Charities Are Cautiously Optimistic as Fund-Raising Season Begins

As the crucial end-of-year fund-raising season is about to start, charities hope that signs of the recession ending will help make it easier to bring in donations.

“We anticipate year-end will be better than we’ve been seeing lately, but are under no illusion it will be where it was two or three years ago,” says Jeff Lindauer, associate vice president for development at the Indiana University Foundation, in Bloomington.

To prepare, fund raisers are weighing which tactics are likely to work best in the current economic environment. They also are trying to ensure that the decisions they make now lay the groundwork for future giving.

‘Warm Prospects’

Among its strategies, Earthjustice, an environmental organization in Oakland, Calif., has cut back on direct-mail appeals that seek to win new donors. Instead, it is spending more money on telephone efforts to encourage “warm prospects” — first-time donors, online activists, and donors who gave recently after long absences — to agree to give monthly gifts.

In the last 12 months, the organization has increased its total number of monthly donors by 6 percent.

Appeals to recruit new donors are expensive and response rates are typically low, while monthly gifts represent a consistent source of revenue, says Melinda Carmack, Earthjustice’s vice president for development.

“We need the cost of a new donor to be within an acceptable range,” she says.

Thanking Donors

Many donors are trimming the number of charities to which they give, so scaling back efforts to attract new supporters makes sense, says Bruce R. McClintock, chair of Marts & Lundy, a fund-raising consulting company in Lyndhurst, N.J.

“They’re probably not as open to thinking about new causes,” he says. “They already have more causes than they feel they can support.”

Michael Nameche, director of development at the Chicago Coalition for the Homeless, plans to focus his efforts in the coming months on seeking gifts from the charity’s loyal supporters.

He says his methods are straightforward. Mr. Nameche signs thank-you letters by hand, and if he notices a donor who has been giving consistently for a long time — even small amounts — or who has significantly increased the amount of his or her gift, he asks the group’s executive director or a board member to call the donor.

“If you call somebody and you thank them for their ongoing support, that’s a lot easier and less expensive than trying to find a new donor in a down economy,” says Mr. Nameche.

The American Society for the Prevention of Cruelty to Animals, in New York, takes a different approach. Throughout the downturn, the organization has kept a close eye on the number of new donors it adds each month and sends more mail when those figures don’t meet monthly targets.

New donors “are going to be way more critical when the economy starts coming back,” says Jo Sullivan, an executive vice president at the organization until last month. “You’ll end up having to spend twice as much to make up for the donors you’ve missed and the donors you’re going to need to grow going forward.”

The organization has been able to attract new donors by adjusting the mailing lists it uses, says Ms. Sullivan. Rather than relying just on donor lists from other animal charities, the group also sends appeals to people who have expressed interest in animals in other ways, such as by buying products from pet-supply catalogs.

Ms. Sullivan says that the organization plans to mail more new-donor appeals during the last months of 2009 than it did during the same period a year ago.

“We’ve worked really hard to find a new pool of people that we all aren’t mailing at the same time,” she says.

Nostalgic Appeal

The American Lung Association, in Washington, sends its Christmas Seals solicitations to both established supporters and potential new donors. This holiday season, the health charity is taking steps it hopes will reinvigorate its 102-year-old campaign.

Last year the appeals, which include seals that can be used to decorate holiday cards and packages, brought in $14.4-million, more than a third of the group’s direct-mail revenue for the year. While the tally was only a 3-percent decline from 2007’s total, it was about half the amount the campaign raised in the mid 1990s. In 1995, for example, donors gave $28-million in response to the holiday appeals.

This year the organization has created a series of nostalgic television advertisements, as well as a Web site and Facebook application, to promote the campaign and introduce Christmas Seals to young people.

Move Away From Events

Building strong ties with donors continues to be crucial for most charities. With this goal in mind, Heartland Habitat for Humanity, in Kansas City, Kan., has in the past 18 months moved away from special events to focus more on raising money from individuals and church groups.

The decision proved to be a boon for the organization, especially given the subsequent downturn in the economy, says Tom Lally, the group’s executive director.

“We’re in a better economic position today than we were probably for the last 10 years,” he says.

Heartland Habitat sent a year-end mail appeal for the first time in 2008. The letter went to 1,015 people and companies and raised $18,500. This year the organization plans to send two appeals at the end of the year to more than 18,000 supporters in its database.

A new effort to solicit big gifts is also in the works.

“Now’s a great time to do the investigation work and get all of that planning done,” says Mr. Lally, “so when the economy turns around, all that legwork will be completed.”

Boys & Girls Clubs of Metropolitan Phoenix is also trying to curb its reliance on fund-raising events.

During its “Believe in Me … Imagine the Possibilities” campaign this fall, the organization is asking a large cadre of volunteers who have traditionally asked for big gifts in connection with special events to seek small contributions from their family members, friends, and colleagues.

While the organization has had success soliciting big gifts, it has never focused on small contributions from individuals, says Lariana F. Lesniak, a vice president at the charity. The economic downturn and the opening of three new clubhouses in the past year have helped prompt the change.

“We’ve known it’s been an area of opportunity,” says Ms. Lesniak. “But until you really have to do something, we didn’t do it.”

Planned Giving

As fund raisers at Nationwide Children’s Hospital, in Columbus, Ohio, seek gifts for the organization’s $250-million capital campaign, they say a growing number of solicitations for cash pledges have turned into planned-giving discussions.

“Some of the people who we were having capital-gift discussions with have said, ‘You wouldn’t want the gift I could give you now,’” says Jon M. Fitzgerald, president of the hospital’s foundation.

To try to persuade more people to take out gift annuities — a form of planned gift — at year’s end, Nationwide Children’s Hospital has increased the amount of money it’s spending on advertisements. So far, the ads have appeared in the The Columbus Dispatch and Ohio Magazine.

Many nonprofit organizations think it is too soon to expect a rebound in gifts of stock, but Mercy Corps disagrees.

With the uptick in the market, the Portland, Ore., international-aid group hopes to see an increase during the year-end fund-raising period.

The organization plans to include detailed information about how to give stock in the appeals it sends to anyone who has given stock in the last five years.

The charity also plans to send reminders about a provision that expires December 31 that allows donors age 70 &frac; and older to give up to $100,000 annually from their IRA’s tax free to charities.

Mercy Corps wants to keep that “menu of opportunities fresh in people’s mind,” says Johanna Thoeresz, the organization’s vice president for development.

‘We’ve Leveled Out’

In a difficult fund-raising year, even good news is often tempered with uncertainty.

While Vivienne R. French, director of philanthropy at the Food Bank of Northern Nevada, in McCarran, is pleased that contributions are up compared to this time last year, she worries how the organization will cope with significant increases in requests for food assistance as the state’s unemployment rate climbs above 13 percent.

But even with those worries, Ms. French says she feels more confident about the organization’s fund-raising prospects than she did this time last year.

“We were still on the downhill slide with the economy,” she says. “I’d like to think that we’ve sort of leveled out a little bit now, and we’re seeing some glimmers of recovery. Glimmers is a good description — not much more than that.”