ARTICLE
How Nonprofits Can Weather An Economic Crisis
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“It’s not what happens to you, it’s how you respond to it.”
— Epictetus, Greek philosopher
How you define the problems facing you matters, because it affects how you respond to it.
There are two basic ways to define the largest problem most nonprofits face during an economic recession:
- Expenses are too high.
- Revenues are too low.
If you frame your problem as overspending, you’re apt to cut expenses.
What happens as a result?
If you cut program expenses, you let down those who rely on you. This puts your core mission in jeopardy. You also have less of a ‘case for support’ fundraisers and marketers can promote in order to generate contributions.
If you cut fundraising and marketing expenses, you’ve got no one to sell the programs that will generate income – earned or contributed.
Sometimes organizations cut expenses with a pretty heavy hand, especially in the heat of the moment. Pencils are sharpened, green visors are donned, and the slashing begins. It seems prudent at the time, and it erases the red ink on your budget spread sheet. This looks good at first blush.
However…
Before too long, the blush begins to fade.
You may find you’ve cut off your nose to spite your face.
CASE EXAMPLE: In the 2008-2009 recession I worked somewhere that, under the direction of the board of directors, sharpened their red pencils and proceeded to diligently cut much of the heart out of the programs. All that was left were the biggest money-makers and the programs serving those who couldn’t afford to pay full fees were pretty much kicked to the curb. This balanced the budget for the short-term. But the organization began hemorrhaging donors because the programs they’d been supporting no longer existed. Plus they cut fundraising staff, so there were less folks to sustain donor relationships. The result? Much ill will was created. It took many years to restore programs supporters cared about and win donors back to the fold. Some losses were never recouped.
If you frame your problem as insufficient income, you’ll begin to brainstorm ways to drive new revenues.
What happens as a result?
If you’re able to find new revenue sources, you balance your budget without sacrificing the types of programs and services on which your constituents rely.
This doesn’t necessarily require finding brand new donors. It may mean approaching existing supporters differently. Perhaps by:
- Prioritizing and segmenting donors to maximize your fundraising potential.
- Ramping up your monthly giving program.
- Adding peer-to-peer strategies.
- Adding additional, specifically targeted direct mail appeals.
- Becoming more aggressive with online fundraising.
- Meeting virtually with major donor prospects.
- Asking for special gifts from major donors.
- Turning fundraising Galas into virtual events.
- Becoming more strategic with suggested ask amounts.
- Using psychology and neuroscience-based tweaks.
- Reworking your website home page and donation landing pages to be more direct, donor-centered and user friendly.
- Using a lightbox to call attention to any crisis campaign in which you may be currently engaged.
There are multiple ways to pivot. Of course, this means hard work. You probably can’t do it all at once. But you do want as many hands on deck to help as possible.
This means board members stepping up and owning their responsibility to help with fundraising. It means staff letting go of strategies not possible given today’s circumstances, and going the extra mile to re-invent. It may mean hiring new staff, redeploying existing staff, or bringing in freelancers or consultants to develop new strategies that will prove equal to the task of current revenue generation.
Asking more brings in more money than asking less.
CASE EXAMPLE: Even in non-crisis periods it’s not uncommon for leadership to put the kibosh on sending numerous (aka ‘enough’) appeals. In 1995 I worked somewhere where I was forbidden to send more than one appeal/year to donors who’d already given. I could make second and third attempts with non-donors, however. One year, inadvertently, the entire mailing list – donors included – was sent to the mail house on our third attempt. Uh, oh! Was I in big trouble? I might have been, however what happened as a result changed the course of our mailing strategy forever after. Current donors gave second gifts – in droves! – resulting in significantly more income than the non-donor portion of the list. If we hadn’t asked, this money would have been left on the table. Or, as hockey Hall of Famer Wayne Gretzky is known to have said, “You miss 100% of the shots you don’t take.”
Begin with the ‘why.’
Rushing to address a problem, without analyzing why you face this problem, may result in attacking the symptom rather than the root cause.
Sure, expenses may be high. Why is that? Top heavy management? (Something you can slash). Or the fact you’ve sourced the best talent to grow your programs wisely to meet existing – even growing – needs? (Something you shouldn’t slash). Maybe you desperately need to keep your talent in order to sustain your success up to this point.
Sure, revenues may be too low. Why is that? You’re maxed out on contributions? Or lack of will and courage to find ways to further grow philanthropy? Maybe you need to step out of status quo mode, comfortable as it may have become, to move forward successfully in today’s environment.
I like to go through an iterative process of asking why, why, why, why…. until I’ve exhausted every question and come to a logical end. Why is this the problem? If this is true, why is it true? If that is true, why is that so? If that is so, why is that the case? Until you get to the root of the problem.
Addressing single symptoms is risky because the one you select may be just one of many.
It’s like trying to cure pneumonia with a Kleenex. You’ll end up going through boxes and boxes of tissues, and still be sick. And no closer to a real fix for the problem. In fact, the problem may worsen because you’ve delayed in getting to the heart of the matter.
Beware the elephant in the room.
Problems often boil down to perceptions.
Most problems are like the story of a group of blind men who have never come across an elephant before and who learn and conceptualize what the elephant is like by touching it. Each blind man feels a different part of the elephant’s body, but only one part, such as the side or the tusk. It’s easy – and dangerous – for each individual to jump to a conclusion about what the elephant is based on their perception.
Don’t jump to conclusions!
Begin with the why, and know where you’re going. In the elephant story, the place they wanted to get to was a holistic view of the entire elephant. They weren’t going to get there by only looking at little, isolated pieces of the view. To use another metaphor, even a good GPS or road map is useless unless you know where you’re going. All the roads can be correctly drawn, but they still won’t get you to where you want to be. The same holds true for a fundraising strategy. For example, you can have the most well-written, best-designed email appeal in the world, but it still won’t raise money if your donation landing page is generic and/or difficult to use.
Find your real problem through a collaborative process.
Whose problem is it? Ever stop a children’s fight and ask them what it was about? Generally you’ll get something like: “He hit me and I fought back.” “No, she started calling me names,” etc. The objective in collaborative problem solving is to get to agreement on the common statement of the problem. Here’s my best advice to assure you’re headed in the right direction, and solving the right problem.
1. Stipulate that problems aren’t ‘bad’.
They’re a fact of life. Change occurs and change requires responses. Don’t be afraid of problems, don’t ignore them and don’t try to gussy them up by calling them something else. One technique is the “best, worst and most probable’ scenario”. When folks are resistant to addressing a problem, ask them what’s the best, worst and most probable thing that will happen as a result of solving/not solving the issue. The perceived upsides, and sometimes terrible downsides, will often persuade folks to get the ball rolling. Since the elephant in the room is real, it’s wise to deal with it!
2. Legitimize problem perceptions.
Ask everyone to state their personal view. Don’t judge at this point. If there’s a lot of dissonance, try discussing how folks feel about their perception of the problem. If Anita says “There’s a problem with productivity,” Donny may feel threatened he’s going to have to work longer hours. If Anita understands how Donny feels, she can rephrase the problem. Once everyone has stated their viewpoint folks can begin to see the commonalities, or lack thereof.
3. Rephrase the problem.
Words carry meaning and play a major role in how we perceive a problem. In the example above, let’s say Anita instead asks the group to figure out “ways to make people’s jobs easier.” She’s likely to get a lot more suggestions. Similarly “How can we increase donations?” is very different than “In what ways can we provide more benefits to our donors?” They are phrased from different perspectives. Also, the latter phrasing suggests a multitude of possibilities, rather than one right answer.
4. Get a working definition of your problem.
Don’t narrow the problem prematurely. Once you’ve clarified perceptions, the next step is to say what the problem is and isn’t. If your car stalls, you can’t jump to the conclusion it’s an engine problem. Similarly, if you start working on “What new programs can we offer” you’ll rule out possibilities you might have explored if you’d defined the problem as “Which existing programs lend themselves to tweaking into a virtual experience.” Building a completely new program excludes the possibility of converting existing ones.
5. Make the problem engaging.
If it’s fun, it’s like a game and folks will want to play. “Increasing donations” is boring. “How can we wow our donors” is challenging. “How to create a Facebook page” is boring. “How can we engage meaningfully with our constituents is exciting. Plus, it doesn’t close off other solutions (maybe Facebook is not the only answer).
6. Reverse the problem.
If you’re really struggling with defining your problem, try turning it on its head. Whatever you want to win, try figuring out what would make you lose. For example, if you want more donors to increase their donations ask yourself what would cause them to not give. “Not asking donors to increase their gifts” may seem obvious as a reason folks wouldn’t do so, but sometimes different obvious answers emerge when you approach it from a different direction. For example, your case for support may appear so irrelevant that even were donors to be asked they wouldn’t give. Or your donation page may be clunky, causing folks to abandon the process midway through. And so forth.
The largest problem you face may simply be poor problem definition.
“If I had an hour to solve a problem I’d spend fifty-five minutes thinking about the problem and five minutes thinking about the solution.”
— Albert Einstein
Einstein understood before you can solve a problem you must first properly define it. Otherwise, you’re apt to solve the wrong problem. Sadly, this happens all the time. Please don’t let it happen to you. You’ll spin your wheels, waste resources and generally frustrate yourself. And you may, inadvertently, end up with a much larger problem. One that costs you more in terms of human and financial resources. And one that lasts longer. Sometimes, much longer.
Take the time to clarify and understand the problem(s) you face. The root problem, not the symptoms. Then you can move forward with confidence to find your best money-raising strategy.
That’s my best advice, crisis or no crisis.
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