Turn on any news show and you’ll hear analysts and pundits forecasting economic doom and gloom. Their reports are filled with words and phrases like “economic downturn,” “soft economy,” and the dreaded “recession.” While the jury is still out about whether or not we’re really in a recession, now is a great time to recession-proof your fundraising effort.

Weak economies can be very helpful for nonprofits. During such times, organizations are forced to be leaner and more efficient. Then when the economy rebounds, they’re in a much better position to take advantage of it.

But economic downturns can also be perilous times for nonprofits. When faced with a recession, many nonprofits make bad choices that limit their growth. Some of these mistakes can prove fatal.

3 Mistakes to Avoid

How will this economic climate affect your favorite nonprofit? Will you fulfill your mission or will you fold? That depends on whether you make these deadly mistakes:

• spend less on fundraising
• become pessimistic
• apologize when you’re asking

Spend less on fundraising
Whether we like it or not, asking for money costs money. When you’re looking for budgets to trim, costly mailings and fundraising activities will seem like obvious opportunities. But exercise extreme caution.

Most fundraising efforts can be tweaked to improve their effectiveness. These tweaks can either reduce cost or increase money raised. But I’ve never seen a fundraising effort raise more money by being eliminated.

In a recent study I did, I discovered our organization’s direct mail program raised more money during the years we sent out more letters. This was counter-intuitive to me. I’d worked for a couple years to eliminate mailings and focus exclusively on the people deemed most likely to make a gift. But in that time of trying to cut expenses, our annual fund dropped by around 30%! Fortunately, this year we’ve increased our mailings and have already raised as much in six months as we did the entire previous year.

Spending less on fundraising can become a self-fulfilling prophecy. Less investment can result in less being raised which leads to further cuts and even less raised. Tighten budgets where necessary but be very careful when making cuts to fundraising programs.

Becoming pessimistic
The top fundraising professionals are some of the most optimistic people alive. The minute they start being gloomy, people begin holding on to their wallets. Ever wonder why the stock market drops when pundits prophesy uncertainty? No one wants to invest in a questionable deal. It’s the same sort of self-fulfilling loop with fundraising.

As development professionals, we’re inviting people to invest in our mission. Our cause makes the world a better place regardless of the economy! That’s not going to change. We need to continue to shed light on the good things happening around us. We don’t need to be Pollyanna, but we do need to continue to see the silver lining.

Apologizing when you’re asking
When we keep hearing how bad things are, it’s easy to get awkward about asking for donations. But timidity is a sure-fire way to not raise money. We need to continue getting out from behind our desks and inviting donors to give.

I’m certainly not advocating being brash or arrogant. We do need to understand that many of our donors may not be able to give at the same level. This is where we can be compassionate and understanding. And our relaxed understanding of people’s financial realities can make them even stronger proponents of our organizations in the future.

But there’s nothing compassionate about not asking.

Stay Positive and Succeed

Whether the economy is soft or strong, one sure way to raise less money is to stop asking for it! The best way to recession-proof your fundraising is to keep doing the things that raises money and to do it in a way that strengthens relationships with donors, helping them become evangelists for your cause:

• keep on making wise investments in fundraising efforts,
• stay upbeat, and
• continue to compassionately raise support.

Combine these ingredients and you have an excellent recipe for strengthening your nonprofit fundraising in any economy!

About the Author: Marc A. Pitman, CFCC is the author of Ask Without Fear! and the founder of Fundraisingcoach.com. His fundraising books and nonprofit seminars specialize in helping fundraising executives reconnect with their passion.

This article is part of the Fundraising in Challenging Economic Times series.

Here’s a list of each of the articles in this series:

1. Recession Proof Fundraising by Anisha Robinson Keeys
2. 3 Suggestions for Raising Money in Tough Economic Times by Jim Berigan
3. When Foundations Say “No” by Aaron Atwood
4. Succeed at Fundraising Despite a Recession by Marc Pitman

Though giving from U.S. foundations was up in 2007, the investment market isn’t looking pretty for anybody. We can expect that numbers for 2008 will be quite different. Foundations effected by declining investment markets are likely to give less and you may be on the other end of some letters declining funding this year.

So what next?

Foundations decline proposals for many reasons. As a member of a foundation board myself, I know that deciding not to fund something is often more difficult than grantmaking. While there are many reasons foundations decline, for the sake of time let’s just focus on what to do next.

First, finding out the reason for the decline should make the list of top priorities. A simple call to follow up is usually all that’s needed. It sounds easy, but I’ll bet most of you haven’t thought of doing it. It’s sad, but many non-profit fundraisers just get so busy that following up on a decline for funding gets put on the long list to-do-later. Don’t! Do it now.

When I talk to a foundation representative about a decline, I want to know if they can help me understand the shortcomings of my proposal. If I’m the grant writer I usually have to swallow my pride and need to feel vindicated (translation: I keep my mouth shut and receive feedback). Don’t fire your grant writer the first time you get a negative critique. It is impossible to have 100 percent success. Likewise, don’t internalize any feedback about your program – foundation staffers aren’t rejecting you when they decline a proposal.

Here are some questions to help you get through this potentially difficult call:

• “Did the program seem to fit your foundation’s interest?”
• “Was there an emphasis in the proposal that missed the mark or was it something else?”
• “How did our outcomes come across?”

Finally, ask a foundation if you should reapply. Based on the conversation, you should have some idea about where things went wrong. I like to end my questioning by simply asking, “Should we consider reapplying next year?”

This is a really important question. It gives the grantmaker a way to tell you, gracefully, if you stand a chance based on what she knows about your organization and her foundation. It also will give you some renewed hope about your grants efforts.

If a foundation staff person says, “No, I don’t think so.” Accept it gracefully knowing that you can mark them off the list and move on to spend your time some other way that will generate revenue. It’s all part of the process.

Let’s assume all has gone well and you know that you’ll submit another proposal at the appropriate grant cycle. I don’t want you stop now. You are almost home! Send a follow note of thanks.

I know it’s talked about like a magic bullet – but building relationship is very critical to keeping your grants program active and successful. A quick note saying, “Thanks for taking time to talk with me about our proposal. It really helped me understand your interests better.”

Now, add them to your grants calendar (more on that in future articles) to ensure you remember to call again closer to the application deadline. You’ve discovered how to write a better proposal, built the relationship and are ready to resubmit. You are on your way to funding!

This article is part of the Fundraising in Challenging Economic Times series.

Here’s a list of each of the articles in this series:

1. Recession Proof Fundraising by Anisha Robinson Keeys
2. 3 Suggestions for Raising Money in Tough Economic Times by Jim Berigan
3. When Foundations Say “No” by Aaron Atwood
4. Succeed at Fundraising Despite a Recession by Marc Pitman

Asking people to donate money is never an easy task. In tough economic times, it’s even more difficult. If people are struggling to pay their mortgage and utilities, how can they find any extra for your organization? I, like many of you in the non-profit sector, have had to exist in this challenging reality for a number of years now. Here are a few ideas that have helped me make ends meet when our donor base is struggling.

1. Appeal to Your Donor’s Sense of Creativity

I once had a conversation with a man (who had done very well in business) about the state of non-profit fundraising. He was being approached constantly by groups to make sizable donations. While he often did his best to honor these requests, he did admit that there was a certain “sameness” to modern fundraising. He wished there could be a little more creativity and excitement involved.

After some talking, brainstorming, and researching, we came up with two ideas that really sparked his imagination. The first one is called the Red Paperclip Project and the other is called the Kingdom Assignment.

Both of these methods are almost exclusively based on the creativity and ingenuity of the individual donor. Each requires a person to be willing to talk to their friends, to make unexpected connections between people and ideas, and to be courageous for the cause.

What particularly struck this donor was the excitement that might be generated, as the competitive nature of wealthier donors were aroused. For instance, the Kingdom Assignment starts with each person (or team) having $100. The object is to turn that $100 into as much money as possible and then give all the money back to the cause. (This is a Christian concept, based on the parable of the Talents, so the method of multiplying the money needs to fall within these theological bounds.)

This competition wouldn’t be anything official from the non-profit, but when you issued a challenge of this kind to a group of wealthy donors that required them to utilize all the skills that made them wealthy in the first place, human nature would invariably take over and competition would arise naturally. Of course, this only benefits the non-profit.

The man with whom I was chatting could easily imagine a group of big donors, who had become bored with the “same old, same old” of non-profit fundraising getting really jazzed about this kind of a deal.

When times are difficult, a non-profit must utilize every advantage it can find that will motivate, encourage, and promote giving.

2. One Man’s Trash is Your Non-Profit’s Treasure

When family budgets are stretched, one of the first items to be cut is charitable giving. If folks don’t have the money, how can they give it?

Well, one answer may be to ask families not to donate cash, but instead to donate used goods from their homes that you can put into a large community garage sale. While I might not be able to write you a check for $100 right now, I can certainly get rid of that couch in my basement, a couple of lamps, a dresser, and a television set.

When you combine all these items from the people in your community, you could rack up a really nice profit from such a sale. Families still get the sense that they are helping out, and they can still protect their personal financial situation, which maybe a bit uncertain. Plus, they get to clean out the basement a bit and get a tax deduction. What a great deal for everybody!

Another approach is the online auction. When I worked for the summer camp, a big box retailer near our office was going out of business, and the manager there donated ten double ovens that had slight dents and scratches to our non-profit. Brand new, in perfect condition, these ovens sold for over $1,000 each. Because we had a contact at the store, they were given to us for free.

So, we stored them in a garage, took pictures of them, and put them up for sale on eBay. I thought that there would be no way to sell high-end ovens online, but we sold them all in a matter of a couple of weeks and made a great profit.

Besides eBay, cMarket is also a great online auction house that has a lot of experience working with non-profits.

3. Double the Power of a Dollar with Matching Grants

One of the first things a person learns about money is that it would be nice if it went farther. If you can get $50 worth of merchandise for $25, you’ve made a great steal.

In hard economic times, we should approach our fundraising efforts like this. Why accept a $100 donation, when it could be turned into $200 with a matching grant. Makes sense, right?

In the past, I have had great success in asking donors on the higher end of the giving scale to make matching grants. Matching grants can be set up in many different ways, but the general idea is that for every dollar the group raises, the matching donor will give $2 or whatever amount he decides upon ahead of time. Many donors will set a threshold figure that the group must raise before the matching gift will start. For instance, the donor may require that the non-profit raise $10,000 and after that, there will be a two for one match. I’ve also seen donors put a cap on the gifts, such as “up to a maximum of $50,000”. This is not uncommon.

Having a matching gift on the table is a powerful tool for a non-profit. First, it’s a great enthusiasm builder. Those working on the campaign can see visible progress- a real goal. This is an extra incentive for them to give the campaign their best effort. Also, a matching gift sends a message to other donors that their contribution of $100 could actually mean $200 for the group. Or $500 turns into $1,000. People can see how this can add up very quickly.

For the original donor, there is a certain level of protection as well. If the non-profit can’t meet the threshold, it tells him that the group potentially has problems that a single gift couldn’t fix anyway.

Conclusion

In the end, I think that the greatest piece of advice in fundraising is the need to be understanding of where your donors are coming from. Ask yourself what each donor’s reality is. Tailor a strategy for each demographic group, so that you can demonstrate to the entire community that you realize one size does not fit all. If you try to put yourself in their position and think about the most respectful and practical way to approach each person, you will find success even in tough economic times.

This article is part of the Fundraising in Challenging Economic Times series.

Here’s a list of each of the articles in this series:

1. Recession Proof Fundraising by Anisha Robinson Keeys
2. 3 Suggestions for Raising Money in Tough Economic Times by Jim Berigan
3. When Foundations Say “No” by Aaron Atwood
4. Succeed at Fundraising Despite a Recession by Marc Pitman

Sales guru Zig Ziglar said, “If you have enough push, you don’t have to worry about the pull.” No matter what you believe about the current economic outlook, if you are a not-for-profit, cutbacks on the part of grantmakers and donors will likely affect your ability to raise funds requiring you to push that much harder to maintain financial stability.

Here are some strategies for pushing harder to raise funds during a recession.

Diversify income streams: Many nonprofit organizations are able to weather tough times by diversifying their income streams; and given the current times, every nonprofit organization, even those that have historically raised money from just one source, should consider expanding the ways it generates revenue. A fundraising plan with a broad reach typically targets contributed income from individual donors, corporations and foundations, and earned income from special events and the sale of products and services.

Honor your volunteers: Even when a fundraising plan identifies diverse income streams, tough times require subtle changes in the tone of the “ask” and the tone of the relationship between donor and recipient. An often overlooked source of support for nonprofits, the volunteer, can be a key barometer for how successful a fundraising plan might be.

Volunteers drive the non-profit community, serving at all levels, from board membership to clerical tasks. In good times, volunteers may be plentiful and enthusiastic. But because they also feel the effects of an economic downturn, they may be scarce, choosing to give their time and effort to personal and/or professional commitments. In response, consider demonstrating to volunteers just how and why their altruism is worth it. Think of ways to make the contribution of their time pleasurable and beneficial, and minimize obstacles associated with serving. For instance, use and promote the organization’s events, friendraisers or fundraising initiatives as opportunities for volunteers to network with potential business contacts. And be respectful of their time by starting and ending meetings and events. Demonstrating appreciation for volunteers goes a long way in fostering loyalty.

Keep in touch: Another important, no-cost strategy for retaining funding levels is to retain funder interest. Now is a great time to keep in touch with your supporters. Their investment shows that they care about the work your organization does; show that you care by keeping them informed of your initiatives, even during the hard times. During your calls, share success stories that can re-energize their commitment. Use anecdotes and case studies to reveal how their time, money and talent are making a transformative difference in your organization.

According to a recent article in the Chronicle of Philanthropy, donors gave more to a charity when they read or hear the story of how one specific individual is impacted by their contribution, as opposed to a report on many anonymous persons. If your nonprofit organization is large, it will be common knowledge that many people are being served—don’t overwhelm them with the stats! Keep collecting statistical data; but remember that donors are as emotion-driven as anyone else and the relationship between donor and recipient is based and built on people helping people.

Be a part of your own solution: Nonprofits should also openly confront the issue of how an uncertain economy could affect your stability and viability. Donors know that no matter where the economy is headed, raising money is never easy. So they will have concerns about how an organization they support will prevent, mitigate or recover from the loss of funding; especially if that organization depended on just one source of revenue. Many nonprofits operate under the constant threat of financial uncertainty. Therefore, they must be creative, proactive and enterprising, constantly seeking opportunities, without forsaking their mission, to ensure sustainability.

A good example is the Girl Scouts. Noted for being enterprising, the Girl Scouts netted over 700 million dollars from annual cookie sales last year. Baking cookies isn’t the answer for most nonprofits, but it helps to have an earned income plan. For example: an organization that provides specialized training or has a talented management team may provide fee-based consulting services to emerging organizations in the same field. There’s an earned income option for just about every nonprofit seeking to supplement fluctuating donations. Coming up with the right fit may just be a matter of brainstorming.

Finally, the best way to ensure that an organization loses revenue and goodwill is to stop asking for money and support. In good times and bad, nonprofit organizations must stay positive, creative and keep pushing hard to ensure survival and to fulfill their promise to serve our communities.

This article is part of the Fundraising in Challenging Economic Times series.

Here’s a list of each of the articles in this series:

1. Recession Proof Fundraising by Anisha Robinson Keeys
2. 3 Suggestions for Raising Money in Tough Economic Times by Jim Berigan
3. When Foundations Say “No” by Aaron Atwood
4. Succeed at Fundraising Despite a Recession by Marc Pitman