Next Stage - Social Impact Services

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Resource Development

3 Lessons from the Great Recession

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Hello Charlotte, how is everyone doing? No, I mean it. Are you doing okay? I hope you are.

This post is meant to make you feel better, so I’m going to state that on the front end. All of us at Next Stage remain bullish on where our community is going long-term and want to shed some light on what is happening right now.

The downward trend of the stock market in recent weeks gave me a funny feeling in my stomach that reminded me of another time in my life. I moved to the Charlotte area and found myself working for a local consulting firm for nonprofits in my fourth month on the job when February 2009 hit. The stock market crash that month sent our community hurtling. By April of that year Wachvoia was acquired by Wells Fargo and it felt like the end of the Charlotte world. It was the start of the Great Recession, and it was my introduction to crisis management for nonprofits. My current career really started then.

The next few months were sort of crazy. Nonprofit organizations went into full-on freak out mode. Most organizations ceased any sort of strategic planning or capital campaign activity. Some moved quickly to lay off employees deemed non-essential. Others took a “wait-and-see” approach that included dramatically curtailing programming, operations and fundraising activities. As the Great Recession dragged on, many of us in the consulting space learned the basics of nonprofit mergers and integrations. I remember a local leader at the time predicting that fully one-third of nonprofits would need to merge with a stronger organization in order to survive.

Fast forward a few years and… what? Did nonprofits fold in record numbers? Did the Great Recession set Charlotte back from a social good perspective by a decade or more? Was it the bloodbath that was predicted?

No. None of those things happened. In fact, Charlotte’s system of nonprofits largely rebounded and quickly. And yet, there were still nonprofit leaders in 2011 and 2012 blaming the Great Recession for their organization’s lack of recent success. It became a convenient excuse years after the worst of the Recession had ended.

Working for another firm at the time, I wanted to understand how we had survived such a rocky time in history. It was clear some organizations had fared better than others and my assumption was that innovation must have played a role. I called it the Charlotte Nonprofit Innovation Study, a grandiose completely unfunded and under-resourced investigation into WTF happened. We got some graduate students from UNCC Charlotte to help us and I enlisted my colleague Ally Yusuf to dig through the 990 forms of a representative sample of 150 local nonprofits. We studied 60 data points across five years of 990s (2007-2011) to identify organizations that fared best during the Great Recession and those that underperformed.

Here are the key takeaways:

  • Charlotte kept giving. One of the bigger findings was that charitable giving in Charlotte did not take a very big hit in 2009. There was a modest dip in giving (less than .5%) in 2009 over 2008. But in 2010, there was more giving than in 2007, a year that was considered by most the gold standard for giving in our community. And by 2011, our representative sampling of organizations was raising millions more than they had in 2007.This was a particularly interesting data point as we deliberately included the United Way of Central Carolinas (UWCC) in our data set. For those who were not around then, UWCC had fared the worst as the Great Recession set in, raising 50% less than they had in their largest years. Having taken a $20 million loss into our assessment, it was amazing to see the generosity exhibited by our community.
  • The organizations that fared best were those with strong marketing and fundraising engines. The organizations that cut back on their resource development teams fared worst. The organizations that were still complaining about the Great Recession in 2012 tended to be the organizations that had temporarily laid off the only staff members focused on constituency growth and revenue development. And that trend included safety net and other organizations alike.
  • Best practices work. We hoped to find a smoking gun of innovation that suggested survivability was linked to fresh, new ideas that would lead to a set of dramatic new learnings for our community. I mean, we called it the Innovation Study for gosh sakes. And instead? Boring old best practices. The organizations that thrived invested in marketing and relational fundraising when others pulled back, fearful of being out-of-step with the community.

The data suggests that the organizations that thrived essentially took market share from the organizations that did not. While there was more charitable support put forward in the years after the Great Recession hit, the organizations that thrived grew substantially. It became a very clear “haves” and “have-nots” situation. The data was sort of stunning.

It is said that insanity is doing the same thing over and over and expecting a different result.

So here we are in 2020 facing a similar and yet quite different event. Unlike the Great Recession, which took months to slowly reveal itself, we have all been dramatically introduced to the new normal in spectacular fashion. We are having a moment. Pundits suggest that the stock market will roar back to life once we tame this virus, and I certainly want to fan the flames of that sort of thinking. But while we hunker down in our homes, I see people struggling and in need. I’m observing people trying to figure out how this disruption will play out in real time. Main Street is struggling as Wall Street yo-yos. It’s that funny feeling in my stomach again.

As a firm, we have jumped in the deep end on community response because we feel it is our duty to do so. We want to be a stabilizing force, sharing our insights and working shoulder-to-shoulder with our partner organizations who were mid-stroke on moving forward ambitious agendas. We also understand the crisis leaders are struggling with and aim to make sense of the chaos with them.

Looking back to the Great Recession, we think there are some important learnings there. I hope we can learn from our past mistakes.

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A Formula for Fundraising Success During COVID-19

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One upside to the coronavirus (did I really just type that?) is reconnecting with current and past clients. I’ve enjoyed the check-in calls with friends new and old over the last few days. Most have had a theme. Can you guess it?

Yes, fundraising is on the mind of the leaders of nonprofits across the country. Some organizations had to cancel their most important fundraising event. Others worry that their missions will be forgotten as we turn our attention to the human need all around us.

Over the weeks to come, the Next Stage team will be sharing practical insights on many aspects of the nonprofit business model with a particular emphasis on fundraising tactics. But if I had to boil effective fundraising in the era of COVID-19 down to three essential steps that any organization could implement, it would be these:

Establish Your Narrative
We all spent last week and this sending out communication to our constituencies outlining how coronavirus was disrupting our operations. So now what?

It is essential your organization find a way to interpret the state of the world through the lens of your mission. Health and human service organizations certainly have an easier time of this as their missions are directly impacting people in need as a result of the pandemic. But all sorts of organizations can tell stories that illuminate the vitality of their missions. It might just take some creativity.

Getting contemporary to the world as it is will be essential to maintaining relationships with constituents and building value. So yes, that might mean shelving the podcasts that were recorded before the outbreak or limiting the canned social media posts that seem disconnected from reality. Our own post just a week ago with ten tips for springing forward feels way out of step with current realities.

Tens of thousands of local people are sheltering in place right now. What do you have to say to them? What is your organization’s coronavirus narrative? If you don’t have one, you better get one.

Find Your Voice
The most important component to successful fundraising during a crisis is having courage and conviction. Period. Full stop.

I’ve heard from a number of people this week who have stated something like “no one will want to give to us with all of this going on,” and I can state unequivocally, “not with that attitude they won’t!”

Do you believe your mission is worth funding? That isn’t a rhetorical question. I’m seriously asking. Because if the answer is yes, then I wonder what has changed about your case for support from last week, last month or last year.

COVID-19 and an economic slowdown shouldn’t shake you (and your staff, and especially your board) from a fundamental belief that your mission is deserving of support, even now. Philanthropy needn’t be so binary. Supporting the safety net is critical, but so too is advancing your efforts, whatever they are. Now is the time to turn on that confidence. Donors can sense win you don’t.

I am working on a post for Monday that will shed a light on this topic pulling from research conducted about the five years from 2007 to 2011 in Charlotte. Stay tuned for that.

Execute Your Plan (And You Need a New One)
If you were quiet earlier this week, you could hear the sound of development professionals across the country shredding what was left of their fundraising plans for the rest of the fiscal year. For organizations that end on June 30, that means you have 3.5 months to meet goal.

You need a new plan. And not just minor edits to what you were already planning to do. You likely need to rethink everything including the message, delivery vehicle, solicitation construct and method of acknowledgement. Your team of staff and volunteers needs to be on the same page and working collaboratively to make it happen.

No one expects that this plan was already in place. Messaging this week has been fairly light and with good reason. People have been adjusting to the new normal and have been distracted. But it won’t be like that forever. Hours spent sheltering in place should be an opportunity for building a new and different resource development plan to sustain your organization through the next 3-6 months at least.

Yes, a three-step process, but not so easy. Let us know if you need our help to realize any or all of them.

So Your Event Was Cancelled, Now What? 

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Galas, walks, golf tournaments, luncheons – our email inboxes were filled last week with cancellation after cancellation. I’ve had to cancel or disrupt several events for weather and I once had to shut down a charity walk trail because deer jumped on the path, knocking someone down and breaking their tailbone. Global pandemic is a new one and likely not in any contingency plan you’ve ever written (bonus points if it is – I want you on my team!). 

These events often represent a large part of your annual budget and many leaders are wrestling with the best way to move forward and minimize negative fundraising impact. Should you cancel or reschedule? Go virtual? What should you communicate to donors? Should you make an online ask? There aren’t easy answers or 3-step plans for this scenario and the right solution is going to look a little different for every organization. Here are some tips and resources to help guide your decision: 

Consider an online event or livestream: 

Some events, such as SEED20 have already moved their events to a livestream format. Key considerations include whether your content easily translates to an online format (luncheons could work well, while golf tournaments, not so much!), whether your attendees feel comfortable navigating an online format, and if you have access to the right technology to create a high-quality online experience. Eventbrite posted some great tips for moving a live event online and evaluating whether you have the right technology. 

Switch to a virtual fundraising day: 

This option works especially well for peer-to-peer events such as runs and walks and many organizations already utilize a virtual option for participants. You can set a specific time for your participants to do a run or bike ride on a treadmill or around their neighborhood, then post photos with their fundraising ask. Here are some examples of existing, successful virtual events. This not only helps support your fundraising, it creates community at a time when everyone still wants to feel connected to each other and their cause. 

Tell your story: 

The most critical part of any event is the way you share your story and mission with donors – and this is something that even pandemic and cancelled events can’t take away. Our brains are wired for story and this is what most often compels someone to give. You may have to reschedule your event, but you can still launch a campaign that communicates the importance of your organization. Food security, access to housing, healthcare and digital access are just a few areas heavily impacted right now and it is a great opportunity to communicate your mission.

Share stories about how the current crisis is impacting your clients. Invite people into your mission by communicating what you are doing about it – and how they can help. The Urban Ministry Center, Urban Promise Charlotte and many local schools have already done a great job of mobilizing their donors with a specific ask that meets the needs of their community this week.  

Most importantly – don’t panic! Cancelled events cause uncertainty and sadness, but it also creates opportunity for innovation and for your community to rally like never before.