In 2009, Tony co-authored a chapter of a book about fundraising in an unpredictable market with Margaret Bennett.
In an unpredictable market it is important to monitor the market, perhaps through the press, economists and emerging research in order to understand what is happening. But don’t forget that media ‘hype’ is often not the reality of your donors’ lives. After an initial period of concern, donors generally settle down until reality bites them directly, for example in the form of less income, employment uncertainty or rising household expenditure. And the point at which the media lose interest may be the precise point when your donors are affected badly – but the media has moved on. Your priority is to see behind the media hype to understand the reality of what is happening in your supporters’ lives. Practise ‘donor obsession’ – tune in to their values, their thoughts and their lives.
Embrace change
In an unpredictable market, your attitude and response to change will determine your organisation’s success as much as, or perhaps more than, any other factor. Take the right opening stance and you can survive.
At the start of a downturn, the focus is inevitably on worsening conditions, downward trends, and the need to protect the organisation from damage and loss. A defensive strategy may seem logical, and indeed by cutting back your investment you may avoid
short-term losses, and minimise your risks. However, if you maintain this defensive stance in the medium and longer term it will be counter-productive, leading you to miss opportunities and be poorly- placed to take advantage of the market upswing when it eventually occurs.
The faster you accept you are in an unpredictable market, the faster you can start ‘driving towards’ it as opposed to ‘reversing away’. Difficult times call for confident action. You will be able to assess and respond to the market place faster than the competition who have stopped or are busy reversing. Be prepared with ‘insurance tactics’ to try to pre-empt negative changes in donor behaviour.
Be intelligent
‘Tuning in’ means systematically monitoring the market to understand how events happening now are likely to impact on your fundraising. Think about the direct impacts (positive and negative) on individual donors such as their employment status; inflation; the cost of utilities, petrol, food; interest rates for mortgages and savings income. Think also about the more “emotional” impacts around consumer confidence, and an individual’s belief that it would be better to save their money or just wait and see what happens before spending or giving.
Tune in to what your competitors are doing, especially those which are in the public eye, or which your donors are likely to know. The behaviour of these kinds of charities can affect your donors as much as your own behaviour, and you need to be ready to respond. For example, once a major charity plays its ‘emergency shortfall’ card this sends a significant message to donors, and you need to be clear whether the most appropriate response for you is to follow suit, or to reassure your donors that you are not in that position.
Some charities have difficulties in obtaining fast, accurate performance results. If you are to be effective as a rapid response team you must be able to assess results quickly.
Experience has showed that small opportunities open up for short periods, and it is only the swift who can fully exploit them before the market changed again. If your analysis is several months behind, the opportunity may have come and gone before you knew it was there. This is crucial for the market upswing stage. You need to have your finger on the pulse in real time; otherwise other organisations will be off and running ahead of you.
Nurture your fundraising expertise
In a time of crisis you will need to call as never before on your fundraising expertise. Every day your ‘rapid response’ fundraising team will need to respond, decide, and innovate. Every fundraising programme you have will need to be made to work harder. Every donor you have will need to be communicated with more intensely, more persuasively.
Your fundraising team is the driver of your fundraising, and if you reduce your investment in expertise you reduce your capacity to drive your fundraising forwards. In a time of crisis you need to drive as hard as you can in order to just stand still. To reduce your fundraising expertise in a time of crisis is therefore a deliberate decision to reduce your income.
In an unpredictable market you should consider increasing your investment in staff training, team building, and developing the right culture for success in your charity. As the media bombards people with messages of doom and gloom it is unsettling for people in any profession, so fundraisers need to hear, see and feel strong support from the trustees and directors of their charity. Now, more than ever, people need to grow their skills and stay completely up to date with market developments and
opportunities. Redundancies in any part of the organisation will send shock waves that will unsettle staff across the board, so building a strong team that it is supported by the organisation, and where team members support each other, is crucial to carrying key staff through difficult times.
Consider also your external fundraising expertise. Your fundraising programme is likely to be dependent on a range of consultants, designers, copywriters, data analysts, production specialists, recruitment and telephone teams, as well as freelancers who supplement your in-house resource. It is in your own interest not to act in such a way that you cut yourself off from this source of expertise, even if this seems attractive in the short term. A good fundraising team will always need external specialists; it simply does not make sense to have every skill needed in-house.
Stand out from the crowd
During the time of crisis you are likely to be competing with the same number of charities, and some of those charities may be seeking more money during the time of crisis if their work increases during a time of greater social and economic need. At the same time, the number of donors who are active may decrease, they may give to fewer charities, and the amount of their giving may be reduced. The market is therefore likely to be even more competitive, and it will even more important for your organisation to stand out from the crowd.
Make your message easier to understand, talk to your donors in language they understand, not your internal ‘mission speak’. Make your message more resonant – tap into the current concerns of your donors, show them that you understand their situation, don’t make them feel guilty about not being able to give as much. Be clear, bold and persuasive about your case for support. Why should people support your cause when times are hard, or uncertain, and it would be safer to sit on their money for a while longer? Why should people keep supporting your organisation if they have to make a choice amongst several?
Focus on your core business
Fundraisers have a well-established practice of ‘jumping on the bandwagon ‘of new ideas. In a predictable, growing market there are many such opportunities and temptations to expand your fundraising, and to achieve a modest level of success. For more than a decade, we have been fundraising in a market that has fostered this type of expansion and many charities today have very diverse portfolios indeed.
It is important, of course, to have a degree of diversity in order to spread risk, especially in an unpredictable market. There is, however, a point at which the diversity of your portfolio becomes a risk in itself. You may be stretching your resources too thinly. You may have too many marginal activities, which could quickly become loss-making during a downturn. You may be investing too much of your fundraising expertise in new areas where you make only a small amount of net income, to the detriment of your major established income streams.
In an unpredictable market, the highest risks are related to areas of your business that are furthest away from your „heartland‟. For example, the donors for whom you are fifth choice, the donors who have been with you the shortest time, the fundraising techniques where you have the least expertise. The last recession taught us that it is our core business, which is most likely to weather the recession, and that this is where we should be focusing our attention and investment. Your portfolio should be diverse, but within the context of core business.
Now is the time to invest in stewardship at every level of your operations, in order to have the highest chance of not only continuing to hold on to your donors, but also to build their loyalty so their relationship with you is even stronger when we emerge from the current time of crisis. Think of the potential of taking a three hundred and sixty degree view of your supporters: money, time, gifts-in-kind, voice, influence and lifestyle change to align with your mission. The more ways a donor engages with your cause, the stronger is their support at all levels. Be empathetic to what they may have to cope with in their lives as a result of the unpredictable market.
Prune selectively but vigorously
As every business knows, at the end of the day there are only two core strategies, make money or save money! The process of defining your core business will identify these less viable or more marginal areas of your fundraising programme, which need to be pruned.
Pruning should always be selective, and there are different levels of pruning depending on the current and future prognosis for each fundraising area. A light pruning may be appropriate for a fundraising programme which is modestly profitable, low risk, needs little resource to maintain it, and has potential for growth when the market recovers. A moderate to strong pruning may be appropriate for a fundraising programme which is not profitable at present, but is expected to recover in more favourable conditions – you may decide to maintain this programme at a minimum level of investment.
Some fundraising programmes may need to be closed down. They may be seriously loss- making, and cannot be maintained with an acceptable minimum of investment, or have no obvious potential for recovery. Or they may be loss-making programmes which can be re- started quickly when the market recovers.
Alongside your pruning, consider also a ‘replanting’ approach, where you move resources from areas of low yield to those of high yield. It is always difficult to move people around, especially as we tend to have structures based increasingly on specialists, but if head counts are frozen or the challenge is simply to work with what you have, replanting resources to reinforce areas with the greatest potential may help you to gain the forward momentum you need.
Unrestricted income
Make sure that you understand your unrestricted income needs. It is often the case that committed giving and unrestricted income go hand in hand, but not always. Unrestricted income is crucial for the stability of the organisation, for paying your overheads and often for enabling you to accept major grants which do not cover their overheads. Unrestricted income gives you flexibility, fuels investment, and enables you to be fleet of foot. Ultimately unrestricted income allows you to maintain your organisation even if you have to reduce your direct expenditure for a period of time. Make sure your fundraising is generating sufficient net unrestricted income for your survival; if necessary accept less income, for example a donor who would give you £200,000 earmarked might give you only £100,000 unrestricted income, but this could be more valuable for your organisation at this time.
Seek dialogues with donors to explain the importance of unrestricted income, especially in difficult times. Where major donors are still giving they may be more sympathetic to a request for a percentage of unrestricted income built into what would otherwise be a restricted grant.
Raising consciousness of the types of funding generated by different programmes is the starting point for protecting this area. Over the boom times of the last decade we have seen a dramatic increase in restricted funds programmes, as they are often high value/volume, and now is the time to review your strategic approach.
FUNDRAISING STRATEGY
Prioritise profit over growth
Big is not always beautiful. ‘Doubling gross income in five years’ is not the only fundraising strategy. Indeed, gross income should not be the focus of your fundraising strategy at all. The investment required to drive gross income growth – especially where recruitment is initially loss-making – will usually reduce your net income in the short to medium term.
Net income is the amount that is available to the rest of the organisation to spend on the , mission and organisational overheads; maintaining net income should be the goal during a time of crisis.
An important lesson learned from the last recession was that despite the decline in gross income, some charities were able to maintain and increase net income, by refocusing on the retention and development of core supporters. So do not be afraid to plan a decrease in gross income or number of supporters, if this will lead to a sustainable increase in net income.
Donor development
Put your greatest effort into keeping the supporters you already have. Develop the relationships you have with them, and aim to increase their giving. From the commercial world of marketing we know that it costs five times as much to recruit a new customer than to keep one you already have, and existing customers will spend up to ten times as much with you as new customers. This applies equally to donors.
Focus on those areas of donor development that will keep your donor supporting you, bearing in mind that a key way to grow net income is to keep more of your supporters. Maximise direct debit and other committed giving schemes that will lock donors in more tightly. Review the information and reporting to your donors to be sure that they are getting what they are interested in, when they want it.
Invest and test
Fundraising teams need to work closely with their financial colleagues to get buy-in as to why it is dangerous and short term to cut investment in fundraising programmes. A charity needs to explore every other option before taking investment away from the one area that can help to navigate out of an unpredictable market, as well as protecting the future security and growth of a charity and its vision for those it serves.
When you have identified your core business, and you are tuned in to the market and your donors, invest strongly. Investment is essential for protecting your current programmes and donors, and to refresh and strengthen your offers so that you stand out from the crowd and compete effectively. You also need to invest to make sure you are ready to take immediate advantage of every opportunity, and manage every risk. Being tuned in to the market means continuing to invest in donor, market and competitor research, as well as time for fundraisers to network.
Instead of continuing to pursue the same strategies as last year, charities need to take a completely fresh look at what the market is doing and decide on a different marketing and promotion mix as well as creative. It should be highly targeted and concentrated. Being flexible, up to the minute with information, in control and brave are the key qualities to continue to invest in recruitment of committed givers in the current market place. A charity should never stop testing or investing unless it is truly forced to do so, these are the lifeblood elements of a successful programme.
Innovate
Focusing on your core business does not mean sticking with what you have done in the past. Indeed, innovation is crucial.
CONCLUSION
To end on a positive note: a time of crisis makes fundraisers much smarter. To survive, we have to be more tuned in, respond faster, innovate more and build better, stronger relationships with our donors.
[1] Although his thinking was in response to the recession of 2008, much is relevant to the situation caused by Covid 19 which many fundraisers face today. Below we have included some edited extracts which we hope you will find a useful stimulus in these challenging times.
For more thought provoking articles from Tony, look at the resources section at www.elischerfoundation.org
[1] A Practical Guide to Managing in a Downturn
Editor: Kate Sayer Published by: Directory of Social Change, October 2009
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