Fundraising in a Tough Economy

With all the bad economic news seemingly permeating the media lately, sifting through the noise to understand the current state of the economy and its impact on giving can feel daunting.

Let me see if I can provide some insights based on my experience and reading that might help you plan your fund development program now and for the next few months.

To summarize the current state of the economy: Inflation hit a 41-year high in June at 9.06% (meaning that things cost 9% more in June 2022 than they did in June 2021). To head off inflation, interest rates have risen to encourage people to spend less and decrease the demand for goods. The stock market has fallen by 15% since its high in December 2021 meaning that people’s stock portfolios – including retirement accounts – lost 15% of their value as have foundation’s endowments from which most make grants. Supply chain issues continue, exacerbated by the ongoing war in Ukraine which has disrupted food and energy supplies, further fueling inflation.

Before you decide to head back to bed and bury your head under the pillow, rest assured that not all the news is bad. The economy added 528,000 jobs in July, more than double the predicted 250,000. This brought unemployment down to pre-pandemic levels and the lowest since 1969. The July inflation report also reported a decrease, down to 8.5% compared to last July, and gas prices have declined; nationally, the average cost for a gallon of gas now sits below $4, the lowest since March. While inflation and gas prices remain high, their downward trajectories bode well. Higher gas prices fuel much of today’s inflation because the price of fuel make producing and distributing food and other goods more expensive. This means that as gas prices fall, other prices should fall as well, creating a ripple effect across the economy.

With all this seemingly bad news – even with some glimmers of hope – the question remains: Should you ask for money in the midst of these economic woes?

Short answer: Yes.

Longer answer: Absolutely!!

While this economy has certainly hurt a lot of people very badly, it has not hurt wealthy and upper middle-class individuals. Many people in these economic strata actually made more money during the pandemic and, because of fewer opportunities to spend it on travel, entertainment, and other luxuries, they also saved more. That pent up demand fuels inflation; if you remember your high school economics course, when demand outstrips supply, prices increases.

But I digress.

Bottom line: People with money – e.g., the people you want to ask for a major gift – still have sufficient resources to invest in your organization and mission.

So, how should you approach development in this economy?

1.       ASK!! If you don’t ask, you don’t get. Don’t assume that the economy has hurt everyone and that they don’t have the resources to invest in your mission. Ask and you might get a surprise. Don’t ask, and you won’t get anything.

2.       Share your organization’s story. Prices have raised for everyone – including your nonprofit. Have you seen higher need? Have higher gas prices hurt your bottom line? Are you paying more to retain quality staff? TELL PEOPLE! While we often hesitate to share our internal woes, do not play coy. Tell stories of the issues the economy has inflicted on your organization and provide data to demonstrate the extent of the problem. One organization with which I work has seen their freight costs double, adding nearly $200,000 to their budget. Share that.

3.       Frequently engage people closest to your organization – your board, staff, and major donors. Even if they have already given this year, tell them how the economy has impacted your services and needs. For some (especially the board and long-time donors), consider asking them for a one-time extra gift this year to help you offset your budget gaps and increased service needs –and then return to their previous giving level when you ask next year.

4.       Cultivate relationships with your major donors and volunteers. Even if they do not have the resources to invest heavily in your organization or feel the effects of the economy themselves, keep them engaged. Just like during the pandemic, donors do not want to feel like you only care about them when they can write a check. Share your story and check on them. In other words, advance the relationship.

5.       Continue to engage new donors by sending broad-based appeals to identify others with a passion for your mission, including new people who may not have had experience with or understood its importance until now. I suggest lowering the amount you ask nondonors to give in these appeals as they may have fewer dollars to give, but, if you steward them correctly, you can engage them for the long haul.

Now is not the time for shyness. Instead, double down and reach out to the people closest to you to allow them to help you meet your mission.