Nonprofit leadership is challenging.
And it’s no secret that fundraising — especially end-of-year fundraising – can easily top the list of stressors. Can you really count on all those pledges to come in at year-end? What if they don’t?
It’s Fall of 2018 and once again the stock market is extremely volatile, with indices bouncing up and down. These changes are leaving some concerned we may see 2008 all over again. In the rare off chance that you missed those times, that was when the stock market took a number of big hits, resulting in billions in wealth being wiped out.
How could this effect your organization?
The saying goes that if you have long term investment window, just sit tight until things sort themselves out. Eventually, things will get back to normal…and they did. In fact, things got much better. But while this approach may work for individual investors, what about the impact on nonprofits?
Looking back on 2008 if you’d been promised some major gifts for year end, you might have been shorted. In fact, you may not have received any of them. When individuals feel wealthy, they tend to be generous but when the stock market plummets like it did back then, this “wealth effect” works the opposite way.
Could we be looking at the same scenario now?
While I’m pretty sure that won’t happen this time around, it’s always a good idea to be as ready as you can for unexpected shifts in giving. “Mr. Market” has strange ways of operating. Those of us who went through 2008 — and the recession that followed — are much more cautious about counting on donor financial commitments until we see the money.
As you prepare your budgets for 2019, or as you assess your mid-year 2018-19 budget, you may want to consider what might happen if the market stays volatile. Will your donors fulfill their commitments or might you run the risk of losing 3-4 of your larger pledged gifts? One nonprofit I was involved with lost several $100,000+ pledges following 2008, all at the same time. This left them in a tough situation, scrambling to reorganize and make cuts to programs, staffing, and events.
I want to make sure this doesn’t happen to your agency.
What decisions should you consider a bit more carefully? This might not be the year to “go big” and make any significant investments. You might want to see how things go and, if all goes well, make that big ticket decision later in 2019.
In the short term following 2008’s disruption, cash proved to be king. You want to have lots of it available so you can continue serving clients while remaining in a healthy cash flow position. When the economy falters, you may see a significant increase in clients and visits — especially if you provide community services — such as food, shelter, assistance, training, etc. Will you be ready to handle it? What can you do to be prepared for a potential hit?
5 ways to help prepare (and prevent) a fundraising hit.
1. Contact donors who have made significant commitments in the past and pre-thank them for their faithfulness and their anticipated gift. Share a few specifics with them about how their valuable their donation is and how it will be used help others.
2. Reach out to previous donors who — for whatever reason — haven’t donated in the last year or two, reminding them of how their gifts are used to help others. Try to be specific about what those donated dollars mean to your clients. Provide examples of some of the key successes your agency has had in the last year, and how their donation could help enhance these efforts.
3. Investigate opportunities to collaborate with other nonprofits, sharing resources, programs, or services to ease the ongoing expense burden. This doesn’t mean you have to merge organizations or dramatically shift your mission or purpose, but there may be some areas of overlap where you can share costs.
4. Look through the grant applications you submitted over the last 3 years to ensure you have reapplied for them all. Is there any money on the table that you’re missing? Are there any new opportunities you could pursue for next year that might help your situation later in 2019? Consider contracting with a professional grant writer to help identify and apply for financial support from grantees you have overlooked or didn’t know about.
5. Reach out to your current and former board members. It’s easy to overlook this source of funding already in your organization. We often see our board members contributing significantly in many ways to the agency, and can feel bad asking them for more. But it never hurts to have a conversation. Can any of them help by filling any donation gaps that surface? Can you get your board involved in specific fundraising efforts?
Effective fundraising is the life-blood of a nonprofit.
Anticipating a potential down-turn in giving will help you think through potential challenges and better prepare for what may lie ahead. If the market shift does bring a decline in giving, you’ll be ready for it, and your impact on those you serve won’t be negatively effected.
In the coming days I suggest you pull together your Fundraising/Development team, key members of your board, your board Chair, and your Marketing team, and have a conversation about potential risks for fundraising. Get feedback from your team members. Have they noticed any shifts? What ideas can you come up with in addition to the 5 steps above?
Work with your team to put a plan in place for worst-case. If the market shift doesn’t hit your agency, your planning will result in your organization being in an even better position to make a bigger impact.
Is your agency in trouble? Take the Break Through Assessment to find out if there are other challenges you may not know about, and what you can do to make things better.