Fund-Raising Strategies for Troubled Times

By Holly Hall

An economic downturn often brings a basic fund-raising principle into sharp relief: Charities need to develop

multiple sources of contributions or risk financial collapse.

Edith Falk, a fund-raising consultant at Campbell & Company, in Chicago, says that one charity her firm advises, a group that promotes low-cost housing, is now struggling because it has so many donors in the beleaguered mortgage and construction industries.

“We cannot even talk to those donors and trustees right now,” Ms. Falk says. “Some are losing their businesses, and one board member is on the brink of bankruptcy.”

To cope, the charity is now trying to seek money from corporations that want to ensure their employees have access to affordable housing, says Ms. Falk. But that is likely to be a hard sell if the economy continues to sour, other experts say. Most donors avoid taking on new philanthropic commitments in tough times.

To keep contributions flowing in a troubled economy, nonprofit leaders and fund-raising experts offer the following advice:

Avoid fund-raising cuts. Many organizations facing a squeeze decide that each department should cut expenses by the same percentage, such as 10 percent, Ms. Falk says. But “cutting your development program is a really bad idea,” she says. “You are putting yourself behind by another six months to a year after the economy improves and you start restaffing your development program.”

Reducing the number of fund raisers on the staff can be especially bad for an organization’s efforts to seek bequests and other planned gifts, says Robert F. Sharpe, a Memphis planned-giving consultant. “The tendency is to let jobs like donor relations go unfilled.”

But when an 80-year-old donor who is used to having monthly contact with a charity suddenly stops hearing from the group, he says, the charity runs a good risk that the donor will change his or her will.

“If only one bequest of $100,000 is lost, that is a lot more than the $60,000 salary of your stewardship person,” he says. “You spend money wisely in bad times, because there is no forgiveness and you get punished harder.”

Keep top donors close. Some experts advise charities not to make the mistake that many groups did after the 2001 terrorist attacks: not reaching out to their donors because of a fear that they would be turned off by solicitations during such a sensitive time. Others say that charities may want to tone down or curtail some requests for money during a tough economy. But all agree that it is more important than ever for charities to keep communicating with their top donors.

At Minnesota Public Radio/American Public Media, the senior vice president of development, Jon Gossett, is urging fund raisers to concentrate on deepening their relationships with donors and making sure donors are aware of how much the station depends on them. “We know things could be very difficult in the next six to 12 months,” he says. “It is a time to focus on communication, which is a form of stewardship.”

Tell a good story. Kyle D. Caldwell, president of the Michigan Nonprofit Association, says his state’s economy has been hurting for a few years and is a harbinger of what charities in other states may soon experience. His advice to the three-fourths of Michigan charities that “see the future in terms of higher demand and shrinking resources” is to “show the impact of your work on the life of an individual.”

“The relevance of nonprofits is more salient now in people’s lives than ever before,” he says, and reminding people of that will keep them interested in making donations.

Don’t ignore people who have stopped giving. When donors are suffering financially, charities sometimes reduce or stop communications with them in an effort to be sympathetic to their situation. But fund-raising experts say it is far better to keep in touch, because those donors are more likely to resume giving to organizations with whom they have an unbroken relationship.

That is the approach being taken by Steven’s Hope for Children, an Upland, Calif., charity that aids families of hospitalized children. The charity expects that many of its donors in housing and related industries will not be able to give this year and the organization has so far been unable to collect some $40,000 in pledges made last year.

“We can’t abandon them if they are suffering financially,” says Tony Cappelli, a co-founder. “We are looking for that extra touch that will let them know we still care about them. We’ll give a phone call, an e-mail, just to let them know we still want them around. They’ll come back when the economy rebounds if you have stuck with them through this down market.”

Look for donors in thriving industries. Fund raisers sometimes assume that a recession affects everyone, says Bob Hartsook, a Wichita, Kan., fund-raising consultant. After the recession that followed the 2001 terrorist attacks, Mr. Hartsook says, he spent three weeks studying industries and learned that, while the overall stock market and mutual-fund indexes were down, a significant percentage — 35 percent to 40 percent — of companies still made money.

“Certain industries are recession-proof,” he says. “After 9/11, environmental companies and hospitals and funeral homes were up. You’ve got to look at who’s doing well in your constituent group and get your head focused on [organizations] that are making money. You have to look for money where other people aren’t looking, and you cannot accept universalities.”

Collaborate with other groups. Until last year, there wasn’t much local churches could do for the rising tide of homeless families in Boise except pray, says Scott Nelson, assistant pastor of the Boise Valley Christian Communion.

That changed when the city government joined local churches and shelters to create Project Catch, an effort to help homeless families become self-sufficient. The arrangement plays on the strengths of each participating organization, without taxing any one of them too much — and raises more money for needy families in the process. In its first year, the program received more than $170,000 in gifts from churches, other nonprofit groups, businesses, and individuals. More than $150,000 of that was new money that had not previously been spent on homeless people, according to Project Catch officials.

Through the project, officials at local shelters refer families who need help, and the city provides job-training and other counseling while monitoring each family’s progress. Meanwhile, churches agree to sponsor a homeless family for a period of months, with congregations providing housing and some helping to pay for the family’s groceries and other needs.

Boise Valley Christian Communion, for example, is one of several churches that have donated an apartment for one of the families. The key, says Mr. Nelson, is that each church’s share of the work is manageable, and the goal of providing comprehensive services to get families back on their feet appeals to donors.

Other charities have stepped in with needed services such as a $22,500 grant from the United Way of Treasure Valley to help pay the salary of a social worker.

Greg Morris, director of Project Catch, says the effort is not only raising more money but eliminating some of the competition among charities. “Nonprofits, when they’re on their own and trying to do the heavy lifting, it’s hard,” he says.

Elizabeth Schwinn contributed to this article.