Blackbaud understands that many nonprofits are trying to minimize the impact of the recession on their organizations. Lawrence Henze, Managing Director of Target Analytics, has written a white paper called Raising Money During Challenging Times that is worth reading. Lawrence is a well known and respected voice in the nonprofit industry and has 15 years of experience in development, raising more than $125 million, primarily for higher education institutions.
Raising Money During Challenging Times notes that in the nonprofit world, it’s “survival of the fittest” during times of economic recession. But that doesn’t necessarily mean you have to be the largest, best-funded organization to survive — more importantly, it’s how you react to the economic environment that makes all the difference. Lawrence covers proven strategies for improving donor relations, annual giving, major giving, and planned giving during tough economic times.
I had a chance to ask Lawrence Henze some questions after reading the white paper. Here is a recap of the Q&A:
Q: You mentioned the siloed approach many organizations have to both online and offline communication. Beyond the wasted expense, isn’t this damaging the relationship the organization has with its donors?
A: It is important that an organization be aware of the entire communication stream it has with donors and prospects, including all means of communication as well. Our donors are smart, and they understand that each communication we send to them reduces the amount of their gift support that reaches intended programs. Furthermore, our goals for communication should be aligned with building a stronger bond, and that does not necessarily equate with more frequent communications. Communications via email and the internet are very effective tools for building loyalty and practicing stewardship. Please view these tools in light of all communications and devise an integrated and comprehensive scheme with the donor’s needs and interests in mind.
Q: Many nonprofits don’t give donors a chance to control the type and amount of communication that they receive. Perhaps it’s out of fear that supporters will forget about them. Can less communication really mean more to donors?
A: It can, and I believe that in most instances it will. I have worked with many clients that can show a direct correlation between understanding a donor’s interest in certain programs, and responding with appropriate communications, and increased giving from these donors. Asking donors how they want to structure their relationship with your organization is a positive step in building a stronger relationship. Reduced communications may bring increased donations and greater lifetime value.
Q: Will some nonprofits be impacted more than others by the recession?
A: If your organization has neglected retention and concentrated on compensating for donor attrition with acquisition, the recession is likely to hit you harder than organizations with the opposite experience. Use the recession to change your focus and concentrate on stewardship. Furthermore, break down the silos that exist within your organization and cooperate on donor retention.
Q: Donor acquisition and cultivation are the two cornerstones of fundraising. In times like these, should nonprofits focus more on maximizing the relationships they have with existing donors?
A: I believe that retention is always the first priority as it directly leads to maximization of lifetime donor value. In recessions, retention becomes even more critical. Enlist your donors in an effort to reduce the number of solicitations needed to renew their gifts and maximize the value.
Q: What are some ways that nonprofits can keep engaged with major gift prospects during economic downturns?
A: I believe that it is time to engage these individuals. Share with your best donors the challenges of running your organization in today’s economic climate. Proactively identify ways to be more cost effective, and try to avoid across the board cuts when targeted, thoughtful expense reductions demonstrate fiscal accountability and intelligence. I am in favor of fewer large special events and more smaller events or personalized contacts.
Q: Planned giving is an area nonprofits might be tempted to ignore or focus less on right now. Is that a mistake?
A: It is huge mistake to ignore planned giving at any time, but it is even worse during a recession. Planned giving is made for conservative economic times, and historical data proves that planned gift commitments often rise during a recession. Be smart, be efficient, and be patient and planned gifts will come. The untapped planned giving potential in your database is likely to be amazing.