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Tips for nonprofits on preparing for economic uncertainty

By Alyce Lee Stansbury, CFRE, Notes on Nonprofits

Researchers, financial analysts, and other experts are reading the economic tea leaves which do not look very favorable for nonprofits. With input from Nonprofit Pro, takeaways from this year’s Association of Fundraising Professionals (AFP) international fundraising conference, and what I’m hearing from local nonprofit leaders, now is the time to prepare for a possible recession.

Prepare for recession

Nonprofits are already facing record inflation, workforce shortages, declining donations, and an increased demand for services. To address these issues, Nonprofit Pro recommends creating a fundraising plan for each of these scenarios: (1) no recession; (2) mild recession; and (3) recession.

If you have an existing fundraising plan, now is the time to determine what adjustments may be needed based on each scenario. If you are one of the 43% of nonprofits without a written fundraising plan, now is a good time to create one and ask the board to adopt it.

Scenario planning should also include strategies to support staff because they are your most valuable asset. Include volunteers if your nonprofit is heavily dependent on them to deliver services. Finance committees should also make it a priority to establish and/or build a cash reserve account.

Retain fundraising staff

The AFP Fundraising Effectiveness Report reveals the average length of time a fundraiser stays on the job is 16 months and many never return to the field. If you are significantly underpaying or underappreciating fundraising staff or the Executive Director, who is the only staff fundraiser, you may be in greater jeopardy of losing them during a recession.

To better understand where you stand, conduct a salary search, talk with like organizations, and contact your state or national association to get up-to-date data on salaries, benefits, and resources. Act on the information you receive to show existing staff know they are valued.

Recruit committed board members

Planning for and navigating tough economic times requires an engaged, knowledgeable, and committed board. Nonprofit Pro advises nonprofits to start recruiting for board members with expertise in business, legal, technology, and digital marketing.

In addition, I recommend recruiting people who are not afraid to ask for money. Take steps now to fill empty seats to ensure your board has a full complement of members. This will make it easier to fill committees, distribute the workload, and to avoid overwhelming a small handful of directors.

Prioritize donor loyalty

At the recent AFP international conference, fundraising researchers and national leaders shared the discouraging news that nonprofits lost an average of 10% of their donors in 2022. New donors are down 19.2% and newly retained donors are down 24.7% which contributed to the overall decrease. It appears people who gave for the first time during COVID are not giving again and those who gave more are returning to pre-COVID levels.

I encourage nonprofits to treat donor loyalty equally as important as donor acquisition. Review and strengthen what your organization is doing to appreciate donors who give year after year, even at modest levels. These are the people most likely to keep giving during a recession because they believe so strongly in your mission.

This further emphasizes the need to personalize donor communications, retain first-time donors, and grow individual giving. If you do not have the ability to personalize fundraising letters, requests, emails, and acknowledgements, now is a good time to invest in or upgrade your technology.

Make giving irresistible

Steven Screen with A Better Fundraising Company shares two seemingly harmless phrases that undermine fundraising success: (1) help us continue to; and (2) support this ongoing work. Rather than asking people to give to what’s already happening, replace these uninspiring phrases with compelling reasons to give such as a deadline, matching funds, the consequences of not helping, you will love how you feel, and Seth Godin’s sage advice that people like us do things like this.

I encourage board and staff leaders to discuss these issues and take action to prepare for a possible recession.

Notes on Nonprofits is a column in the Tallahassee Democrat produced by Alyce Lee Stansbury, CFRE, President of Stansbury Consulting, and includes resources, responses to reader questions, guest columns, and timeless topics. This column first appeared on May 1, 2023 in the Tallahassee Democrat. Please send your comments and questions.

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