David Lamb, Consultant, Target Analytics: A Blackbaud Company

BROTHER, CAN YOU SPARE A $MILLION?

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Brother, Can You Spare A Dime?Once I built a railroad, I made it run,

made it race against time. Once I built a railroad; now it's done.

Brother, can you spare a dime? Once I built a tower, up to the sun, brick,

and rivet, and lime; Once I built a tower, now it's done.

Brother, can you spare a dime?lyrics by Yip Harburg, music by Jay Gorney

(1931)

The Worst of TimesMortgage crisisBanking failuresCollapse of the automotive industry8.1% unemploymentGovernment bailoutsWar and disaster

What Is The Economic Reality?

Source: Justin Lahart, Wall Street Journal, 3/30/09

What Is The Economic Reality?Recession = two successive quarters of negative

a decline in GDPOther recession factors considered by the

National Bureau of Economic Research Industrial output Employment Income Sales

Recession officially started in December of 2007 as determined by the NEBR

Slowdown = lower than average rates of growth in personal income 40 year average income growth is 3.3% If growth is 2.9% or less (90% of average), economy is

in a “slowdown”

What Is The Philanthropic Reality?

Source: Giving USA Spotlight, Issue 3, 2008

Giving rose or remained stable in 9 of 15 years with at least 1 month of recession

What Is The Philanthropic Reality?

Source: Giving USA Spotlight, Issue 3, 2008

What Is The Philanthropic Reality

Different sectors feel the effect of economic conditions differently

Org type Overall growth During recession During non-recession years

During years with 8 moths or more

of recession

During slowdowns

Religion 2.00% -0.10% 2.80% 1.40% 2.60%Education 3.10% -1.10% 4.60% -1.90% -0.50%

Human Services 2.30% 0.70% 2.90% 5.00% 0.30%Healthcare 2.30% 0.50% 2.90% 1.90% 0.90%Arts Culture Humanities

4.00% 1.90% 4.70% 2.30% -3.10%

Giving Growth from 1967-2007

Source: Giving USA Spotlight, Issue 3, 2008

What’s The Prognosis For Philanthropy?The economic events of 2008 are unprecedented

in their negative impact on the economyHistorically, the three toughest periods for

philanthropy were the Great Depression, the 1970s oil embargo, and the terrorist attacks of 2001.

In tough economic times, giving drops, but doesn’t stop

The annual fund may suffer through the recessionSome planned gifts may become more popularGifts of stock are less attractive to donors, but…Major givers are still out there

Bank of America High Net Worth Philanthropy Study

Average charitable giving increased for all wealthy households except those earning >= $5 millionWealthiest households gave 9.7% less in 2007

than in 2005Drop in giving had greatest impact on arts

organizationsIncreasing popularity of donor advised

fundsBequests and planned giving important gift

vehicles

Major Gift MotivatorsTop motivators

Give back to the communityLoyalty to causes/organizationsSocial beliefsMake a difference

Least motivatingCareer & business interestsPublic recognitionPeer pressureFamily legacy

Source: BofA HNWP Study, 2008

Donor Expectations

Source: BofA HNWP Study, 2008 “factors ranked as important when making a gift”

What’s A Fundraiser To Do?Keep communicating with your best

prospects even if they stop or reduce giving

Focus on the missionKnow your donor populationProspect wiselyDiversify your outreachDemonstrate good stewardship

Communicate, Communicate, …

Don't stop askingMake giving as easy as possible - make sure

all barriers to giving are removedLet donors know you're using their dollars

wisely This might be a good time to do a

constituency survey

It’s The Mission StupidMake the case for giving

Your mission is more relevant now than ever beforeRemind them of the consequences of not meeting your

missionWho will suffer, go without, be worse off than they are

today?Show the impact of your work on the life of an

individual Show the impact of your work on the communityPeople who really care about your work and

mission try to find a way to help

Segment, Segment, SegmentThis is a good time to analyze your database to

identify the characteristics of your best donors Wealth, interest, and linkage are givensWhat other characteristics are statistically

significant?Let the characteristics of your current MG donors

help you find new prospects

Statistical ModelsCan measure propensity to give and/or propensity

to give at a certain levelNot all variables that seem like they should be

correlated with giving actually areVariables that are significantly correlated to giving

are not all equally influentialNeed statistical software to measure strength of

correlation and properly weight variablesFor do-it-yourself models, consult Josh Birkholz’s

book, Fundraising Analytics: Using Data to Guide Strategy

Various vendors and consultants can create custom models for you

Major Gift StrategiesGood prospect research is more important than ever

Doing your homework Knowing the right amount

Prospect among people in “recession-proof” businesses

If the donor refuses to make an outright gift, be ready with alternative scenarioLonger pledge periodsPlanned gift opportunity

Donors who made pledges prior to the start of the recession will probably still honor their commitmentMay ask to extend the number of years to payMay ask to make smaller payments early and

accelerate payments after the recession lifts

Death & Taxes: Recession-Proof BusinessesSome of the most recession-proof businesses may

not be ones you think of as the most lucrative Funeral homes Tax accountants Waste collection Debt collection Consignment stores

Others are more obviously profitable: Healthcare Alternative energy Rental property owners Grocery Software as a service (SAAS)

SaaS Example: Omniture

Finding Rising IndustriesGo to

MarketWatch.comSector IndexesBest and worst

industries sort differently depending on the time frame selected

Base your research on data, not guesses

Industry Comparisons

Ways To Use Sector Index InformationTop down

Use a vendor like Dialog, LexNex, or Standard & Poors to create a list of local companies in top performing industries (use SIC or NAICS code)

Obtain names of top officers in those companies and compare to your constituency

Bottom upPerform a vendor-driven matching process of

people in your database who have corporate affiliations

Filter those corporations by top performing SIC or NAICS codes

Corporations And FoundationsMany of the same prospecting principles

for finding MG prospects pertain to finding corporate donors

Much corporate “philanthropy” comes from the advertising budget

Foundation portfolios have been heavily hit by the banking collapse Many foundations are maintaining or

increasing funding level despite portfolio losses

Expect smaller grants from small and family foundations

Planned GivingPlanned gifts that become more attractive in

a recessionAnnuities

Guaranteed income streamRates set by actuarial tables, not market rates

Bequests & revocable planned gifts56% of wealthy donors now have a charitable

bequestCould be 93% by 2010

Source: BofA HNWP Study (2008)

A prospect for an outright major gift can be – and often is – a planned gift prospect as well

Planned GivingCampbell & Company survey (2007)

Age when people make bequest decisions30% of respondents between 40 and 60 told

researchers that they would consider a bequest15% of people in their 70s to 90s said they would

consider a bequestConclusion: Market bequests to loyal donors,

even if gifts are small and even if comparatively young

People who have named charities in their will often give more in annual gifts

35% of people with charitable provisions in their will have at least one graduate degree

Diversify Your OutreachSeek creative ways to engage your populationSocial networking media provide a new

relationship building strategyFaceBookMySpaceTwitterSecondLife

See the March, 2009 edition of FunraisingSuccess Magazine (www.fundraisingsuccessmag.com)

Stewardship Is More Than Just A “Stage”

During a recession, it is more important than ever to thank your donors

Recruiting a new donor is much more expensive than retaining existing donors

When the economy improves, donors are more likely to resume giving to orgs that have stewarded their gifts well

Stewardship Is More Than Just A “Stage”

Update donors on what their gifts have done for the cause or the community

Be strategic with your stewardshipBig gift donors

Donors whose potential is big, even if they didn’t give at their potential

What Not To DoSpecial events

In lean times, donors would rather see their money go to the program rather than a glitzy event

For necessary events, look for low cost options that focus on substance and mission

Donor acquisition People will be less likely to support unfamiliar

organizationsWork on re-engaging lapsed donors and

energizing top performing segments

What Not To Do

Across the board staff cuts The economy will eventually improveRe-staffing and training could take six

months to a year. Cutting back on stewardship and

donor relations activities

The Best Of TimesThe best time to raise money is when you need itOrganizations that continue to raise money

during a recessionHave a sophisticated prospect management in placeHave a diversified constituencyCommunicate effectively through print and

electronic meansThe reasons’ people give don’t change during

recessionMissionLeadershipInvolvement

Questions