Fundraising in a Slumping Economy
By: Bridgette O'Connor

During fourth quarter of 2007, end-of-year appeal donations flooded the mailboxes of many of the country's 1.4 million non-profits. Now, the envelopes have been opened, the cash counted, and the benchmarks analyzed. While some organizations ended the year in the black and on target with their goals, they are nonetheless facing the typical first-quarter blues. The hustle and bustle has slowed, donor enthusiasm has cooled, and staff motivation is lagging since the end-of-year thrust.

Though such events are cyclical trends in even the best of times, many organizations are now finding them somewhat troubling. Turn on any news program these days, and you will hear economists' woes over a slowing economy and possible recession. While Wall Street shrugs it shoulders over what it conceives as the inevitable, and retail giants reassess top-management bonuses, the hand wringing of fundraisers and other non-profit organization leaders can be seen in every sector of the non-profit community over the fate of their institutions and, more important, the people they serve.

While there is no crystal ball to forecast how an economic slowdown will impact non-profit fundraising and for how long, there are some practical, proactive measures organizations can put in place today to buffer against any fluctuations in fundraising.

Pay Yourself First
You have likely heard the adage, "pay yourself, first." Doing so over time can build financial stability for organizations. In his recent article, William Barrett, senior editor at Forbes magazine, suggests that, during economic downturns and subsequent challenging fundraising periods, non-profits with endowments and cash reserves have fewer reasons to worry than those that do not ( Forbes , December 2007). These resources can carry an organization through a short-term slowdown in philanthropy, and any organization that does not already have an endowment or liquid cash reserves should consider getting one or both started as soon as possible.

How much an organization needs to stock away in each is dependent upon its needs and operating budget. An endowment is typically built so that its corpus can generate adequate interest or dividend revenue to support the organization's operating/program and capital needs. This amount will vary depending on each organization's needs. It is recommended that cash reserves equal six months to one year of operating/program expenses.

Endowments
An endowment is usually developed over a period of time, and fundraising for an endowment is ideally integrated into a major gift campaign for programs or capital, as these tend to draw greater donor enthusiasm than endowment campaigns alone. If an organization is already considering one of the latter, it should also consider incorporating an endowment component. In addition to helping ensure an organization's financial health and future, an endowment gives donors another opportunity to support your organization and will attract donations that may not otherwise be realized, such as planned gifts.

Most endowments are built primarily via planned gifts, meaning the donor must pass away before the gift is actualized by the non-profit. Though the economy may be sluggish presently, it need not stop fundraisers from making their major gift appeals for endowments, or otherwise. In fact, for fervent fundraisers, this environment can be an overabundant garden of opportunity as their frantic counterparts react to the media hype and stop asking. Even in cases where donors are wary about their own current financial stability and, thus, their ability to make charitable gifts, planned giving opportunities can provide them a way to support an organization without impacting their present financial state whatsoever. Moreover, the emotional impact of knowing this gift will change future lives beyond the donor's lifetime will likely enrich the donor's life also and motivate them to support your organization in other ways. With some planned giving opportunities, a donor's financial status can even be enhanced through the related tax savings and deductions, thereby providing the donor an added financial incentive to give in an uncertain economy. Remember that every day is a good day for planned giving fundraising.

Cash Reserves
While endowments take time to grow to become useful to an organization, liquid cash reserves are less time-consuming to build and more readily accessible. Cash reserves act as savings accounts for organizations: they can help meet cash flow needs during payroll, they can act as start-up and matching funds for new programs, and they provide a healthy cushion with an unforeseen expense. However, due its lackluster and obscure nature, cash reserve fundraising can be difficult as it usually fails to give donors a clear picture of how their donation would impact those served by the organization. These funds often are not raised for a specific purpose; they go into the abyss, supporting operating expenses and unforeseen needs during critical times.

While cash reserve fundraising may not always be fruitful, that is not to say fundraising cannot help an organization achieve a healthy reserve. Fundraising for the programs that directly benefit those you serve via an effective annual fund program can create an influx of program and operating dollars that will allow you to shift previously budgeted, available funds to cash reserves. Also, soliciting donors for items that are currently purchased but that could be donated to you, such as office supplies, will allow you to shift these previously budgeted funds to reserves. An added benefit, these in-kind solicitations are a great way to get your organization's name in the public and to engage new donors in a way that feels non-committal yet helpful, allowing the donor a chance to first test your organization before becoming more engaged. As donors begin to feel they are making a difference in the lives you serve, and that their donations are handled properly, they will be motivated to increase their philanthropy.

Enhancing Operating Revenue
Most organizations are able to rely less on cash reserves when they have stable operating revenue. Organizations often find fundraising for operating dollars to be challenging also, as the idea of funding light bills does not appeal to many donors as do the programs that directly benefit those you serve. Consider that operating dollars are no different than program expenses-they are the core of your program expenses, providing the staff, supplies, space, heat, electricity, and more that allow you to conduct a program. These costs can be tied directly to those you benefit. Thus, highlighting how these individuals will be better off because a donor helped fill a need for a new air conditioning unit for your facility or training for your program staff will compel the donor to give. Keep those you serve as your focus, and the funds will follow.

Make New Friends, But Keep the Old
While dollars can be shifted to create a solid cash reserve, shifting time and resources to retain current donors can help ensure a solid, consistent donor base, providing some stability during unstable times. Money follows one's loyalty, and donor loyalty is cultivated by organizations that take the time to demonstrate continually to donors their gratitude and make donors feel they have had a part in the organization's successful outcomes.

In fact, a recent study by Bank of America, The Study of High Net-Worth Philanthropy (COP Indiana University, 2006), found that nearly 60% of the high net-worth individuals they surveyed said they would give more to charity if they were able to determine the impact of their gifts.

Moreover, another study sponsored by the Association for Fundraising Professionals, The Fundraising Effectiveness Project (AFP, 2007), showed that improvements in donor retention could dramatically improve non-profits fundraising revenue. The study found that, in 2005, organizations experienced a 51% loss in fundraising revenue due to loss of previous donors.

The time and resources spent to acquire new donors can be significant. While an organization may attract donors to replace those lost, the relationships and, thus, donor loyalty take time to replace. As organizations already face losing donors due to challenging economic times, keeping current donors engaged becomes even more imperative. Most donors give to multiple causes, and, during an economic slowdown, given the choice of supporting an organization with which a donor has a history vs. one that they recently began supporting, most would direct their funds where they have a long-standing relationship.

On a related note, the research also indicates that donors tend to give where they have invested their time. According to the Bank of America study, volunteering by high net-worth individuals is associated with higher giving levels. Again, where one's loyalty rests, one's financial support follows. This largely holds true for corporate philanthropy also, as businesses tend to direct their funds to organizations where their employees have a presence as volunteers or as donors. During a sluggish economy, donors may tell you they are not certain about their money and, thus, their ability to give it to you. But, perhaps with some encouragement, they would be willing to invest their time. As the research suggests, this investment may eventually prove to be profitable to your organization in more ways than one.

Though no one seems certain what this latest economic downswing will bring, it is certain to impact those most prepared the least. The right time is now to start this preparation by taking even just one step toward implementing an endowment, starting a cash reserve fund, fundraising for operating support, and engaging and retaining donors. Doing so will add greater stability to grow your organization, better preparing it to withstand economic threats and enhancing its ability to carry out its mission. As fundraisers and organization leaders, we owe this to those whom we serve; they are counting on us.

Bridgette O'Connor is vice president of Hartsook Companies, Inc., a national full-service fundraising consulting firm, www.hartsookcompanies.com .

Product Roundup

Ezfund
EZfund makes fundraising easy with quality fundraising products and services. EZfund is a full-service fundraising distributor that has helped raise more than $50 million for PTAs, schools, and church groups. Its specialty is frozen foods, offering Otis Spunkmeyer/Chippery frozen cookie dough, brownies, pretzels, coffee cake, and much more. Products come with the EZ guarantee of on-time delivery. There are no upfront costs for selling kits and delivery. Fundraising consultants also are available. Browse from the many products offered. Let EZfund make your fundraising program a success.
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Educational Outfitters
Educational Outfitters puts the fun back in fundraising. It provides schools a unique opportunity to promote and support the school. Raising money through school logo items encourages school spirit, builds the school's brand, and creates revenue. The programs offered by Educational Outfitters are easy to implement, and the products are of the highest quality. A wide range of promotional items that are suitable for parents and kids of all ages are available. A school can pick from pens and cups to hoodies and caps, and just about anything you can imagine. Educational Outfitter also makes great gifts for just about anyone.
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Fieldhouse
By using the power of the Internet, schools that work with Fieldhouse maximize their fundraising reach into their local community while minimizing work load. The original product, online ecommerce stores, allows schools to offer 24/7 custom fan gear and process any transaction online. Fieldhouse handles the orders, payments, shipments and customer service, so there is no hassle for the school. Fieldhouse's latest product, Share, gives schools an online platform to sell sponsorships and WebGrams (short encouraging messages), manage the progress of fundraisers, and take donation payments online. This patent-pending system lets schools set their own prices and control the Web site content.
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Gift Bricks
Why not try a Gift Bricks engraved brick fundraising program? Backed with more than 22 years of successful fundraising projects for thousands, Gift Bricks offers engraved bricks, tiles and other media, including marble, granite, slate, glass, and bronze for donor recognition and fundraising. Gift Brick epoxy-filled or Laser-blasted engraving adds clarity to the lettering and protects the material from chipping, cracking or filling with debris. Gift Bricks engraving process allows the capability to engrave copy, artwork, logos and signatures. Gift Bricks also offers marketing, sales and installation help.
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Scripture Candy
The Butterfly Pop with Caterpillar Gummie is a new fundraising item from Scripture Candy. Each adorable, hand-decorated pop and gummie is packaged with an attractive, yellow bow with a hang-tag featuring a Scripture verse. With Scripture Candy fundraising, you can earn up to 55% profit, sell products with a Scripture message, receive high-quality merchandise in a timely manner, allow trained specialists to create a sales program to fit your exact needs, receive excellent customer service with no hidden cost or gimmicks, and maximize profits with minimal effort.
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Gold Medal Products
Gold Medal Products, the ultimate one stop concession source, has announced the release of its 64th Edition 2008 FUNFOOD Catalog. The definitive guide to profit-building concepts, this full color, 120-page catalog showcases the widest range of equipment and supplies in the concession industry. Everything necessary for producing money-makers (such as Popcorn, Cotton Candy, Sno-Kones, Shave Ice, Nachos, Pizza, Hot Dogs, and Frozen Drinks) can be found in this complete product overview. A wide range of new and enhanced items are featured, including new Poppers, Cotton Candy Machines, Sno Kone Machines, and new Whiz Bang Games.
www.gmpopcorn.com

Compelling Creations
Compelling Creations offers a better approach to fundraising. When your school's supporters purchase their sterling silver faith jewelry directly from the company's Web site, your school receives 30% of all sales. They ship directly to the customer, so there are no distribution headaches. They offer 24/7, 365 day fundraising. Backpack flyers are provided at no additional cost. You can track your sales online anytime. They pay out each month. www.compelling-creations.com