Which organizations will withstand the recession?

In late January 2009, a study authored by Retriever Development Counsel LLC, was conducted in the US, assessing the impact of the economy on the fundraising efforts of over 180 organizations. The survey was conducted in partnership with Nonprofit Association of Oregon, Grantmakers of Oregon and Southwest Washington, Oregon and SW Washington Chapter of the Association of Fundraising Professionals, Meyer Memorial Trust.

Although this survey focused on the Oregon and South West Washington area, the results are likely applicable to non-profits across North America. Respondents were primarily executive directors and development directors representing a range of organizations and sectors across the board. The results were illuminating and provide an interesting insiders look on how nonprofits perceive to be faring during the current economic situation.

First and foremost, there was a significant amount of good news coming out of the survey, which should give nonprofits, whether in the US or Canada, reason to pause. For one thing, fundraising trends tended to be higher in 2008 than in 2007. For another, the majority of nonprofits surveyed predicted a recovery time of two years or less. And many organizations said they were looking to the economic downturn as an opportune time to reconnect with their mission, re-align their strategic vision, establish new partnerships and introduce a higher level of creativity into their overall approach. What’s more, many have witnessed an increase in the use of their services and are planning to expand their offerings in the coming year.

Interestingly, however, the organizations who claim to be doing well aren’t boasting the largest budgets or the most effective fundraising efforts in 2008, but they do share some of the following criteria:

• A diversified revenue stream.
• An engaged leadership—including executive, development/fundraising and board— ready, willing and able to take on any new challenges that lie ahead.
• Greater efforts at relationship-building and donor outreach.
• Emphasis on development staff or resources.
• They are proactive, always looking for ways to improve and increase their planning and their efforts.

On the downside, however, the survey found that, for those organizations who witnessed a decline in their fundraising dollars, most attributed it to the economy. Many nonprofits also approached the new year with short-term solutions to the current situation. Those who predicted longer recovery times, cited organizational problems (e.g. leadership) or lack of development/fundraising efforts as the main culprits.

But, in line with the above, and contrary to what many would believe, the organizations who claim not to be doing well are not necessarily those with the smallest budgets or staff. Nor are they the ones decrying 2008 an abysmal year for fundraising.

Yet, they all seem to have a few things in common, such as:

• Problems with leadership or board.
• Reactive as opposed to proactive strategies.
• Little donor stewardship.
• Lack of fundraising efforts.

Another intriguing tidbit is that, overall, nonprofits surveyed said they experienced higher fundraising results in 2008. To what did they attribute the increase? By and large, the answer was simple: a greater focus on the “ask”. Likewise, in order to achieve their 2009 revenue goals, donor stewardship was deemed the top priority, followed by foundation grants and major gifts. It should come as no surprise then that when asked about their priorities for 2009, 81% stated it would be communicating with donors.

Some other noteworthy takeaways from the report include:

• A large percentage of respondents (77%) anticipate recovery in two years or less.
• The impact of the economic crisis appears to vary among nonprofits, with some experiencing greater consequences and others a lot less.
• Nonprofits who appear to be faring better in the economic climate are, by and large, the ones who promote diverse revenue streams and effective management.
• Development activities, particularly individual donor relations, seem to underlie the approach of the more successful organizations.
• Board members need to increase their level of involvement and engagement.
• Non-profit leaders need to take a greater role in communicating the organization’s goals, decisions and vision moving forward.
• A greater focus on internal communication within the organization is necessary.
• Sometimes an organization’s perception of how well they are faring does not reflect the realities of the situation.

Unquestionably, like our neighbours to the south, Canadian nonprofits will feel the effects of the economic downturn and core funding/fundraising efforts will be impacted. But as the survey and its report demonstrates, even in these harder times, a proactive strategy is the key to resilience. Strong leadership, scenario planning, restructuring, donor stewardship, diversity and creativity are just a few of many priorities that can mean the difference between funding and fundraising highs and lows.