Fundraising and Philanthropy in a Tightening Economy
“When the waterhole starts to shrink the animals begin to look at each other very differently.”
How should not-for-profits react and recalibrate when faced with an economy that is tightening as oil prices slump? My belief is that if you’ve been conducting your development and fundraising in a planned, strategic and professional way and had your eye on the long game, you shouldn’t need to do a lot of recalibrating and certainly no panicking.
First of all, we in Alberta have been going through this up and down cycle on a fairly regular basis since the first real boom of 1910-1912, which was followed by our first bust of 1913-1914 and then the fall out from the Great War 1914-1918, followed by the agricultural depression of the mid-1920’s and the worldwide depression of the 1930’s… and so on.
This current downturn is nothing new and should not be a surprise. In addition to the above events, we have had downturns in the more recent past including the oil embargo and stratospheric interest rates of the 1970’s, the national energy downturn of the early 1980’s and the recession of 2008-2010. In all the upswings and downturns that I have experienced in almost thirty years of living and working in Calgary, I have observed many not-for-profits and charities having the same reaction with every tightening of the economy; “what are we going to do – OMG!”. It’s as if this has never happened before.
My recommendation always is, do the same things that you need to do at all times rather than have one policy for the good times, and the panic of a shrinking waterhole at other times. Successful fundraising is a matter of serious long term planning and strategy, plus having a team of community advocates and a Board that understands its role in opening doors and making connections. It should not be a hand to mouth or day to day activity based on a shotgun strategy of “who has money and let’s hit them up”, which is regrettably so often the case in the not-for-profit world. Yes, there will be some shrinkage in tough times, but that is almost always in the highly discretionary and one-time donor section rather than in ongoing, planned and committed philanthropy. For example, energy companies who were awash in money in the past year and supported your silent auction or golf tournament with a one-time donation, are going to have to pull back and probably will not support those things this coming year. However, they will almost certainly continue to support their long term relationships and honour their commitments in multi-year agreements. They may have to make some short term choices and reductions here and there, and this is when the usually collegial not-for-profit sector become the animals who look at each other differently, and the organizations which take the least hits and reductions will be those who have formed strong long term relationships based on more than “give us your money because we are a good cause”. Also, individual philanthropists who have sustainable wealth, rather than up and down success based on the price of oil, will continue to support and donate to their causes. This has been proven out by tracking donations and philanthropic support over several economic hiccups.
There are 86,000 registered charities/not-for-profits in Canada, and about 18,000 operating in Alberta, especially Calgary. Almost all of them can be called “good causes” and deserving of support. The successful ones, and by that I mean the ones who not only survive but who grow and become stable over time, are the ones who recognize there may be some reductions in giving during the bad times, but their long term thinking and relationship building will minimize the pain and enable them to bridge those times.
While there are no iron clad guarantees or magic formulas for development and fundraising, there are factors that will almost certainly guarantee failure. Some of these are:
- No plan or long term strategy, just month to month survival and shotgun fundraising such as telemarketing.
- A dependence on one or two funding sources who you keep going back to again and again, especially if they are government grants which are subject to political and economic changes.
- A Board that will not or cannot help with door opening, promoting or supporting the cause.
- No clear roles for CEO, staff, volunteers or Board members – this always leads to confusion and frustration both by staff and by potential or existing donors who are contacted by different people at different times.
- No strong volunteer base of community champions who believe in your organization and cause.
A belief that a professional fundraiser can automatically tap into some mysterious pool of money or available donors who will immediately send funds to where requested.
- Panic fundraising – nobody likes to donate to crisis situations, e.g. “please give us a donation so that we can meet the payroll this month”.
- Events that are a one time occurrence are good for “friend raising” but rarely raise much money. “let’s put on a dinner and charge $250” involves an incredible amount of staff time and energy, plus cost, for very little return. There are dinners almost every night of the week in Calgary and there is a definite donor fatigue when it comes to buying tickets. Also, this type of support will be one of the first casualties of discretionary spending or community investment cuts by large companies.
Some proven rules for successful development in good times or tight times, are:
- Follow a well developed and strategic plan that has been agreed to by your Board. This plan should need only minor review or tweaking in economic downtowns if it is built on long term goals and relationship building.
- A professional plan will include methodology for identifying potential connections, approaching, cultivating, presenting, closing and stewarding the relationships. The key to all this will be creating a strong case for support.
- The donor base needs to be fairly broad and not dependent on one or two sources, such as government. If one or two of that small base disappear in tough times, you are doomed. This is especially true of government sources and grants as we will no doubt see in the coming months.
- Sophisticated donors, individuals or corporations today are besieged with requests and look for a return on investment, i.e. what will my donation achieve? Any case for support must show this ROI.
- Don’t expect magic and fast solutions. While there could well be some quick, short term successes the evidence is it can take a year or more before a campaign starts to produce significant success.
- The plan should have targets and goals and timelines, plus clear roles and expectations for staff, volunteers or committee members and Board members.
- There should be a marketing/media/communications component, especially for today’s world of social media, in order to create and sustain awareness for your fundraising activities and ongoing communication with existing and potential donors.
- Have someone to manage the fundraising or campaign details and process, either a contract Development Officer or a staff member who understands the intricacies of a professionally run development plan. Development and fundraising will not manage itself and is not something to be undertaken as a part-time job for someone who is already busy – at least not if it is to be done well.
- Fundraising events can be successful and the best ones are those which start with a clear vision and build over time. For example, I remember going to early Calgary ZooGala events years ago when they first started and there were very few sponsors or attendees, and now it is one of the biggest, most sought after and successful events in the city.
The answer of what to do in tough times is, of course, to have a plan and strategy that is not dependent on good times or high oil prices. It is like any other business – you can get by without a proper business plan but not for long and you will certainly not achieve your goals or reach your potential.
I always try to remember that hope is not a strategy. Plans can be adjusted but blind faith cannot.