Navigating Nonprofit Fundraising During Economic Uncertainty
Keep calm and prepare for recession with these fundraising tips
One of the biggest questions our nonprofit clients are facing right now is what the heck to do when it looks like the economy is about to go into recession.
On August 5, 2024, the stock market experienced a significant downturn, triggered by a combination of weak economic indicators and growing recession fears.
The Dow Jones Industrial Average (DJI) fell 1,033.99 points, or 2.6%, marking its worst day since September 2022. Similarly, the S&P 500 and the Nasdaq Composite also experienced sharp declines, falling 3% and 3.43%, respectively. The combination of weak domestic economic data, disappointing corporate earnings, and global market instability created a "perfect storm" that led to the significant market decline on August 5, 2024.
Having lived and fundraised through the 2008-2009 recession, here’s the advice we gave back in 2022 - and that we still stand by today!
Don’t Slash Programs
One of the biggest mistakes nonprofits can make during a recession is to slash programs. This decision can back your fundraising efforts into a corner and diminish the case for continued giving. Once that happens, there’s no secret special fundraising sauce that can magically fix the situation. Many of the organizations that significantly cut programming and scaled back impact during the last recession are no longer around to tell us not to follow in their footsteps.
Keep Your Most Loyal Donors Close
The folks we can truly count on in a recession - and the ones we should be most afraid of losing - are the ones who’ve stuck with us over time. Don’t skip or cut back on acquisition, but devote extra relational energy to being in community with your loyal supporters. This is a great place to get your board to throw down to reduce the weight of pre-recession scrambling on your staff. Building and maintaining these relationships is crucial for sustaining your organization through tough times.
Lean Into Recurring Giving
People are less likely to stop recurring gifts, and one-time donors may appreciate the chance to stretch out their dollars over time. If you could go back in time and do one thing with the foreknowledge that a recession was on its way, I’d pick building out a recurring giving program. It provides a steady stream of income that can help stabilize your finances when other revenue sources might be fluctuating.
Diversify Revenue Streams
Don’t rely solely on donations, grants, and corporate sponsorships. Explore other revenue streams such as earned income, social enterprise initiatives, and cause marketing partnerships. During a recession, contributions might decline, but other opportunities can help fill the gap - especially if they provide value to partner agencies or businesses, even during tough economic times. Social enterprises or fee-for-service models can provide a steady income stream. Diversifying your revenue not only provides stability but also strengthens your financial resilience.
Strengthen Cash Reserves
Build up and maintain cash reserves to ensure your organization can weather financial difficulties without having to cut essential programs or staff. Having a solid cash reserve can be a lifesaver during economic downturns. Aim to have at least three to six months of operating expenses in reserve. This can help you navigate periods of reduced income without making drastic cuts that could harm your organization in the long run. Regularly review your budget and identify areas where you can save or cut back without impacting your core mission. Consider setting up an emergency fund specifically for economic downturns.
Enhance Donor Communication and Transparency
Increase communication with your donors, providing them with clear, transparent updates on how their contributions make an impact, especially during challenging times. Transparency builds trust, and in times of economic uncertainty, your donors will appreciate knowing exactly how their money is being used. Regularly update them on your organization’s financial health, the challenges you’re facing, and how you’re overcoming them. Share success stories and impact reports to show the tangible results of their support. This not only reassures current donors but can also attract new ones who are looking for trustworthy organizations to support. Use multiple channels – newsletters, social media, personal calls – to keep the communication lines open and active.
Don’t Take It Personally
When gifts take longer to close and donors ask more questions before giving, don’t take it personally. It just means that they are being thoughtful about the application of their resources. Whatever the cause, donors being more present and engaging more deeply is generally a good thing. Be patient and responsive, and continue to show how their contributions make a significant impact.
Is the economy still stressing you out?
Still feeling unclear on how your organization can prepare for the recession? Let’s talk. Tap the link in our bio for a free 1:1 consultation.
By following these strategies, your nonprofit can navigate the uncertain waters of a recession with confidence and resilience. Stay proactive, communicate openly, and remember that your mission is more important now than ever.
This blog post was authored by Common Great Senior Consultant, Kirsten Rogers. Learn more about Kirsten here and click here to book a Power Session with her. A Power Session is a 60-minute, on-demand meeting that can be used to address your nonprofit’s priorities, ask questions, discuss barriers, and more.
