This Might Be Your Perfect Opening
Could it be that during this period of high inflation and a looming recession… there’s an opportunity to improve your fundraising success? That might sound counterintuitive, but let’s dig into it. What Should Fundraisers Do Differently Right Now? In times of uncertainty, it’s easy to speculate or panic. But instead, I turn to experienced practitioners—those who have their fingers on the pulse of donor behavior. These experts collect valuable data, and it’s this insight that helps them make informed decisions. One of those practitioners is Carsten Walter at the Heritage Foundation. For nearly 35 years, Carsten has overseen Heritage’s planned giving and data analytics programs. With more than 500,000 active members and supporters, Carsten has unique insights into donor behavior, particularly during tough economic times. What’s Happening Now? I asked Carsten the same question many of us are grappling with: How is fundraising being affected by the current economic climate? His response was enlightening: “We are seeing declining numbers on membership, and from our market research, we know that inflation is causing donors to dial back their giving.” In other words, yes, inflation is having an impact. But Carsten didn’t stop there. What Should We Do in Response? Carsten explained that despite the challenging environment, Heritage continues to mail donor acquisition letters. “We scale back somewhat,” he said, “but we are always in the mail and looking for opportunities to build on successful results.” The key here is that Carsten and his team at Heritage remain data-driven. Instead of making decisions based on speculation or fear, they lean on in-house research to understand what’s really happening. The Importance of Data Having access to solid, real-time data helps Carsten stay calm and clear-eyed during times of crisis. For example, when COVID hit, Heritage had already conducted an analysis on the impact of economic and election cycles on their fundraising over the last 30 years. This long-term view allowed them to make better decisions in the moment. Here are some of the insights they gathered: Membership Donors (<$10,000 per year): These donors tend to give more during economic downturns and when unemployment is high. They give less during presidential election years and when their preferred party is in power. Major Donors (>$10,000 per year): These donors behave differently. They give more generously in strong economic times but pull back in down markets. Their giving is tied more closely to their investment portfolios. What About Now? Carsten acknowledges that the current environment, driven by inflation, is unique. “The United States hasn’t seen inflation like this since the 1970s and early 1980s. So it’s difficult for us to assess exactly what will happen. But so far, we haven’t seen much impact on major donors.” He expects that the real test will come later in the year when the bulk of major donations typically arrive. And despite the uncertainty, Carsten offers a valuable reminder: “We shouldn’t use a recession as a crutch or an excuse. If we do our jobs right, we can excel even in bad markets.” Seizing Opportunities in Tough Times Carsten’s mentor, the late John Von Kannon, used to say, “This is a time to be near, dear, and clear with your donors.” This advice is as true today as ever. Economic uncertainty presents opportunities to strengthen existing relationships and build new ones. One example? Planned giving programs, which tend to be unaffected by economic cycles. As we move forward in this uncertain climate, it’s crucial to keep a data-driven approach and continue prospecting. There are always opportunities, even in challenging times.
Otherwise, You’ll Wither on the Vine
What am I talking about? I’m talking about the importance of continually prospecting for new donors. Even in challenging economic times. In fact, especially in challenging economic times. Systematic acquisition efforts are key to your long-term growth and success. Without them, your organization risks stagnating or even shrinking. The Power of Donor Acquisition A little more than ten years ago, John Davis took charge of the Leadership Institute’s direct mail fundraising program. At the time, the Institute had about 10,000 active donors and was mailing 100,000 new-donor acquisition packages a year. That might sound impressive, but John and the team knew they could do more. So, they did. The direct mail prospecting program, a core component of the Leadership Institute’s long-term fundraising strategy, follows a classic pipeline approach: Smart acquisition efforts bring in first-time donors. Effective stewardship programs lead to repeat giving. Ongoing cultivation transforms annual donors into major and estate givers. Simple, right? This is Fundraising 101. But the trick is maintaining the discipline and commitment to see this strategy through over time. Aggressive Prospecting Pays Off When John began in his role, Leadership Institute founder Morton Blackwell gave him a challenge: prioritize prospecting, even if it meant borrowing money to invest in donor acquisition. Morton’s conviction that donor acquisition was key to the organization’s future led to a significant increase in prospecting efforts. Initially, the team ramped up from mailing 100,000 acquisition packages to 1,000,000 per year. By last year, the Leadership Institute had mailed more than 8,000,000 prospecting letters. The results? They’ve grown from 10,000 active donors to nearly 100,000, and donor revenue jumped from $7 million to over $29 million annually. Last year alone, revenue increased by 44%. Why Does This Work? The Leadership Institute has demonstrated that it can recover its prospecting investment within two years. After that, renewals from these new donors provide an incredible stream of revenue. With consistent stewardship, donor giving increases year over year. They plan their new-donor acquisition around recovering $0.50 for every $1 spent, and as long as they hit that target, they continue mailing at scale. Each year’s prospecting efforts build on the previous ones, creating a compounding growth effect. The Importance of Prospecting in Tough Times So, what does this mean for fundraising in difficult economic times? It’s easy to see the short-term challenges—falling stock markets, rising interest rates, and general economic uncertainty. But the long-term strategy remains the same: systematic acquisition efforts ensure your organization’s future growth. Leadership Institute’s approach has proven that steady, smart prospecting brings long-term revenue growth, even when the economic landscape looks rocky. Stay tuned as we delve deeper into how large organizations like the Leadership Institute, American Target Advertising, and the Heritage Foundation navigate their fundraising efforts during challenging times.
Ready to Paddle Upstream?
It’s not as crazy as it seems. In challenging times like these, making bold moves in fundraising can feel like paddling upstream, but it’s a strategy that can set you apart. Soon, you’ll appreciate just how smart you were to take that approach. Last week, we discussed the importance of continually prospecting for new donors—especially in tough economic times. John Davis’ amazing example at the Leadership Institute provided a compelling “why” for this strategy. Today, let’s dive a bit deeper into the “what” and how you can apply it to your own fundraising efforts. Why Donor Acquisition Is Key Donor acquisition is an engine that creates long-term value. As John Davis has said, done well, donor acquisition will drive your organization forward for decades to come. The Leadership Institute’s strategy of systematically acquiring donors is a prime example. They invested in acquisition efforts, and the returns have been transformative. Since revamping their prospecting efforts in 2012, the Leadership Institute’s donor revenue from direct mail has increased by $15 million—an extraordinary return on investment. This brings us to a crucial point: Donor attrition is inevitable. Donors move on for various reasons—shifting priorities, financial setbacks, or simply losing interest. That’s why you must continuously replace lost donors to maintain and grow your revenue. How to Build a Smart Acquisition Program If you’ve been hesitant to launch a robust donor acquisition program, you’re not alone. I’ve heard plenty of concerns: How do I find good lists? We’ve tried it, and it didn’t work. We lack the resources. I don’t have the time or talent. The board won’t approve it. The good news is that these challenges can be overcome. John Davis offers a valuable piece of advice: Focus on maximizing lifetime value and tune out the noise. Instead of searching for magical new techniques, start by understanding the lifetime value of your donors. If you’re already generating healthy lifetime value, focus on increasing the number of donors. If not, dig into what might be going wrong. Navigating a Recession With a potential recession looming, it’s easy to get spooked. But here’s what John advises: Avoid the temptation to overcorrect. Every recession is different, and reacting too quickly can cause more harm than good. Instead, focus on your data. It will guide you through periods of volatility and help you make informed decisions. Kathleen Patten and Carsten Walter have both emphasized the importance of sticking to your mission and leaning into your brand during uncertain times. Donors are more likely to stick with organizations they believe are doing the most important work, so make sure your messaging is clear and resonates with your supporters. The Importance of Acquisition During a Recession Recessions can cause long-time donors to reevaluate their giving habits. If your organization doesn’t make the cut, you risk losing those donors for good. That’s why investing in a broad base of direct response donors is crucial to weathering tough times. John shared a powerful insight: the real damage during a recession isn’t the short-term loss of revenue, but the long-term impact of losing donors who would have otherwise supported your organization for years to come. Following Morton Blackwell’s principles for acquisition can help recession-proof your organization. Seizing the Opportunity The key to navigating any challenge, including a recession, is you. As John Davis and others have pointed out, the future of your organization isn’t predetermined. You have the power to create it by leaning into the very forces that cause others to hesitate. By embracing smart donor acquisition strategies and focusing on long-term value, you can paddle upstream with confidence, knowing that the challenges you face today will set the stage for incredible growth tomorrow.
Is It Nuts to Fundraise at a Time Like This?
The country is heading into a recession. Interest rates are rising, and business activity is declining. The nation is bitterly divided. What would you do if someone came to you today, amid these conditions, and said they wanted to launch a $7.5 million fundraising campaign? That’s exactly what Ann Pamela Cunningham did in 1853, during an economic downturn and with America on the verge of Civil War. With no fundraising experience, no staff, and against many odds, Ann led a nationwide effort to raise the funds necessary to purchase and restore George Washington’s home, Mount Vernon. Through her passion and innovative strategies, Ann raised the equivalent of $7.5 million today, ensuring Washington’s legacy lived on for future generations. Ann’s story is an inspiring reminder that in times of crisis, opportunity often arises. She didn’t let the economic headwinds or her personal challenges hold her back. Instead, she forged ahead and created one of the most iconic historic preservation efforts in American history.
You’ll Never Know How Far You Can Go Until You Push Your Boundaries
In 2003, Stephen Clouse helped lead a monumental rescue campaign to revitalize George Washington’s historic home, Mount Vernon. The goal was to re-engage a disengaged audience and rebuild a declining donor base, a challenge requiring bold thinking and innovative strategies. Stephen and his team identified two critical issues: young people had little interest in Washington’s legacy, and Mount Vernon’s major donor pipeline was shrinking as older donors aged out. The solution? A fresh approach that combined reimagined exhibits with dynamic fundraising strategies aimed at attracting new donors. Going Beyond Comfort One of the breakthrough moments came when they shifted Mount Vernon’s visual branding to the famous image of Washington crossing the Delaware River. This iconic painting wasn’t initially considered because Mount Vernon didn’t own it, but donor research showed it was a powerful image that resonated emotionally. By taking a risk and obtaining permission to use the painting, they revitalized the campaign’s visual storytelling. The direct mail package, designed to resemble an old felt box, asked for significant contributions—and it worked. Mount Vernon received a $1.5 million gift from a new donor through this mail effort alone. The Takeaway Stephen Clouse’s success at Mount Vernon teaches us that breaking out of your comfort zone can yield incredible results. By pushing the boundaries of what is possible, you can tap into previously unimagined potential. As Stephen says, “You’ll never know how far you can go until you have gone too far.” It’s a call to action for fundraisers to rethink everything—especially in challenging times.
Are You Already Too Late to the Game?
With the impending economic downturn, are you adjusting your fundraising plans—and revenue projections—accordingly? If not, you might be behind the curve. I recently had a conversation with Jerry Linzy, partner at Panas, Linzy & Partners, to get his advice on fundraising during challenging times. As someone who has seen countless economic cycles, Jerry’s insights on maintaining strong donor relationships in rough times are invaluable. Key Insight: It’s All About Relationships Jerry’s core message was clear: the health of your relationships with donors is everything. If you’re just now worrying about the economic impact on fundraising, you might already be too late. Here’s why: Donors ask themselves key questions in tough times: Do I have enough to live on? Which charities are my friends and have treated me well? Which charities are making a difference? Do these charities align with my values? Donors will still give during tough times, but they may give to fewer organizations. That’s why now is the time to ensure you’re one of their top priorities by strengthening those relationships. Consequences of an Economic Recession on Major Gifts Jerry emphasized that donors will continue to give, but strategies may shift: Some may give more, recognizing the heightened need. Some will explore new giving avenues, such as planned giving. Major gifts may come from alternative means, such as appreciated assets. The key is that your mission remains important to them—and they are connected to you. Opportunities in Challenging Times Despite the challenges, Jerry believes this could be a time of great opportunity: Fewer competing campaigns. Donors focusing more on organizations that treat them well and make a real difference. You will plan and prepare more carefully, resulting in stronger campaigns. Jerry’s advice? Don’t wait for the economy to improve. The organizations that thrive are those who understand that challenging times can bring great advantages. Keep building strong relationships, tell your story well, and be persistent in your mission. Conclusion The message is clear: stay close to your donors. If you’ve built strong relationships, an economic downturn won’t be as much of a threat. Now is the time to reassess your approach, keep communicating, and make sure you’re at the top of your donors’ list.
Are You With Them in the Kitchen?
Fundraising is often described as being about relationships, but how deep do those relationships go? Are you simply with your donors in the “living room” of casual acquaintance, or are you “in the kitchen,” where real conversations happen? Recently, I had the chance to sit down with Mike Richey, the longtime Vice President for Philanthropy and Alumni Engagement at the University of Kentucky. Over the years, Mike has raised more than $2.5 billion for scholarships, faculty, and infrastructure. He shared some incredible insights that have shaped his legendary career in fundraising. Building Relationships that Last Mike emphasized one thing above all: fundraising is about long-term relationships. He told me, “I’m not in the living room with these supporters; I’m in the kitchen with them.” This struck me. To raise major gifts, it’s not enough to simply know your donors—you have to understand their personal and financial situations. You have to communicate directly and transparently, especially during difficult times. Mike’s approach underscores the value of maintaining real, deep connections with donors. It’s about knowing their concerns, their stresses, and the issues affecting their businesses and families. This level of understanding fosters trust, which in turn leads to greater support, even in challenging times. Navigating Tough Economic Times We’re all aware that these are difficult times for fundraising. Rising inflation, economic uncertainty, and global crises have made it harder for nonprofits to reach their financial goals. But Mike offered reassurance: “This is not a time to fret. Nor is it a time to offer excuses. It’s a time to be encouraged.” Mike’s advice is to focus on the strong foundations you’ve built with your donors over time. Even in economic downturns, your major donors will continue to give if they feel connected to your cause. Those relationships will sustain your organization during tough times. Patience and Transparency Mike also mentioned the importance of patience. In uncertain times, your donors may need more space and time to make decisions about major gifts. The key is to remain transparent and patient while making sure your communication focuses on the donor’s needs, not just your organization’s. It’s during times like these that donors might begin to think about their legacy. Encouraging conversations about planned or legacy gifts could be a significant opportunity. Opportunities in Uncertainty Mike sees the current climate as an opportunity, especially for those fundraisers who can have real conversations with donors. “I’m not asking today,” Mike suggests you say, “but I do want your input on what we should be doing to serve our community and meet our goals in this time.” This isn’t about asking for money—it’s about gathering insights and letting donors know that their wisdom is valuable. When they are ready to give, your organization will be top of mind. Conclusion To sum it up, Mike’s wisdom reminds us that fundraising is about building meaningful, long-term relationships. It’s about being in the kitchen with your donors, not just the living room. With transparency, patience, and strong connections, your organization can not only weather tough times but also emerge stronger.
