location, believes it’s a function of a smaller list universe. “People are not going to commercial lists and prospecting,” he said. “A lot of the organizations are more timid on prospecting.”
Edmonds said the past recession proved nonprofit fundraising is not recession-proof, as had been widely believed prior to the economic downturn. “Until the last one we never had a problem and in fact donors felt the needs were greater and gave more,” said Edmonds, senior strategist at RobbinsKersten Direct in Holliston, Mass. “The past (recession) changed everything. People who would give $5,000, $10,000 every year held off or gave half.”
The recession has also damaged development departments, said Doyle, president of Amergent in Peabody, Mass. “Leadership, if they didn’t have an understanding of development, would cut budgets across the board,” he said. “They were cutting overhead budgets and felt development budgets had to be cut to be fair. They also cut acquisition budgets. People who invested their budgets in the donor development side — upped major gift capacity, retention, et cetera — tended to do well.”
Unease and uncertainty about Social Security could have fueled the downswing among older donors, those who were already retired when the recession hit and had no jobs to lose. “Fear hit that group. They cut major giving and changed their wills, and they haven’t quite come back yet,” said Edmonds.
“They’re Depression babies,” said May. “Disaster is just around the corner.” Many of these donors give to five or six organizations, said May, and your organization is most likely not in the top three. “They have their church, a community organization, maybe a school, and then you,” he said. “If they hit a tough time, you might be the one they skip for a few years.”
You’ll have to make some tough choices in tough times, said the panelists, and they suggested looking first to the $5 and $10 donors. While their age and their longevity on your file might make them seem to be solid planned giving prospects, “If you roll their planned gifts back into all the effort you put into talking to those folks, there’s near zero for your organization,” said May.
Doyle called it a “caring cost,” saying while in the past with nonprofit postage low there were no barriers to mailing to everyone on your file. “Those days are over,” he said. “You have to add up how many mailings you need to get a $5 and $10 donor to give. Those one- and two-off donors have a heavy cost to carry.”