The Wayback Machine: The Nonprofit Clinic—Summer ’08 Edition

Successful Fundraising in Difficult Economic Times

by Buzz Harris, Executive Director, The Development Resource Center

~ Note: This article pre-dates our blog. We decided to share it here as it is still timely. ~

Fundraising during a recession is always challenging. Here is a multi-part strategy to ensure that your organization’s journey through recession is a smoother, more prosperous one. Bring your board and staff together separately to review and recommit themselves to the organization’s mission. Inform both groups, candidly and transparently, about your income and expenses and the reasonable expectations for fundraising. Faced with this challenge they may have valuable input and suggestions. Solicit their thoughts and support.

Good fiscal practice tells us to visit expenses first. Where can you reduce spending without harming your core program? What purchases and upgrades can be deferred? Create an austerity version of your current budget. Imagine that your income comes in ten percent or fifteen percent below even this plan. What would you cut at various benchmarks? Get buy-in for any cuts before you are forced by events to make such decisions. Consider implementing across-the-board, temporary compensation reductions rather than terminating positions due to income constraints.

Do you have an endowment or a reserve fund? If so, be prepared to draw on the principal to support your austerity budget through hard times. That is why these funds exist. Prepare your board in advance for this eventuality to avoid surprise. If you do not have one set up a reserve account right away. Some or all funds from planned giving should go into such a fund. You can also budget five percent or so of your regular income to build a reserve over time. Every organization needs a financial cushion.

Next turn your eyes to your base of individual donors. Do you have a major donor program that yields about sixty percent of total donor revenue? If not, you are in luck! You have a vast untapped resource. How much staff time do you spend on individual donors at all levels? About sixty percent should be focused on relationship building and phone or in-person gift solicitation from donors who could give you gifts of roughly $500.00 or more. You can save time by cutting back on the number and size of special events, and reducing time spent on annual fund mailings and phone banks. Read the sections on major donor fundraising in Kim Klein’s Fundraising for Social Change and start a program right away. However, DO NOT reduce your donor acquisition efforts. Organizations need new donors to replace those who regularly move on.

If you already have a major donor program ask your existing donors for names of additional prospects whom they know. Check your database for suspects who gave initial gifts of $75.00 or more, whose yearly giving is more than $100.00, or who have given one or more identical gifts per year for five years or more.

Organizations that are largely grant funded should redouble their research efforts to find new prospective funders. Reframe your work to access new funders whom you may never have considered. For example, an environmental group engaged in water quality improvement should look beyond green funders to public agencies concerned with tourism (cleaner rivers mean increased tourism opportunities), poverty alleviation funders (cleaner water means increased, safer fisheries and a better food supply for local communities) and the like. Be inventive and honest in reframing your program for new funders.

DRC courses on these issues.

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