Fundraising in a Recession

Africa by Radio Continental ConferenceWillow Park Conference Centre

Bredell, Johannesburg

17-19 September 2009

Presented by Jenni McLeod

Downes Murray International

Agenda• Global perspectives in recessionary times

• Where does the money come from?– Where does the money go to?

• What not to do

• Analyse your activities:– where can you cut costs?

• Segmentation and working smart

• Building and maintaining relationships

Global Perspectives in Recessionary Times

• 1967 – 2007 in Recession Years….

• After adjusting for inflation…..

• Giving fell by one percent

• When a Recession lasted 8 months or longer…….

• Giving fell by 2.7 percent

Today’s Recession….

• Has already lasted 18 months

• Is Global

• No end in sight

So what’s the answer?

How will we deal with this?

Will donors continue to give?

Where does the money come from?

• It is tempting for organisations to rely on the ‘big givers’

– Trusts– Foundations– Corporate Sector

Trusts and Foundations

• Most of these bodies work from invested capital

• Grants that have already been promised prior to the recession are almost always honoured

• Looking ahead 2-3 years down the line, the effect of recession on invested capital may create a shortfall– It can be more difficult to win grants in this situation

The Corporate Sector• Companies exist to make a profit for their

shareholders• Whilst many companies take their commitment

to NPO’s seriously, when times are tough:– The bottom line is all important– Fat is cut in order to enhance the bottom line– The first thing to fall away will be donations and

sponsorship that do not add to the bottom line

The Corporate Sector is fickle

Individuals• Organisations tend to focus less on the “little givers”

– Individual donors

• Individual donors can be the lifeblood of an organisation– They feel the pain of recession– They understand that if times are tough for them, they will

be even more tough for those in need– They are more likely to continue their support, even if it is

at a slightly lower levelYour committed individual donors believe in you – they

are not as fickle as the Corporate Sector – IF YOU LOOK AFTER THEM!

Giving USA statistics2008 Contributions: $307.65 Billion

Where does the money go to?

What are the most ‘attractive’ or well funded causes?

6%

35%

13%9%

7%

8%

4%

4%2%1%

11%

Unallocated Giving $19.39

Religion $106.89

Education $40.94

Human Services $25.88

Health $21.64

Public-Society Benefit $23.88

Art, Culture & Humanities $12.79

International Affairs $13.30

Environment/Animals $6.58

Foundation Grants $3.71

Gifts to Grantmakers $32.65

Giving USA statistics2008 Contributions: $307.65 Billion

Giving USA statistics2008 Contributions: $307.65 Billion

What NOT to do….

• Don’t panic

• Don’t stop asking for money

• Don’t stop acquiring new donors

• Don’t slash donor nurturing activities

• Don’t slash fundraising costs

Impact on Income of a One Year Lapse in Donor Acquisition

Think strategically

• If your donor base shrinks, you will raise less money

• If you slow down your fundraising, you will raise less money

• The effects are cumulative

• The lifeblood of the organisation drains away

• Then where are you?

Cutting costs Creatively and Strategically

• Re-evaluate where you draw the line between major donors and smaller donors

• Consider out-sourcing some of your back-office operations

• Perform donor acquisition with more thought

• Reactivate lapsed donors

• Clean your database

Segmentation as a Strategy

• Recency

• Frequency/History

• Monetary Level

• Source

A simple Segmentation Plan

Segment Category Recency Frequency Giving Level

1 Major Donors 0-36 months 1+ R1000+

2 High Active Donors 0-18 months 2+ R400+

3 Medium Active Donors 0-18 months 1+ R250+

4 Lapsed Donors 19-36 months 1+ R50+

5 Former Donors 37+ months 1+ R50+

Work SMART!

• Eliminate the ‘deadwood’ from your list– This will cut your mailing quantities in the right

places

• Focus on the top donors

• Vary the frequency and character of your contact– Don’t be afraid to pick up the phone

• Tailor make appeals to different interests

Look after your donors properly…

• Consider:– What have you done for your donors lately?– Do you actually know your donors?– How much time do your key staff or Board

Members spend with your donors?

• Enhance your acknowledgement procedures

• Make your donors your best friends

Low Cost Relationship Building

• Ask your Board Members to call some of your donors monthly

• Get CEO or Board Members to personally sign the “thank you” letter

• Phone your lapsed donors – especially the ones that gave frequently, or gave large amounts in the past

• Send Birthday Cards to your donors

Keeping your Donors happy…

• The 3 biggest drivers of donor loyalty are:

– Satisfaction with the quality of service provided to them

– Trust in the organisation to deliver on its promises

– A genuine commitment to the cause by the individual

What makes a Donor stop giving?

• Top 2 reasons:

– A perception or knowledge of mismanaged funds

– Feeling uninformed and/or unappreciated

In Summary

• Recession has an impact on the Corporate sector very quickly

• It is delayed, but real in the Trusts and Foundations Sector

• Your Individual Donors will continue to support you – if you treat them in the right way

• Don’t stop your donor acquisition activities – the short term ‘gain’ in cost savings is a long term disaster in revenue

Thank you

Jenni McLeod

Client Services Director

Downes Murray International

www.dmi.co.za