How You Can Start and Operate a Soup Kitchen

Mission Possible: How You Can Start and Operate a Soup Kitchen

Opinion: 10 Strategies for Fund Raising During the Recovery

Chronicle of Philanthropy, March 20, 2011
By Irwin Stoolmacher

Although the Great Recession officially ended a year and half ago, the nation’s nonprofits continue to struggle.

The bad economy means they must continue to grapple with an astronomical increase in demand for their services and big changes in the fund-raising landscape.

As a result, nonprofits need to focus on the fund-raising and marketing strategies that will help them survive over the long haul.

First, nonprofit executives need to understand the continued pressure for every source of money and how long-lasting the problems will be.

Individuals. Millions upon millions of Americans are facing difficult economic times for the first time in their lives. While the nation’s unemployment rate has finally fallen below 10 percent, the underemployment rate was running at 20 percent last year, according to a Gallup poll.

Many of the newly needy used to volunteer at nonprofits. Today they are clients. The combination of the newly needy and the historic needy—the chronically poor, the physically challenged, the mentally ill, those suffering from substance abuse—is severely taxing the capacity of nonprofit organizations. Pantries are running out of food in midmonth, and emergency shelters in many sections of the country cannot meet the demand for services.

When people lose their jobs and see their incomes drop sharply, they have no choice but to limit their discretionary spending. When faced with a choice among food, housing, and health insurance, many people jettison their charitable giving.

Bequests and other planned gifts to nonprofits have also been diminished by the economic downturn and foreclosure crisis. Many families that thought that they were in pretty good shape and had planned to leave sizable donations to charities in their wills have had to rethink their plans.

Government. At every level, governments are buried in red ink.

To deal with the federal deficit, lawmakers will need to make broad cuts in grant programs to nonprofits and to entitlement programs that give benefits to everyone who qualifies, like Medicare and Social Security. Because that will still not be enough, taxes will probably rise, and that will also affect the discretionary spending of all Americans.

To save government jobs, public-employee labor unions will put pressure on government to reduce contracts to nonprofit organizations and for-profit companies. Not only will nonprofits see fewer government grants and contracts to provide health, human-care, educational, social, and recreational services but they will also receive far fewer dollars donated by government employees through payroll-deduction campaigns.

Even so, thousands upon thousands of additional government workers will lose their jobs over the next decade as governments at all levels trim costs. These laid-off workers will further tax an already tattered nonprofit social safety net.

Foundations. As a result of the economic downturn, many foundations saw the value of their portfolios plummet. Many of these foundations, like leery investors, were reluctant to re-enter the stock market aggressively.

As a result, many foundations put a higher than normal amount of their funds in safer low-yield financial instruments and have not profited from the rebound of the stock market. The result has been fewer funds available for discretionary grants from small and midsize foundations to nonprofits.

Corporations. America’s businesses responded to the severe economic downturn by tightening their belts and reducing their giving. For thousands of companies, this has meant lowering their cost structure by reducing their labor force and demanding greater per-person productivity.

The consequences for nonprofits were reduced corporate contributions, grants, and giving through payroll-deduction drives.

Given all those changes, nonprofits would be wise to follow these 10 tips:

Avoid the temptation to cut fund-raising expenses. With very rare exceptions, organizations that spend less to raise money raise less. Organizations that mail fewer pieces to recruit donors, approach fewer corporations, prepare fewer foundation proposals, and hold fewer one-on-one interactions with high-end donors won’t do as well as those that continue to do all they can to raise money.

That is not to suggest that efficiencies shouldn’t be considered when it comes to raising money. It is, however, Pollyannaish to think you can reduce your fund-raising efforts and expect to raise additional dollars.

Continue to spend on marketing and public relations. Donors do not support nonprofits they don’t know much about. Companies do not spend billions of dollars on marketing and public relations because they don’t work. Cutting back on your marketing and public relations in today’s more competitive landscape could have drastic negative consequences.

Stay away from hyperbole. In these very difficult times, it’s tempting to oversell a group’s ability to bring about changes. Be careful to avoid language that is over the top, puts a misleading spin on the facts, or in any way overstates your organization’s capability. Don’t do anything that can harm your organization’s reputation.

Establish a strong brand. Put together a statement that is short enough to put on the back of your business card that succinctly tells what you do. Develop a communications plan to explain to the community you serve how you are fulfilling your mission. You want to come across as prudent and efficient stewards of all money donated to you.

Scope out the competition. Nonprofits compete for donations and volunteers. To win attention, you need to know your competition. Learn what your competitors do well in addition to tracking their mistakes. Check out competitors’ Web sites, go to their events, and ask your close supporters how they view other organizations. Just as fund raising should not drive an organization’s programs, what the competition is doing shouldn’t drive a group’s effort to promote its brand. Knowing more about the competition should, however, help you find better ways to emphasize what is special about your organization.

Actively and consistently promote your brand. Use newspapers, magazines, radio, cable television, billboards, and online search engines to get your message out. Nonprofits that maintain their brand will be more likely to keep donors loyal and attract new donors in the highly competitive new nonprofit landscape.

Concentrate on getting donors to give more. Devote a considerable amount of energy to getting more from people who already support your group. Classify donors by categories based on their interests, demographics, or whatever is relevant for your group, and tailor approaches to different types of donors. Devise creative ways to approach donors for additional support, such as challenge grants, quarterly or monthly donations, and naming opportunities.

Create a quality Web site and update technology tools. A highly professional Web site is no longer a luxury for groups that want to attract younger donors. Someone must be assigned to update the site very regularly—weekly is ideal. Offering your donors the chance to receive a compact version of your newsletter online and to communicate with you and make donations to you via the Internet is essential. With this in mind, you need a strategy to obtain the e-mail addresses of donors, volunteers, and others.

Embrace social media. Nonprofits need to get their messages out on social networks such as Facebook and Twitter, as well as on professional networks such as LinkedIn, creative sites like the photography-sharing site Flickr, and sites that offer community news, such as AOL’s Patch.

You also need to consider having a presence on social-networking sites that have sprung up to serve specific racial or ethnic groups.

Not only can social media help nonprofits reach out to new supporters but they can also help an organization quickly learn what donors think and how to adapt.

Increase your presence on the Internet. When someone is looking to find out more about a cause, you want your organization’s name to pop up.

Since 70 percent of searches are done on Google, that needs to be a focus. Nonprofits can draw more Google traffic by learning how to gain attention, an approach known as search-engine optimization. The specific formula Google and other search engines use to decide which Web sites are listed first in search results is confidential, but many people know the basics.

To move your ranking up on a search page, you will want to tailor your Web site to satisfy as many of the ranking criteria as feasible. Consultants can help, or someone on the staff can learn this task.

None of the steps outlined here are optional. Nonprofits that can’t revise, retool, and reshape their fund-raising efforts will not be able to survive in the new nonprofit terrain.