As of the end of the third quarter of 2022, the stock market had dropped close to 33% in value for the year. Inflation has been hovering above 8% and internationally the conflict in Eastern Europe has not helped to calm the markets. Times of economic uncertainty or instability affect donors in different ways. Smaller donors may find it harder to make gifts when they have to spend what used to be expendable income on increased gas and food prices. They may, however, decide to include your organization as the beneficiary of a planned gift in order to show their support when they may not feel as liquid. Bigger donors may begin to feel less wealthy as their investment portfolios decrease in value. They might, however, decide to make a gift of stock to your organization, which provides tax benefits and could allow them to purchase new stocks at a lower basis point. Donors have historically continued to give charitably during difficult economic times but it’s important for non-profit organizations to be able to meet donors at the different points during their life cycle if they want to develop strong and sustained relationships with these generous donors.
Small and Entry Level Gifts
The first gift a donor makes to an organization is typically a smaller gift no matter the financial capacity of donor. It is just common sense that most people wait to make bigger gifts to organizations until after they get to know the mission and impact that their giving supports. Timely and accurate thank you letters are crucial and will separate you from so many organizations that don’t have an organized and timely acknowledgement process. Once a gift is received donors should begin to receive regular communications about the impact of their giving. Organizations should have a strong communications schedule that includes direct mail, email, social media and in person engagement. By doing so, as soon as a donor makes a gift they will immediately have a sense of what their gift is helping to achieve. More advanced organizations will send a welcome package and include the donor in a giving circle that makes them feel a part of a community.
Events are a time tested means for raising funds and can attract donors of many different sizes. Charity races or picnics can draw lower level donors while also offering opportunities for major donors to sponsor. Galas and charity auctions tend to be geared towards major donors and are wonderful ways to recognize donors and highlight the impact of your work. Smaller, more exclusive events tend to be limited to major donors and can provide for some of an organization’s biggest solicitations. No matter what kind of event fits your organization, it is important for planners to target the right attendees and plan for deliberate interactions during the event. Once the event is over, attendees should be added to your organization’s communication plan to ensure that they stay engaged in your work and possibly continue their support outside of tickets or event sponsorships.
Major Gifts mean different things to different organizations. A local food bank may consider a $1,000 gift a major gift whereas the American Heart Association or a major university may designate a $50,000 or higher gift to be major. The definition of a major gift is for each organization to decide but once that designation is determined, those donors should be stewarded in a special way that sets them apart from the rest of your donor community. The old adage in fundraising is that you raise 80% of your gifts from 20% of your donors (and in some campaigns that could even be 95% from 5% of your donors). Therefore, in order to ensure that major donors make those gifts and continue to grow in their giving, these donors should have a designated staff member or gift officer that engages them on the phone or in person throughout the year. Smaller organizations will need to depend on their leadership to multitask and be gift officers while also running the organization. Larger organizations with more mature development offices will have gift officers assigned to every major donor. Whatever the size of your organization, by increasing your community of major donors you will ensure the continued growth and impact of your work.
If your organization is receiving planned gifts then you can take pride that you’ve built a donor centric development program. Only the most loyal benefactors decide to leave an organization in their will or trust. Planned gifts will often be a donor’s largest gift so promoting them with donors at all stages of the donor life cycle is key. For small and direct mail donors it is good to focus on donors who are recurring givers or have given for three or more consecutive years since loyalty is the best indicator of potential planned gift. All major donors should be encouraged to consider planned gift commitments as they tend to be planners and will likely have set up a will or trust already. Planned gifts are an important part of capital campaigns and can also be recognized at public events. When we thank donors publicly, it brings them closer to our organization and can inspire others to follow their lead. Finally, as mentioned before, during tough economic times a donor who may not be able to make a current gift can still give your organization a shot in the arm by making a planned gift commitment.
The current economic environment will present a number of challenges for charitable organizations. For those organizations that have a one-dimensional development department it may be harder to ride the wave of financial uncertainty. Those organizations, however, who understand the life cycle of their donors and have development strategies that respond to these different stages will find that they are more prepared to handle the unexpected ebbs and flows of their donors’ circumstances. By doing so you will be prepared for these difficulties and use them as opportunities to strengthen relationships as those donors continue to support their efforts both now and in the future.