A fundraising check list : how to react to the economic crisis?
Because…yes..there is a crisis going on! You heard about it…except if you are working on street face-to-face campaigns somewhere in Asia. You are probably experiencing changes in redemption or attrition in the last months or years. If not, you should wonder about what to do if your organization arrive to the point where all indicators turns red.
External factors like credit crunch, increased fiscal pressure on individuals, political instability are much more difficult to face that choosing the right headline for your next DRTV campaign. Right now, Italy is a very good example having a temporary government that face the worst economic downturn since last world war II. As a result, many Italian organizations witnessed a terrible second semester 2011. And I am quite sure that all are monitoring their performance indicators daily…looking for new trends! But these will be hard to identify until next political elections in 2013.
An opportunity? Many organizations still grow during economic crisis, so it is not said that you are currently facing this problem. It depends a lot on your recruitment channel, your kind of donors and the product you are recruiting to. But hey, if you get to that point of this post, I assume that it was not or is not anymore an opportunity anymore.
Done your homework? Do some benchmarking to find out if similar organizations are facing the same situation. Just ask them or consult their year-end results. They should be available in the next weeks if not yet on their website. Is there a benchmarking group in your country you could join even id you’ve never considered it before. Are you part of an International NGO or a network that can provide you trends and good practices from other countries. In few words, update your data about your market because it is evolving fast.
Been deep enough in your analysis? make sure you understand which part of your program is really underperforming. Recruitment or retention? Average contribution or unrestricted funds? You will probably need to engage your financial department and why not asking to external consultant to give you an hand to go deeper in your database analysis or by reviewing your internal processes.
Are you reforecasting regularly enough? Planning and budgeting is usually an annual exercise but in these difficult times what about doing it more often? Making it a monthly exercise is very demanding for you and your team but you need to set the key indicators to be constantly watched. Run the numbers of income and expenses every trimester is for sure a good practice. Here it could be useful to have at least 2 scenarios, the worst case and the best case scenarios. This will help you to understand how to adapt your expenses.
Need to do some savings? Based on your reforecasting, you will have a clear picture of what your new budget is. This is important especially for organization that have a fixed ratio between fundraising investment and income. For all organization this is a key number when it comes to reporting to donors so be aware to control its evolution. Then you need to prioritize cuts according to some factors you will define, most probably the kind of income they are able to produce. Make sure not to cut investment on your core fundraising and prefer cuts to new projects, tests or creativity for example.
It is for sure necessary to speak to your 3 main providers and share your financial difficulties. Do not hesitate to transparently launch calls for tender for donor magazine printing, for direct marketing mailing and web activities…but this is also true for your bank especially if they charge you costs for regular donation through direct debit. Providers need to go on producing even at a lower cost, they can’t afford to see a big art of their income being totally cut. Just go bargaining! You will be surprise by the savings especially with consolidated providers that very often consider themselves as partners.
Thinking out of the box? Find out what it is that you are not doing in this particular moment. Is your recruitment strategy having the right products for the market? Do you need to develop a new product, a new way of payment, a lower the entry point combined with upgrade activities. Is it time to modify your channel mix? Invest more in the best performing channel is not always easy because you depend on lists or providers. But explore how you could do it. You surely will need to sacrifice an historical channel that is underperforming. Just make the shift, this is the right moment. On your donors base, do you need to review or improve the retention tools for new comers. Pay more attention to specific segments of your database identifying through datamining. Spend some time reviewing last years analysis they can have findings you forget about.
Is there a potential for a special appeal related to the economic crisis impacting your projects. Is your attrition under control? How easy it is for your donors to cancel their regular donations? Think about limiting the possibility to cancel a direct debit donations on outbound telemarketing campaigns and develop a downgrade offer to answer inbound calls. Make sure that all your telemarketing scripts have an answer the financial difficulties your donors are facing. And remember you are not discounting a product!
Are your staff and board aware of what it takes? Keep updated your Senior Management Team and your Board. They are the ones to validate your moves but you need to bring food-for-thought. Your role as a fundraiser is to propose solutions so share presentations with the different alternatives. If all indicators are still negatives, you could present a multi-year scenario and why not advise to use cash reserves from the organization showing how it could keep your recruitment to the planned level. Reserves are developed especially for moment like this, aren’t they?
When it comes to staff, share the situation with your team but also with the financial team. They will help you to develop mid or long term reforecasts. Fundraisers will need extra motivation and it won’t be very hard to make them part of the solution. Listen to their ideas and why not, create a task force that will meet on regular basis to issue recommendations.
Now just take time to tick the boxes of the check-list! And more important share with us what are your personal experience about the economical crisis.