Educational Fundraising Whitepapers

Philanthropy Spotlight: Kay Sprinkel Grace

Kay Sprinkel Grace, CFRE is the co-author of High Impact Philanthropy: How Donors, Boards and Nonprofit Organizations Can Transform Communities (2000, with Alan L. Wendroff) and the author of Beyond Fund Raising: New Strategies for Nonprofit Innovation and Investment (1997), which has been described as offering "the key to both a successful financial future and a reinvigorated organization.” She received B.A. and M.A. degrees from Stanford University, where she has been recognized for her fund raising leadership. The Golden Gate Chapter of the National Society of Fund Raising Executives also honored Kay as "Outstanding Fund Raising Executive" in 1992.

This article is excerpted from Contributions magazine. To subscribe, visit www.contributionsmagazine.com.

Ten Things You Should Know About Fundraising in a Changing Economy

The economic balloon may not have burst, but certainly it is leaking. Newspapers carry daily stories about massive layoffs, plummeting earnings, and gloomy predictions for future recovery. The stock market zooms up and down, and a few economic indices have plunged and rested at the bottom without significant recovery.

During the robust days of the dot.com-driven economic boom, we spoke often and optimistically about a golden age of philanthropy. We imagined continuing great partnerships with wealthy visionaries of all ages who would see the power of investing in their communities. And yet, today, the scene seems to have changed. Corporate philanthropy programs have reduced staffing and grants, large and small foundations report slimmer earnings and less money to give, and many individuals – whether directly affected by the economic slump or not – are unsure about the future and more conservative with their nonprofit investments.

How can you work most effectively in this current shifting economy – fulfilling mission, sustaining investors, and making adjustments that may become necessary if the current patterns continue? Here are Ten Things you should know about doing business as a nonprofit in a volatile economy.

1.Remember that philanthropy is more than giving money.
We know that philanthropy is values-based voluntary action that includes giving, asking, joining and serving. In uncertain economic times, position your organization so that opportunities for asking, joining, and serving are as evident as opportunities to give. Engage current and lapsed donors in ways that will keep them connected to your mission and give you leverage in the community. If someone has made a significant gift, and now finds resources more scarce, coach them in how to become an advocate-asker: drawing on their own reasons for supporting your organization in persuasive meetings with those who can give new or renewed support. If someone who used to be a funder is out of work and feeling embarrassed or uncomfortable – involve them in a volunteer job that will call on their professional expertise and give you the benefit of their wisdom.

2. Be more accountable and transparent than ever.
People whose resources are limited want to make their investments where they know they will have the biggest impact. We know that we need to be accountable, that our results must be measurable, that one of the key aspects of new philanthropy is the need to be transparent. This is even more imperative in this economy. Nonprofits can and must convey to prospects and donors what the impact of their gift will be, how that impact will be measured, and how that measurement will be conveyed. We need to welcome, not resist, the demand for evaluation and accountability. But, we need to know our own marketplace and programs so well that we can convey what the appropriate measures are. We need to define the benchmarks and peg our progress to them.

3. Convey a sincere commitment to long-time donors based on a belief that an investment has a long life: that a gift once made has a residual that lingers.
Too often, we drop people from our stewardship and recognition programs when their gift lapses. What this conveys is a short- cycle view of investment. If someone makes a significant gift that allows you to develop a program, expand your season, hire new people – then the residual of that gift continues to have an impact long after the gift itself is spent. The notion of gifts as investments requires us to take a longer view of return on that investment. When a funder isn’t able to make the level of gift (or any gift) for one or more years, don’t drop them from your lists or your events. Economic cycles are inevitable, and you want to be at the top of that funder’s list when times get better.

4. Your organization may also find itself having to cut staff if your community is particularly hard hit by the cuts in corporate or foundation funding.
If you find yourself in that position, do it wisely, legally, and with heart. Eliminate the position, not the person. Let people know how difficult this is. Convey to the community what the cuts will mean. Be transparent with your funders and clients about the difficulty of the decision and the ways in which you will “back fill” to ensure the best possible service delivery. And, as a side benefit to an otherwise painful process, crank up your volunteer program wherever possible and appropriate. The slogan, “when life gives you lemons, make lemonade” has application here.

5. If you haven’t been good stewards of small gifts and their givers, get busy!
The golden age of philanthropy was ushered in and characterized by gifts that were very large from people who may never have made a gift to a particular organization. Because philanthropy is increasingly issues-driven, these were people who sought to make a difference in an area of philanthropic importance to them. They chose an organization and offered it an opportunity to do something significant with a major infusion of funds. In the process, organizations have had to be careful not to focus just on these big gifts, but to honor and value smaller gifts as well. But, let’s face it. If you have limited funding for stewardship, you will spend it on the people who have given the most. At the theoretical level this is a mistake, and it is disastrous at the practical level. While the large gifts from donors who hadn’t previously given were characteristic of much significant philanthropy, there is still much to be said historically for people who grow up through an organization with incremental giving. Take care of them now more than ever before. When the next high cycle occurs, they could be your big donors.

6. Look for hidden or impervious-to-change wealth in your community.
Seasoned development professionals know that sometimes the greatest wealth is not obvious. The last several years of incredible economic growth have created many new sources of wealth and many new wealthy individuals. The majority of them are still intact, and many of them are still to be identified. Watch the transfer of wealth in your community and engage these new potential donors – particularly women and people of color – in dialogue about what your organization is doing to meet the needs of the community. Uncover their values and connect them with what you are doing. Be a watcher, a reader and a listener.

7. Keep cultivating – the cycle will recycle.
Beyond the hidden or impervious wealth, and the temporarily lapsed or reduced donors, lies another whole untapped world of potential support. You will discover it by looking upon this time as a time of donor acquisition. But don’t resort to direct mail exclusively: think, instead, of how you market your organization, the messages you send, the materials you use, the events you sponsor, the ways in which you involve yourself directly in the community. All of this is cultivation – and can be followed by more systematic and deliberate cultivation of those who step forward and identify themselves as interested in what you are doing. They are your next generation of funders and volunteers.

8. Be prudent in your own organization’s financial planning.
Many of your board members are well aware of having to scrutinize and pinch back the budgets in their own homes and organizations. Make sure that your organizational budget reflects that same kind of process. None of us can know when the balloon is going to reinflate – or whether it will deflate completely. But, prudent planning that reflects knowledge of the fragile marketplace will impress your boards members and funders. Don’t stay fat when your funders are growing lean.

9. Look to new markets, including your earned income stream.
Evaluate your sources of earned income (client fees, subscriptions, single tickets, bookstore) and see if you can cut your margins there to increase your yield. Increasingly, nonprofits need to look beyond pure philanthropic dollars to ways they can leverage potential sources of earned income to balance the need for philanthropic dollars. If you have an endowment, or even a reserve fund, make sure it is invested safely but wisely. That, too, can increase your income and convey a message that you are aware of market volatility and the need to balance income sources. All of which positions you as a better investment for those who can invest.

10. Consider different timing for your mailings and major donor campaigns.
If everyone in your community solicits in November, why don’t you solicit in September? If most events are held in the spring, why not do yours in the winter? Get “off cycle” so that people don’t have to make tough decisions for their discretionary dollars. Keep track of the major events in the community, and plan yours around them. Watch when the greatest influx of direct mail occurs, and plan yours for a different time. We usually think summer as a bad time to fund raise, but one organization in a resort community always used that time for their local business campaign. The businesses were riding high, and so did their campaign.

The Golden Age of philanthropy is not over; it has just begun.
What happened in the past few years isn’t going to go away. If money is scarce, or if people are more cautious, we need to show that we have both patience and opportunities through these times. We have much to work with even if the dollars are reduced. Donors are better educated, organizations are better positioned, communities are more aware of our impact and the needs we meet, and society is more open to the ways in which effective donor investment in nonprofits can change people, institutions, and communities. We need to show that we are a robust part of a still vigorous economy, and provide continuing opportunities for investment that go beyond money.