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Fund-raising finesse.

Philanthropies Beat The Bad Times With Better Campaigns.

It wasn't long ago that the Bush Administration acknowledged the U.S. economy was in a recession, and already some economic indicators hint at better days. Yet for fund-raising professionals in many philanthropic organizations, the recession has not been a time to pull back and wait for the downturn to pass. Instead, it has provided them a challenge to sharpen their skills, focus their efforts, and be more aggressive in their campaigns.

Many nonprofit organizations are reporting strong fund-raising results. This should not be surprising, given a historical perspective. In the six recessionary periods since World War II, charitable giving outpaced inflation and grew at an average rate of 6 percent in current dollars. During the recession in 1982, giving increased 7.6 percent over the previous year. The record shows donors respond to fund-raising appeals even in difficult times.

Good News and Bad

Recession does not take an equitable financial toll: Some regions and families are hit hard while others are not affected at all. "During a recession people become more aware of human needs - they become more generous and more caring," says Ron Carroll, executive director of the National Capital Area Council of Boy Scouts of America, Bethesda, Maryland. "In these times, people step forward to do what they can, especially those not adversely affected."

The Christian Appalachian Project, Inc., Lancaster, Kentucky, which operates in Appalachia to reduce problems caused by poverty, has not seen the effects of recession on its fund-raising income. "People continue to support our work even if they are hurting themselves," says William A. Begley, CAP's vice president of development. "They dig a little deeper and may not send as much, but more people are giving."

On the other hand, Chris Cleghorn, vice president of direct mail marketing at the National Easter Seal Society, Chicago, observes that while giving by prior donors has dropped only a little, prospects for new donors are more bleak. "Loyal supporters will stay loyal," he says, "but it's harder to find new supporters." The same phenomenon is apparent among Easter Seals' business supporters; giving in general grew during the past year, bu establishing new corporate connections was difficult because the for-profit world is suffering, too.

Institutions that rely heavily on corporate donations are feeling a pinch. "Segments of the economy that have been generous in the past have been seriously impacted by the economy," notes Clinton Fields, executive director of Friends of the national Zoo (FONZ), Washington, D.C. The zoo's annual gala depends heavily on $1,000-plus contributions from banks, real estate firms and law firms. In 1991 "many were up front and told us they frankly could not afford to participate," Fields says.

Cultural institutions are particularly vulnerable to recessionary pressure, says Ed Able, CAE, executive director of the American Association of Museums (AAM), Washington, D.C. "People are made [more] aware of social problems and human needs by the media, and we must compete with the whole charitable community."

Not only are individual contributions to museums down, but government funding is dwindling as well because the government tends not to look at the arts and humanities as essentials. "Twenty nine percent of the states are proposing cuts of 50 percent or more in funding of arts and humanities," Able notes.

War's impact

Last year's double whammy of recession and war has had different results for different organizations. Elaine Binder, CAE, executive director of B'nai B'rith Women, Washington, D.C., observes a kind of national paralysis. "People are concerned that their financial situation could be [quickly and dramatically] altered," she says.

During the weeks of round-the-clock news coverage of the war in the Persian Gulf, CAP's Begley saw a drop in fund raising income that he feels may be attributable to people simply ignoring their mail, leaving direct mail appeals unread and unanswered while they followed the war's events. On the other side of the coin, public radio stations enjoyed a tremendous influx of support during the short war period. According to Barry Forbes, director of marketing for The Development Exchange, Inc., Washington, D.C., "Public radio stations are riding the crest of awareness because of the Persian Gulf War. More people came to depend on public radio for a thoughtful review of events."


Nonprofit organizations that decided to whether the recession by cutting back on fund-raising activities may find themselves running far behind as the economy improves. Max L. Hart, director of direct mail for Disabled American Veterans, Cincinnati, went out to leaders in the fund-raising industry in January 1991 to get a reading on what other organizations were planning in light of the recession and postal rate increases.

"Down the line they all said they were not concerned about postal increases or recession, and that it would be business as usual," Hart says. "I'd love to see others pulling back - we would be out there with less competition - but I just haven't seen it."

The Development Exchange's Forbes strongly recommends "ZBD" - zero-based development - to his public radio clients. "While they are in a short-term panic now over state and university funding cuts, I urge them not to cut back on marketing," Forbes says. "They need to be developing long-term strategic plans, investing in donor cultivation and customer service activities that will provide long-term support. Public awareness of an organization gained now will outlast the recession."

The issue of recession is viewed as a short-term problem at Easter Seals. "We look at fund-raising as a long-term activity requiring a long-term strategy," says Cleghorn. "Our philosophy is not to make short-term adjustments that may alter long-term relationships."


As much as anything, recession causes fund-raisers to do what they do better. "We have to be much more aggressive and much more direct in our appeal," says Binder. "Everyone's getting more mail, so we need to be more clear, crisp, and direct. B'nai B'rith Women has developed a strategic plan that's more focused on [the public's] concerns about the emotional health of children and youth, and this has been reflected in our message. The recession has caused us to tighten our focus, so we will emerge considerably strengthened."

Museums' new emphasis is public "ownership," AAM's Able notes. "The public must be educated that museum collections belong to them. If the public cares, they will step into the breach and support museums, or they risk irreparable damage to the collections those museums hold in trust."

Planning pays off

Anticipation of and planning for the recession has given many nonprofit organizations a boost. The Children's National Medical Center, Washington, D.C., had record fund-raising success. "In our strategic plan, we counted on receiving less from real estate companies and banks, and looked at a new audience mix to generate new dollars," says Gary Deverman, assistant vice president, development.

In seeking different pockets of money, the hospital found great success in cause marketing. Cause marketing partners a nonprofit organization with a for-profit company. For example, the company might offer a special product that is connected with the nonprofit group and share part of the profit from sales of that product with the nonprofit. "There are more dollars available on the advertising side of most organizations, and we felt we could go after them in an appropriate way in line with our mission," Deverman says. One such program is the Bell Bicycle National Safe Kids Campaign, which raised more than $100,000 for the hospital from the sales of bicycle helmets.

As part of its annual matching campaign, Children's worked with companies in the Washington, D.C., area. The firms matched the donations their employees made to Children's, up to a certain amount. Children's then advertised the campaign through a Washington Post newspaper column and reached an all-time record for this income source. "Fund-raisers need to spend time thinking creatively," Deverman counsels. "Ask who will be impacted by the recession and who will not; then develop a new mix of programs."

Donor involvement

One of the best strategies in a recession is to take care of your best donors. One-on-one solicitations and more personal mailings are among the ways nonprofit organizations are maintaining strong relationships. Fields reports that a recent telephone survey of FONZ members revealed that while people are cautions in a recessionary economy, they have a certain amount of disposable income for philanthropic causes and they are making choices. He found that people are looking for high value from their selected contributions and are questioning the affordability of membership in many nonprofit organizations.

In line with this, FONZ's winter campaign featured a 10 percent discount on memberships and increased the member discount on zoo merchandise from 10 percent to 20 percent. FONZ has also changed the tone of its fund-raising communication. "While many organizations depend on the |feel good' motive for giving - and this is still a strong motive - we are saying |this is a good cause and this is specifically [the reason] why you should feel good,'" Fields explains.

The American Institute for Cancer Research (AICR), Washington, D.C., set up a toll-free nutrition hotline for donors and the general public. Research indicates the institute's donors are eager to become better informed about diet and cancer issues, and the hotline gives callers the chance to consult with a registered dietitian on nutrition questions. In conjunction with AICR's other member services the hotline helps strengthen donor ties to the institute.

The National Capital Area Council of Boy Scouts of America is getting its volunteers involved in budgeting and program planning. "In the past, we've had five or six volunteers involved in budgeting," says Carroll. "This year, we are starting at the grass roots to get more than 100 volunteers into the process. We want them to become enthused, to buy into the program, and to increase their commitment to raising the money required. These 100 will become sales-people of our priorities."

Budgeting in a recession

Philanthropic organizations know how to tighten their belts in times of financial distress - trimming budgets, deferring nonessential purchases and programs, and tapping reserves when necessary to provide essential services. The United Way of Metropolitan Tarrant County in Fort Worth, Texas, has been facing a revenue shortfall of more than $2 million because of the layoff of thousands of local workers in defense-related industries. To make up for this shortfall, President Jerry J. Jirik says the group has been reducing allocations to agencies an average of 7 1/2 percent, with each agency considered on a case-by-case basis according to its financial need and to the public's need for its services. The organization is cutting back its own operations, using two thirds of its reserves, and committing virtually all of its venture funding to balance its budget.

At the same time, this local United Way is planning to step up its fundraising campaign. "Our message for the entire community is |Working Together We Can Work Wonders,'" Jirik says. "This positive message strategy will communicate that United Way is even more valuable in difficult times." The organization is also broadening its outreach to include retirees (through their former employers), school district employees, and small business. It will recruit volunteers and provide training on campaign effectiveness techniques.

Other nonprofit organizations facing less severe constraints are nonetheless taking a hard look at budgets. Carroll is among those recommending zero-based budgeting. "We examine each planned expenditure," he notes. "We communicate to the board and to the people that we are reducing costs and maximizing dollars. Then when we move on a program, they know it is well-planned and needed."

FONZ is also taking a cautions approach to budgeting . "We are pulling in our tentacles a little until we see where the economy is going," says Fields. "It makes sense that if people are being cautions in their expenditures, organizations must do the same."

New Approaches

Much of the pressure on nonprofit organizations in a recessionary period comes from a greater demand for services. Many are experimenting with new fund-raising techniques to increase their income to meet these needs. Public radio stations are using 900 numbers, and the Disabled American Veterans is having success with "live" first-class postage stamps on its return envelopes. Mailing lists are being trimmed, and more tailored mailings are being developed. To offset the rising cost of direct mail, many groups are turning to telemarketing and phonathons.

Children's National Medical Center is among the organizations that have given their messages a lighter tone to counteract the dismal economy. In 1991, instead of a letter from the hospital president, potential donors got a note from "Dr. Bear," the hospital's labcoat-sporting, stethoscope-toting mascot. Increasingly, philanthropies are weaving their mission into their fund-raising message to generate greater awareness among givers.

The Boy Scouts in the National Capital Area Council are using volunteers to help in some areas formerly staffed by paid employees, including work at scout camps and computer assistance for list maintenance and mailings. The Christian Appalachian Project, whose mission includes helping the unemployed, is hiring and training local people to handle its direct mail - from printing and assembling to fulfillment and thank-you. "According to accountants, these people are part of our fund-raising expense," says Begley, "but we make sure our donors know that we are providing employment to 50-60 people in this area."

On the horizon

Whether they're optimistic or not about an economic rebound, the one thing most nonprofit executives do agree on is the need to maintain strong fund raising programs that build awareness, identify new donors and funding sources, and keep costs to a minimum.

As the economy improves, many will be working from the strong foundation they established during the recession, when - as Deverman describes it - they "talked about ideas instead of dollars."

Marilyn Gentry is executive director and CEO of the American Institute for Cancer Research, Washington, D.C. Carolyn Peterson, of Peterson Public Relations, Vienna, Virginia, contributed to this article.
COPYRIGHT 1992 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:charity organization's finances
Author:Gentry, Marilyn
Publication:Association Management
Date:Jan 1, 1992
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