NP Sector personnel strategies during recession

During the Chronicle of Philanthropy’s on-line discussion on the recession and the non-profit sector, Richard Marker, principal at Marker Goldsmith Philanthropy, was asked about the agency management strategy of putting employees on contract. His advice, given my own experience, was excellent.

My own view is that it is a short term savings to reduce support for those you can still employ. It is better to fully invest in fewer employees than short change and antagonize many.

When I managed an organization during a recession, we quickly learned to get the bad news out of the way, reduce staff, and assure those who remained that it was our expectation that they would continue to have a job. The steady drip-drip-drip of bad news sets up uncertainty throughout the organization, damages morale, and virtually guarantees that you will lose your best people-those you most need during the bad period.

Chronicle experts peer into crystal ball

The Chronicle of Philanthropy hosted an online discussion, Outlook for 2009: What the Recession Will Mean for Your Organization. Among the findings:

• Foundations will focus on those with whom they have a relationship.
• Not all organizations will be affected in the same way, and many donors continue to give generously.
• Donations that depend on stock gifts will lag improvement in the market.

Also included, some great tips on strategies to survive and present your case.

Conducting a capital campaign during a downturn

If you’re contemplating a “must-do” campaign, what do you do? If your case is strong and your donors are with you, I advise that you move forward. It will take you longer to reach your goal than it would have two years ago, your pyramid may be somewhat flatter, and you will have to visit more donors, but you can make it. (In most campaigns, there are always some who are not contacted due to volunteer fatigue; now you will have to see more of them, and that requires more volunteers.)

A regional hospital foundation officer tells me they are proceeding with five separate hospital campaigns in as many communities. Of 30 donor prospectives whom they re-interviewed, only one advised them to pull back.

So again, is your case strong? Is it for a facility or improvements taht your community badly needs? Are your volunteers committed? If so, this may be precisely the right time, because those with less urgent campaigns may be withdrawing.

Emory development officer gives key to success in economy

Randy Gorod, Director of Development of the Arts and Sciences Department of Emory University told participants at the North American Association of Synagogue Executives meeting last week in Atlanta that the key to success in this economy is to remain one of a donor’s 2-3 top prioritiies. Most donors give to a number of causes, he said, but only 2-3 are at the top of the list.

To get and keep that position, he advised maintaining strong relationships with your organization’s donors through regular communication.

Pastors to defy 501(c)(3) rules

NPR’s Barbara Bradley Hagerty reported on All Things Considered yesterday the commitment by more than 30 pastors to endorse political candidates this weekend. As the article reports, the issue is not whether religious leaders have a right to their own political views, but whether organizations that engage in political activity should enjoy the benefit of their tax exempt (and therefore taxpayer subsidized) status. As we commented in an earlier blog about political activity by 501(c)(3) organizations, we believe this activity threatens the entire bedrock of charitable tax status.

clipped from www.npr.org On Sunday, more than 30 pastors across the country are expected to preach a sermon that endorses or opposes a political candidate by name. This would be a flagrant violation of a law that bans tax-exempt organizations from involvement in political campaigns.

How to handle bad news

The NY Times reports that two groups, Acorn and Points of Light Institute, discovered embezzlement. Points of Light Institute notified Federal authorities and put a statement on its website letting the public know about the problem. Acorn kept it quiet.

clipped from www.nytimes.com Acorn chose to treat the embezzlement of nearly $1 million eight years ago as an internal matter and did not even notify its board. After Points of Light noticed financial irregularities in early June, it took less than a month for management to alert federal prosecutors, although group officials say they have no clear idea yet what the financial impact may be.

The embezzlement was discovered in 2001 and not disclosed, the Times reported, because the family of the accused, Dale Rathke, the brother of Acorn’s then-CEO, agreed to restitution in exchange for confidentiality.

Points of Light is likely to emerge in fairly good shape, we believe, while Acorn will spend years trying to overcome the scandal. When confronted with a serious problem, a public organization does better if it comes clean with its donors and supporters and takes ameliorative action.

Raising more by asking for less

This headline is a bit misleading, for reasons you’ll see, but the lesson is important. Six public radio stations in FY 07 raised more revenue by lowering price barriers to first-year members. Instead of just emphasizing high dollar amounts, they emphasized “participation” and consciously promoted their basic member rate. They increased new on-air gifts, overall on-air gifts, and on-air revenue. Moreover, they raised revenue and donors by significantly more than other stations.

At the same time, an acquisition direct mail test in DEI’s 3MG campaign the test stations to keep their ask amount at $35. The test produced outstanding results, and an A/B test of the price point at one station increased first-year donors without any dimunition of revenue.

Particularly in this economy, you can attract new donors and even increase net revenue by not pushing too hard for a high average gift. (This is not new, but perhaps stations are more willing to test such concepts in troubled economic conditions.)

At the same time, many of the public radio stations in the on-air group managed to increase high-end gifts by asking for them during the same on-air breaks. It wasn’t that they asked for less–they asked for as much as they ever had–but they also  sought basic gifts and emphasized inclusiveness.

Those organizations that make participation affordable may emerge from this economic slowdown with more donors and can then turn to donor development  that will ultimately pay off.

Managing in a Down Economy, pt. 4

In intimate conversations with major donor prospects, it is possible to be more open about financial realities—in fact, it’s preferable.

Lead with your mission—the service you are providing to your community. This is particularly valuable when you can show that you are part of the solution to the economic stresses facing your service area.

Then, be open about the steps you have taken to economize. While assuring prospects that your organization always strives to be as efficient as possible, demonstrate the special steps you have taken to ensure that you are providing maximum social return on each donor’s investment. By showing how you have cut overhead, you document that further cuts will impact service.

 

With that groundwork laid, present details on your financial situation and the consequences to the community. Remember, this conversation isn’t about you—it’s about the service you provide.

Then, listening and watching for clues as to the donor’s ability to give, it may be time to ask if they can help to preserve that service. Be specific about how they can help solve this challenge to their community.

Managing in a Down Economy, pt 3.

You’ve done your assessment. Your local economy is tanking and it is affecting your donors. How do you communicate in the midst of this turmoil? 

In this post, I’m going to emphasize the general message—what you say to the community and to your rank and file givers. In a few days, I’ll turn to the more specific messages you can send in face-to-face conversations with major donors.

In general messaging and the “mass market” part of your donor base, avoid fueling the psychological fire by making the economy the central theme of your message. (Yes, I’ve seen organizations do this.) Instead, lead with your strength, the service you provide to your community and the value you represent. Position yourself as a problem-solver, not another burden on community resources.

Emphasize not your needs, but your community’s need for your service at this time. The reason to contribute to you is not because you’re in tough times, but because those you serve are. You’re the solution. (Don’t cry poor. If your organization feels the pinch, others are too.)

Find good news where you can and  highlight it. Something is going well. Tell people about it. Like a tall peak, generate your own weather.Particularly during tough times, your givers and the community at large will welcome positive messages and be impressed by the fact that you’re doing such good things during bad times.

Managing in a Down Economy, pt 2

We continue with our series of discussions on managing and fundraising in a down economy. In our last post, we discussed the importance of making certain your organization is operating as efficiently as possible, both for the purposes of financial efficiency and appropriate donor and gift stewardship.

A second very important step is to assess economic conditions within your community and among your donors. The fact that conditions are difficult nationally does not mean that your service area is feeling the pinch to the same degree. State capitals, for instance, have proven relatively immune to economic swings, as have financial centers. One of our clients has experienced only a modest housing slowdown. This is where having a savvy, well-connected board can be invaluable in giving you high-level information about your own market.

Having gained a realistic view of your own economic environment, assess the affect that these conditions have on your donors. Foundations were severely affected by the last economic downturn, but have been less so this time—so far, at least. Due to the combined impact of the housing/finance bubble and the inflationary ripple of rising energy costs, middle class donors of smaller amounts to your organization may be particularly vulnerable. Ask yourself who is contributing to you now and how economic conditions are affecting them. Some may be relatively unscathed.

The central point is to avoid being consumed by national trends and focus on your community of service and your donors. Having done that, you can move on to minimizing damage in areas that are the most vulnerable and maximizing opportunities in those that are the least.