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.
