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David Lamb, Consultant, Target Analytics: A Blackbaud Company
BROTHER, CAN YOU SPARE A $MILLION?
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Brother, Can You Spare A Dime?Once I built a railroad, I made it run,
made it race against time. Once I built a railroad; now it's done.
Brother, can you spare a dime? Once I built a tower, up to the sun, brick,
and rivet, and lime; Once I built a tower, now it's done.
Brother, can you spare a dime?lyrics by Yip Harburg, music by Jay Gorney
(1931)
The Worst of TimesMortgage crisisBanking failuresCollapse of the automotive industry8.1% unemploymentGovernment bailoutsWar and disaster
What Is The Economic Reality?Recession = two successive quarters of negative
a decline in GDPOther recession factors considered by the
National Bureau of Economic Research Industrial output Employment Income Sales
Recession officially started in December of 2007 as determined by the NEBR
Slowdown = lower than average rates of growth in personal income 40 year average income growth is 3.3% If growth is 2.9% or less (90% of average), economy is
in a “slowdown”
What Is The Philanthropic Reality?
Source: Giving USA Spotlight, Issue 3, 2008
Giving rose or remained stable in 9 of 15 years with at least 1 month of recession
What Is The Philanthropic Reality
Different sectors feel the effect of economic conditions differently
Org type Overall growth During recession During non-recession years
During years with 8 moths or more
of recession
During slowdowns
Religion 2.00% -0.10% 2.80% 1.40% 2.60%Education 3.10% -1.10% 4.60% -1.90% -0.50%
Human Services 2.30% 0.70% 2.90% 5.00% 0.30%Healthcare 2.30% 0.50% 2.90% 1.90% 0.90%Arts Culture Humanities
4.00% 1.90% 4.70% 2.30% -3.10%
Giving Growth from 1967-2007
Source: Giving USA Spotlight, Issue 3, 2008
What’s The Prognosis For Philanthropy?The economic events of 2008 are unprecedented
in their negative impact on the economyHistorically, the three toughest periods for
philanthropy were the Great Depression, the 1970s oil embargo, and the terrorist attacks of 2001.
In tough economic times, giving drops, but doesn’t stop
The annual fund may suffer through the recessionSome planned gifts may become more popularGifts of stock are less attractive to donors, but…Major givers are still out there
Bank of America High Net Worth Philanthropy Study
Average charitable giving increased for all wealthy households except those earning >= $5 millionWealthiest households gave 9.7% less in 2007
than in 2005Drop in giving had greatest impact on arts
organizationsIncreasing popularity of donor advised
fundsBequests and planned giving important gift
vehicles
Major Gift MotivatorsTop motivators
Give back to the communityLoyalty to causes/organizationsSocial beliefsMake a difference
Least motivatingCareer & business interestsPublic recognitionPeer pressureFamily legacy
Source: BofA HNWP Study, 2008
What’s A Fundraiser To Do?Keep communicating with your best
prospects even if they stop or reduce giving
Focus on the missionKnow your donor populationProspect wiselyDiversify your outreachDemonstrate good stewardship
Communicate, Communicate, …
Don't stop askingMake giving as easy as possible - make sure
all barriers to giving are removedLet donors know you're using their dollars
wisely This might be a good time to do a
constituency survey
It’s The Mission StupidMake the case for giving
Your mission is more relevant now than ever beforeRemind them of the consequences of not meeting your
missionWho will suffer, go without, be worse off than they are
today?Show the impact of your work on the life of an
individual Show the impact of your work on the communityPeople who really care about your work and
mission try to find a way to help
Segment, Segment, SegmentThis is a good time to analyze your database to
identify the characteristics of your best donors Wealth, interest, and linkage are givensWhat other characteristics are statistically
significant?Let the characteristics of your current MG donors
help you find new prospects
Statistical ModelsCan measure propensity to give and/or propensity
to give at a certain levelNot all variables that seem like they should be
correlated with giving actually areVariables that are significantly correlated to giving
are not all equally influentialNeed statistical software to measure strength of
correlation and properly weight variablesFor do-it-yourself models, consult Josh Birkholz’s
book, Fundraising Analytics: Using Data to Guide Strategy
Various vendors and consultants can create custom models for you
Major Gift StrategiesGood prospect research is more important than ever
Doing your homework Knowing the right amount
Prospect among people in “recession-proof” businesses
If the donor refuses to make an outright gift, be ready with alternative scenarioLonger pledge periodsPlanned gift opportunity
Donors who made pledges prior to the start of the recession will probably still honor their commitmentMay ask to extend the number of years to payMay ask to make smaller payments early and
accelerate payments after the recession lifts
Death & Taxes: Recession-Proof BusinessesSome of the most recession-proof businesses may
not be ones you think of as the most lucrative Funeral homes Tax accountants Waste collection Debt collection Consignment stores
Others are more obviously profitable: Healthcare Alternative energy Rental property owners Grocery Software as a service (SAAS)
Finding Rising IndustriesGo to
MarketWatch.comSector IndexesBest and worst
industries sort differently depending on the time frame selected
Base your research on data, not guesses
Ways To Use Sector Index InformationTop down
Use a vendor like Dialog, LexNex, or Standard & Poors to create a list of local companies in top performing industries (use SIC or NAICS code)
Obtain names of top officers in those companies and compare to your constituency
Bottom upPerform a vendor-driven matching process of
people in your database who have corporate affiliations
Filter those corporations by top performing SIC or NAICS codes
Corporations And FoundationsMany of the same prospecting principles
for finding MG prospects pertain to finding corporate donors
Much corporate “philanthropy” comes from the advertising budget
Foundation portfolios have been heavily hit by the banking collapse Many foundations are maintaining or
increasing funding level despite portfolio losses
Expect smaller grants from small and family foundations
Planned GivingPlanned gifts that become more attractive in
a recessionAnnuities
Guaranteed income streamRates set by actuarial tables, not market rates
Bequests & revocable planned gifts56% of wealthy donors now have a charitable
bequestCould be 93% by 2010
Source: BofA HNWP Study (2008)
A prospect for an outright major gift can be – and often is – a planned gift prospect as well
Planned GivingCampbell & Company survey (2007)
Age when people make bequest decisions30% of respondents between 40 and 60 told
researchers that they would consider a bequest15% of people in their 70s to 90s said they would
consider a bequestConclusion: Market bequests to loyal donors,
even if gifts are small and even if comparatively young
People who have named charities in their will often give more in annual gifts
35% of people with charitable provisions in their will have at least one graduate degree
Diversify Your OutreachSeek creative ways to engage your populationSocial networking media provide a new
relationship building strategyFaceBookMySpaceTwitterSecondLife
See the March, 2009 edition of FunraisingSuccess Magazine (www.fundraisingsuccessmag.com)
Stewardship Is More Than Just A “Stage”
During a recession, it is more important than ever to thank your donors
Recruiting a new donor is much more expensive than retaining existing donors
When the economy improves, donors are more likely to resume giving to orgs that have stewarded their gifts well
Stewardship Is More Than Just A “Stage”
Update donors on what their gifts have done for the cause or the community
Be strategic with your stewardshipBig gift donors
Donors whose potential is big, even if they didn’t give at their potential
What Not To DoSpecial events
In lean times, donors would rather see their money go to the program rather than a glitzy event
For necessary events, look for low cost options that focus on substance and mission
Donor acquisition People will be less likely to support unfamiliar
organizationsWork on re-engaging lapsed donors and
energizing top performing segments
What Not To Do
Across the board staff cuts The economy will eventually improveRe-staffing and training could take six
months to a year. Cutting back on stewardship and
donor relations activities
The Best Of TimesThe best time to raise money is when you need itOrganizations that continue to raise money
during a recessionHave a sophisticated prospect management in placeHave a diversified constituencyCommunicate effectively through print and
electronic meansThe reasons’ people give don’t change during
recessionMissionLeadershipInvolvement