It’s Been A Tough Year for Fundraising, Will 2010 Be Any Better?

By Kris Kindelsperger, Ed.D., Senior Executive Consultant, and Angela White, CFRE, Senior Consultant and Chief Operating Officer, Johnson, Grossnickle and Associates

It is unlikely that most development officers in the non-profit world will look back on 2009 with much nostalgia.  While there are notable and positive exceptions, it’s shaping up to be a year of challenges on multiple fronts for most non profits.  2008 was the first in the past 30 that the total dollar value of philanthropy declined.

Early reports for 2009 are not looking much better – perhaps even worse.  In July, the Council for the Advancement and Support of Education (CASE) predicted an average 3.9% decline in giving to education for the 2008-2009 academic year based on its fundraising index.  In September, the Foundation Center’s Year-end Outlook for Giving predicted a 10% decline in foundation giving for 2009.  Corporate giving fell in 2008 by a greater percentage than any other sector and few development officers are reporting that this has changed for the positive in 2009.

How will 2009 end up?  December is likely to be a key to the final outcome.  Why?  Because December is the largest philanthropic month for nearly all non-profits.  How good (or bad) December ends up hinges on a couple of cross currents.  On the positive side, the recent run up in the market restored some of the assets of investors.  Many yearend gifts have historically come from appreciated assets, and this year some people once again have “appreciated” assets.  Perhaps more important, confidence among higher capacity donors is cautiously improving, at least that’s what donors have told us during recent campaign feasibility studies.  Will they feel confident enough to give away portions of their restored portfolios?  Many organizations are hoping so.

On the down side, rising unemployment is inevitably impacting organizations that rely on smaller annual gifts during the holiday season.  Unemployment, underemployment, or the fear of future layoffs is causing many to save rather than spend according to statistics from the U.S. Department of Commerce, Bureau of Economic Analysis.  Although there may not be a documented correlation between spending and giving, reason would say that many will hold on to what they have in December, rather than spend it or give it away.  The decline in foundation giving will also impact fourth quarter giving – a time when some foundations, in good market years, distribute unanticipated income to meet the 5% distribution rule.  

Development professionals everywhere are crossing their fingers and hoping for a strong philanthropic month of December.

What should we look for in 2010?  Who knows?  But there are some factors that would set the stage for a better year.  1) High net worth individuals should find some clarity on issues affecting taxation and investors should continue to gain confidence if the market moves upward in a moderate, but steady upswing, rather than rising quickly and then correcting.  2) The broader population should regain confidence if unemployment begins to decline and consumer spending increases.  3)  If there are no major national or international disasters or 9/11 type events.

Some organizations are already going against these trends.  Such organizations tend to demonstrate some or all of the following characteristics:

• They are getting in front of current and past donors (now more than ever) – thanking them and building relationships.  They take no donor for granted and focus on renewing support from existing donors, by recognizing them, and letting them know the difference they are making.
• They recognize that tough economic times may call for different strategies.  Donors may need more time to make a decision about major gifts.  Matching donor interest to organizational needs may take more negotiating, and the way to communicate with donors may need to be even more personalized than in the past.
• They appreciate that it may take longer to reach goals, and that proven fundraising techniques may not work as well as in the past.  Campaigns may need to be extended, and impersonal direct mail may not yield the same results.
• They are fighting for their niche.  What makes an organization unique?  No two organizations or donors are the same.  Many are working harder to deliver a strong and compelling case for the needs of those they serve and communicate this message broadly.

Don’t use tough economic times as an excuse to retreat from the gains that your organization has made.  It may feel like survival of the fittest, but in reality it is more like survival of smartest and the most focused.