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Nonprofit Fundraising in Economically Turbulent Times
Christen Condrey

May, 2010

TexasNonprofits is very proud to publish the first student paper publication by masters candidate Christen Condrey in Medical Applied Anthrolology through the Unversity of North Texas College of Public Affairs and Community Service. This opportunity is part of a new TXNP program inviting students of Public Policy and Community Service to have the opportunity to submit, and if invited, publish papers in our library.Our Texas students are tomorrow's leaders, loaded with tomorrow's insights to share with us.
 
 
When the economy declines, philanthropic giving may also wane.  The current recession affected the U.S. nonprofit fundraising climate throughout 2009 (The Center on Philanthropy at Indiana University 2009).  In the face of a recession, the question of how to keep fundraising alive arises for many nonprofits.  Many tools are proving to be vast and resilient fundraising resources in an economically turbulent era.  Among these newly emerging trends are the extensive use of technology, seeking out untouched foundational grants, corporate partnering and affinity marketing, forming alliances with regional businesses, and keeping up with online resources offering current information on nonprofits and navigating the recession.  
 
   

When the economy declines, philanthropic giving may also wane.  On November 28, 2008, the National Bureau of Economic Research announced that the U.S. economy has been in recession since December 2007 (The Center on Philanthropy at Indiana University 2008).  Certain segments of the economy have fallen below levels last seen in the recession of 2002 (Greene et al. 2001; The Center on Philanthropy at Indiana University 2008).  Effects of this previous recession on non-profits were felt at least 2-3 years following economic downturn (Nonprofit Finance Fund 2010; Greene et al. 2001). 

     The current recession affected the U.S. fundraising climate throughout 2009 (The Center on Philanthropy at Indiana University 2009).  According to the Philanthropic Giving Index, over 93% of fundraisers feel the economy is having a negative impact on fundraising, with 28.5% calling it a very negative effect (Philanthropy Journal Nonprofit News and Resources 2009). 

     The Center on Philanthropy at Indiana University, in its Giving USA Foundation’s Fall 2008 Newsletter, analyzed the past 40 years of economic trends in regard to philanthropic giving.  In recession years, giving tends to fall by at least 1%, while years that have 8 months or more of recession can see a 2.7% decline (The Center on Philanthropy at Indiana University 2008).  The longest recession in the 20th century, between the years of 1973-1975, saw a 9.2% decrease in giving, while the 2002 recession experienced a 6.3% drop (The Center on Philanthropy at Indiana University 2008).  As of 2009, non-profit confidence in the current fundraising climate had dropped nearly 28%, the largest decrease since the Center on Philanthropy at Indiana University began its Philanthropic Giving Index study in 1998 (Philanthropy Journal Nonprofit News and Resources 2009; The Center on Philanthropy at Indiana University 2009).

     Many nonprofits are reporting smaller contributions or none at all from individuals, corporations, and foundations (Hall 2008).  The number of return donors is declining as well.  Non-state agencies are losing government funding (Hall 2008).  Many donors cite stock market volatility and concern over deepening economic downturns.  The recession is also causing individuals, corporations, and foundations to lose confidence in their ability to make long-term financial commitments, which can lead to delays in decisions about giving (Hall 2008).  In the wake of such instability, fewer charities are beginning campaigns, setting lower goals, or delaying and extending campaigns that have not raised enough money (Hall 2008).  Adding to nonprofits’ financial concerns is the fact that the need for the services of many nonprofits also increases in times of economic hardship.  All of these aspects of recession can take a definitive toll on nonprofit organizations.   

     In the face of a recession, the question of how to keep fundraising alive arises for many nonprofits.  There are positive reports, however, despite economic downturns.  According to a study by Caroline Preston, more than 52% of donors state that their gifts in 2009 would be as much as those given in 2008, even though most people in the survey declared that they had been affected by the recession (Preston 2009).  Of the respondents that planned to give a comparable amount in 2009, 50% were fully prepared to make sacrifices in other areas of their life to remain committed to giving (Preston 2009).  If donors had previously offered to donate, 87% said they would pay in full.  If individuals could not donate as much as previous years, they preferred to give smaller donations, rather than not giving at all (Preston 2009).  Of those that participated in the survey, 42.5% said they would consider giving to new nonprofits and 40.3% were interested in donating to nonprofits servicing populations directly affected by the recession (Preston 2009). 

     Corporations are also reducing their cutbacks to nonprofit donations (Blum 2010).  While levels of corporate giving may not return to amounts recorded in 2007, corporations are allowing more contributions to nonprofits in 2010 as compared to 2009 (Blum 2010).

     Not only are there hopeful statistics in how individuals and corporations view their commitment to nonprofits, there are many new trends emerging that provide numerous, creative, and innovative methods for nonprofit fundraising.  Many of these tools are proving to be vast and resilient fundraising resources in an economically turbulent era.  Among these newly emerging trends are the extensive use of technology, seeking out untouched foundational grants, corporate partnering and affinity marketing, forming alliances with regional businesses, and keeping up with online resources offering current information on nonprofits and navigating the recession.  

      Technology is rapidly changing and providing a wider forum for contact among individuals, corporations, and foundations. It also offers increasingly diverse mediums for building support networks and donor relationships.  ‘Do not call’ registries and debates over postal rates can affect traditional nonprofit fundraising techniques (Schwinn 2003; Lewis 2003), but the very encompassing technological or online world can provide many additional avenues of building virtual communities (Corson-Finnerty 2000).  Twitter, Facebook, blogging, texting, and online chat forums are just the beginning of technological assets for fundraising.

     In a time when nonprofits can only afford so much in a budget, social networking tools such as Twitter, Facebook, and blogging cost little to reach wide populations to educate individuals on a nonprofit’s cause, build rapport, and nurture relationships.  Concurrently, donors may only be able to contribute small amounts, but the numbers of small contributions from such a wide base of supporters can add quickly to raise overall donations (Hudson Institute 2009; Panepento 2010; Wallace 2010).   After all, most donations are made up of small contributions (Fritz 2010 Fundraising in a Recession).  Supporters can also communicate with each other or forward nonprofits’ information to gather backing (Hudson Institute 2009). 

     Twitter is a social networking site that allows users to send ‘tweets’ or updates in a live stream (Twitter 2010).  On February 12, 2009, fundraising festivals were coordinated around the world by Twitter users to raise money for clean water projects in 14 developing nations (Hudson Institute 2009).  In January of 2010, Alison McQuade capitalized on a widespread Twitter joke referring to the upcoming Apple iPad as the iTampon by tweeting a post that linked the iPad jokes to her nonprofit organization that raises money to provide eco-friendly feminine products to women and girls in Uganda (Panepento 2010).  McQuade also put posts on her Facebook page, another social networking site.  Within one day, $200 in new donations was generated, and by the fourth day $1,676 was raised (Panepento 2010).  While this may not be an incredibly large amount, there were no overhead costs (just two tweets and one post) and only took four days.  There is also the chain reaction of generating new supporters and spreading information to consider, as well as the ability to easily and regularly communicate with donors to nurture relationships. 

       Blogging, a form of online rapid-fire broadcasting, can work to generate followers as well.  It reaches large amounts of people, and often develops lasting relationships among readers.  Blogging creates an intimacy that facilitates dialogue and the possibility of online community among readers (Wallace 2010).  All of these dynamics are necessary in the creation of a nonprofit community, so blogs can create a forum for and relationship among supporters and nonprofits that can in turn generate financial support. 

     In recent years, text-messaging has been linked with the online payment service of PayPal to generate instant and easy donations via cell phones (Hudson Institute 2009).  In 2002, a Turkish PVO, Educational Volunteers Foundation of Turkey, began an annual cell phone-based fundraising campaign (Hudson Institute 2009).  By 2007, $575,000 was generated via text messaging just for that year alone (Hudson Institute 2007).  The Red Cross and many other organizations have used text messaging for numerous fundraising campaigns, such as raising aid for the earthquake in Haiti or the Asian tsunami (Hudson Institute 2009). 

     Many nonprofits utilize the online forum to ‘pull’ visitors into sites and entice them to continue visiting, increasing the potential of donation or support (Corson-Finnerty 2000).  The Nature Conservancy has many resources for users, which include the ability to ask questions of a conservationist, subscribe to a newsletter, read book reviews, send nature e-cards, decorate personal desktops, calculate carbon footprints, listen or share podcasts, virtually visit nature preserves, shop, donate, volunteer, or browse current activities (Nature Conservancy 2010).  Amnesty International offers many audio aids for current events, news streams, and ways to take action or join (Amnesty International 2010).  The Metropolitan Museum of Art provides interactive learning about currently displayed works of art, the ability to subscribe to Artwork of the Day feeds, viewing of selected highlights, shopping, behind the scenes footage, online lectures, and ways to donate (Metropolitan Museum of Art 2010).  All of these sites provide forums to create community, create accessible information for educational purposes, and offer active involvement for the potential supporter.  By supplying supporters with an abundance of resources and interactive ‘gifts’, nonprofits can build and nurture relationships, ensuring a continuing involvement and potential donations. 

     Beth Kanter is an award-winning blogger that provides fundamental advice for any nonprofit interested in utilizing technological fundraising models (Hudson Institute 2009).  Just a few of her very important lessons discuss the necessity of the instant ‘thank you’, viral marketing, building social capital and networks before asking for donations, displaying fundraising results as they occur, and giving back lots of little gifts, as well as how to use videos, blogs, Twitter, and online payments (Hudson Institute 2009).

     While technological trends provide creative and fascinating avenues for nonprofits to pursue fundraising, there are many additional resources to explore.  Grant writing for foundational support has long been a source of assistance for nonprofits.  Just as there are many unclaimed scholarships for students attending college, a study of foundational support for nonprofits found that there may be many more grants available than nonprofits seek (Rooney 2006).  Case studies from the Nonprofit Overhead Case Study indicate that 2/3rds of human service and educational nonprofits report inadequate overhead funding.  Half of these nonprofits state the reason that they have inadequate administrative funding is because foundations only support program funding rather than administrative expenses (Rooney 2006).  However, 69% of foundations reported that they do fund overhead for general operating grants or unrestricted grants (Rooney 2006).  Only half of all human service or educational organizations requested overhead funding in the three years preceding the study, and 55% of these nonprofits received support (Rooney 2006).  This data suggests that many nonprofits may not be seeking the assistance offered by foundations.  The report further documents that there are many types of foundations with which to build relationships, such as large foundations, young foundations, independent foundations, local foundations, and foundations that fund human service organizations (Rooney 2006). 

     Corporate donors are also proving to be rich sources of assistance.  Debra E. Blum discusses how companies in 2010 are focusing more on business strategy rather than the economy when making philanthropic decisions (Blum 2010).  While 53% of businesses in 2009 planned cuts to nonprofit donations, only 20% reported reductions in 2010 (Blum 2010).  Companies are aware that tying brands to giving or nonprofits increases visibility and brand awareness.  Nearly half of all businesses are planning to increase efforts to get employees to volunteer with nonprofits (Blum 2010, Preston 2010).  The nonprofit endeavors in which corporations expressed the most interest are overseas organizations, science and math education, and environmental nonprofits.  

     Stephen Halliday suggests that affinity marketing (where a nonprofit organization partners with a for-profit organization) may be mutually beneficial to both organizations (Halliday 2009).  When a nonprofit or any of its supporters purchases a product from the for-profit partner, a portion of the proceeds is returned to the nonprofit.  Since individuals represent the largest sector of donors to nonprofit organizations, tying products in with a cause will increase the corporation’s product visibility while at the same time cycling funding back to the nonprofit (Halliday 2009).  Halliday does discuss crucial ethical criteria for nonprofits to look for in corporations, such as shared values, strong commitment to customer service, and a fiscally sound and proven track record (Halliday 2009).  The author of this article would further suggest that nonprofits carefully consider whether partnering with a business will alter core values of the nonprofit organization and mission statement.

     On a more regional level, many nonprofits can consider partnering with local businesses.  For example, the Northcoast Cooperative Grocery (Northcoast Co-op) in Humboldt County, California offers a register donation program to any tax exempt organization serving Humboldt County.  At registers in any Humboldt Cooperative, these nonprofits are assigned numbers and a list is displayed where shoppers can add any amount of donation to a grocery bill while paying (Co-op News 2010).  Many nonprofits participate, such as Hospice of Humboldt, Friends for Life Animal Rescue, Food for People, Environmental Alternatives, and Friends of the Arcata Library (Co-op News 2010).  If just half of all shoppers donate 1% of grocery bills, this can add up very quickly.  Piggybacking with local businesses by including fundraising appeals in their mailers or advertisements can also aid in saving local nonprofits the cost of mailings (Fritz 2010, 10 Ways for Nonprofits to Cut Costs).     

     Many online sites offer of-the-minute articles, advice, and in-depth information that aid nonprofits in understanding and navigating the recession.  The Chronicle of Philanthropy (philanthropy.com) offers daily updates on the nonprofit fundraising climate, daily articles regarding fundraising, a ‘Chronicle Index’ tracking the how four key economic indicators affect charitable giving, and podcasts about fundraising (Fundraising 2010).  The Foundation Center (foundationcenter.org) offers webinar series on nonprofit sustainability, grantseeking basics, proposal writing, finding funders, corporate giving, approaching foundations, and strengthening nonprofit portfolios.  This site also has video, audio, transcript, and webinar archives that provide profound advice for nonprofits (Foundation Center 2010).  The Nonprofit Finance Fund (NFF) (nonprofitfinancefund.org) offers educational workshops, customized consultations, webchats, and many other services for nonprofits to work through recessions.  Keeping up with these resources gives nonprofits a competitive edge of current information and in-depth knowledge of the economic climate to navigate financially turbulent times.  

     Joanne Fritz offers sound advice for nonprofits while fundraising during a recession:

1.  Do not sound desperate.  Explain to donors that nonprofit needs continue whether a year is economically good or bad.  Retain enthusiasm and optimism while discussing sound and current plans.  Avoid talking about grand or large plans for expansion.  Donors may react to doubts on the part of the fundraiser.

2.  Prove that the nonprofit and the fundraiser are responsible.  The fundraiser should always keep appointments and be well informed.  Nonprofits should avoid non-insured investments and keep money safe by placing it in an FDIC insured bank.

3.  Keep contacts strong.  Giving may decrease or periodically cease, but nurture corporate, individual, and foundation contacts.  Keeping in touch with donors can strengthen relationships and encourage gifts when they can once again afford it.

4.  Diversify funding sources and identify all types of financial support.  Most charitable giving is comprised of small donations, and nonprofits should avoid depending on just a few major donors. 

5.  Truly examine fundraising programs.  Nonprofits should make sure that programs are efficient in terms of resources.

6.  Do not pull back on fundraising.  Fritz likens nonprofit fundraising to advertising campaigns.  Businesses do not stop advertising during lean times, and nonprofits should not stop fundraising.  Likewise, nonprofits should keep up marketing and PR campaigns.

7.  Do not stop major campaigns.  If a nonprofit is in the middle of a major campaign when an economic crisis worsens, it is better to slow down rather than stop efforts.

8.  Let donors know that those that receive the aid of the nonprofit organization are in need more during recessions than ever.  Economically difficult periods can be much worse for disadvantaged populations.  Stories and personal testimonies can show the shared humanity between donors and served populations (but beware of accounts that can demean or demoralize served populations).

9.  Look at industries that are still thriving when searching for new donors.  Nonprofits can keep up with current events to find businesses that are recession-proof and that are not linked with other nonprofits. 

(Fritz, 2010 Fundraising in a Recession,2010 The Nonprofit Hard Times Survival Guide).

 

    

     Recessions can prove difficult for everyone, creating greater needs for nonprofits and less available funding.  Many resources are still available, however, for nonprofits to navigate economically turbulent times.  Technology, untouched grants, corporate partnering and affinity marketing, regional business alliances, and online informational resources are just the beginning of avenues for nonprofits to address fundraising needs.  When facing the storm of economic hardship with humor, creativity, and ingenuity, nonprofits may actually be strengthened, build a broader and diverse base, nurture the rapport of supporters and donors, and re-commit to their vision.

 

Christen Condry is a masters candidate in Medical Applied Anthropology at the University of North Texas.  For further insight you may contact her at clc0388@gmail.com.

To learn more about the University of North Texas go to www.unt.edu.



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