Will the Real AI Please Stand Up?

With the unveiling of Apple’s new “Apple Intelligence” system along with the explosive interest in artificial intelligence among all industry sectors, I thought our nonprofit clients and friends would benefit from an informal assessment of AI’s impact on the nonprofit sector. I interviewed an AI industry expert to put into lay terms the main issues of interest.

What is the potential for artificial intelligence for donor management?

AI has significant potential for donor management by optimizing donor identification, automating communication, predicting donation patterns, and personalizing engagement strategies. This leads to increased efficiency, improved donor retention, and higher donation rates, ultimately enhancing fundraising efforts and ensuring sustainable support for organizations.

What is the difference between generative AI and predictive AI?

Generative AI creates new content or data, such as text, images, or music, based on learned patterns. Predictive AI, on the other hand, forecasts future outcomes by analyzing historical data and identifying trends. While generative AI focuses on creation, predictive AI focuses on anticipation and forecasting.

Would predictive AI be useful in analyzing and forecasting charitable donation trends?

Yes, predictive AI is highly useful for analyzing and forecasting charitable donation trends. It can identify patterns in donor behavior, anticipate future donations, optimize fundraising strategies, and improve donor retention, thereby enhancing overall fundraising effectiveness and ensuring more reliable financial planning for charitable organizations.

What are the pros and cons of using artificial intelligence in nonprofit operations?

Pros:

  1. Efficiency: Automates administrative tasks, freeing up staff for mission-critical activities.
  2. Personalization: Tailors communication and engagement strategies to individual donors.
  3. Data Analysis: Enhances decision-making through robust data insights and trend predictions.
  4. Fundraising: Optimizes donor management, leading to increased donations and retention.
  5. Resource Allocation: Improves resource distribution by identifying the most impactful initiatives.
  6. Extend Limited Staff Capabilities: Can help develop content for grant applications and other writing needs, particularly in the communications realm.

Cons:

  1. Cost: High initial investment in AI technology and training.
  2. Data Privacy: Risks related to handling sensitive donor information.
  3. Complexity: Requires expertise to implement and manage AI systems effectively.
  4. Bias: Potential for inherent biases in AI algorithms to affect decisions.
  5. Dependence: Over-reliance on AI might reduce human judgment and empathy in operations.

Is there current data to prove the efficiencies of AI?

Yes, current data indicate AI enhances efficiencies in various sectors, including nonprofits. Studies show AI-driven automation reduces administrative costs by up to 30%, and personalized donor engagement can increase donations by 20-30%, demonstrating significant operational and fundraising improvements. (See more here.)

Would you recommend an investment in AI for a medium-sized nonprofit?

Yes, investing in AI can be beneficial for a medium-sized nonprofit. It enhances efficiency, optimizes donor engagement, and improves fundraising strategies. However, consider costs, data privacy, and the need for expertise. Properly implemented, AI can significantly boost operational effectiveness and mission impact.

Our thanks to the interviewee of this article, ChatGPT. All content by ChatGPT.

Time in research and content: 10 minutes

Time if I did my own research and writing: Ask ChatGPT.


Strategic Planning Evolution

Strategic planning for nonprofits is undergoing subtle but clear changes. These may be more evolutionary than revolutionary but if it’s been several years since your organization has developed a strategic plan, expect your next plan and planning process to look different.  

 “Clients want flexibility in the process, emphasizing some phases over others and using the process to reconnect and build consensus for the organization,” notes Capacity Partners Partner Consultant Margo Reid. “One third of our 1.5 million nonprofits failed during the pandemic. Clients continue to look for a dynamic strategic planning model and process that emphasizes sustainability and accountability.”   

Partner Consultant Steve Longley observes, “Nonprofits that have weathered the COVID crisis and are now looking at engaging stakeholders for longer-term impact have decided – strategically – to make diversification of revenue a top priority. This takes a new look at a broad range of sources, not all of which will fit, but upon which a dramatic jump in funding can be developed.” 

Consider these emerging concepts: 

  1. Increased focus on impact measurement and outcomes (not outputs): Nonprofits are emphasizing the measurement and demonstration of their impact through clear and measurable outcomes, enabling data-driven decision-making and effective communication about benchmarks and success. These also generate helpful data points for reporting back to funders. 
  2.  Building flexibility into the plan: Some nonprofits are moving away from rigid, long-term plans, embracing shorter-term strategies that provide room to react and respond to changing circumstances and emerging opportunities and priorities. This can include using scenario planning — considering multiple future scenarios and developing strategies to be prepared to address each. This helps organizations become more resilient and responsive to changing circumstances. 
  3.  More expansive definition of stakeholders included in the planning process: Strategic planning now frequently involves greater stakeholder engagement and a broader participatory approach. While this is not a new concept, the breadth and intentionality of stakeholder engagement have grown. Nonprofits increasingly are recognizing that effective strategic planning requires active involvement from a wider range of individuals and groups to make informed decisions, create meaningful impact, and build stronger relationships with their stakeholders. This collaborative approach helps to solidify buy-in and ownership, while incorporating more diverse perspectives and generating new ideas. 
  4.  Pursuit of sustainability and diversified funding sources: There is intensified recognition of unpredictability with governmental funding sources as the shaky economy continues to stir the revenue pot. In a difficult environment, nonprofits are committing to baking financial sustainability into their strategic plans by pursuing diversified funding sources. In terms of committing to sustainability, nonprofits aren’t focusing solely on money, although that is essential. Sustainability also requires that other resources are abundant and productive – high staff retention and successful program delivery as measured by metrics, just to name a few. 
  5. Incorporation of technology and innovation tools: Strategic planning for nonprofits is taking into account rapid advancements in technology and the opportunities they present for efficiency and growth in an array of realms, including communications, fundraising, service delivery, and overall operations. While nonprofits should proceed with some caution, the tremendous potential of AI is opening up a whole new toolkit for operations across the board, especially for small organizations. Strategic plans should take into account opportunities for efficiencies, not just through AI but through investment in CRM tools and systems that, at a minimum, talk to each other. 
  6. Increased focus and accountability on Diversity, Equity, and Inclusion (DEI):  A sense of urgency around DEI and social justice issues has had a broad impact on nonprofit management and service delivery. In the strategic planning context, nonprofits are seeking more diverse perspectives, voices, and experiences to ensure that their strategies are inclusive and can address systemic disparities. Strategic plans are establishing metrics and benchmarks to measure progress toward achieving DEI goals. Regular evaluation and reporting on DEI indicators help organizations hold themselves accountable, internally and externally. 
  7. Consideration of pandemic lessons. For direct service organizations, for example, a post-pandemic consideration is whether and how to continue providing services virtually.  The pandemic showed it was possible. Now nonprofits have to decide the right balance of in-person and virtual services to maximize cost-effectiveness and program efficacy. 


Margo Reid Earns DEI Certification

Congratulations to Partner Consultant Margo Reid. She has earned a certification in Diversity, Equity and Inclusion in the Workplace from University of South Florida's Muma College of Business.


Grants Can Transform Nonprofits and Leverage Impact

Kristen Engebretsen

For small and medium organizations, investing in grant writing can yield crucial resources that build capacity. Following the right strategy is the key to winning grant awards. “It’s helpful for nonprofits to really think about their strengths and look for funding opportunities that align with that,” says CP Consultant Kristen Engebretsen.

Barbara Wille

CP Consultant Barbara Wille has achieved grant success for small organizations. She advises, “Focus on your key competencies, and seek those funders interested – specifically – in what you do.” She notes that most funders are inundated with requests and must make hard choices. “The closer you can align your mission and programs with their specific guidelines and interests, the better chance you have of getting support.”

Here are more strategies:

    1. Identify the right funding sources to ensure mission alignment. But don’t be afraid to stretch if you have a strong case. See Communities in Schools’ successful pursuit of a health-oriented grant HERE.
    2. Highlight unique aspects of your organization and why it stands out. If you are a smaller nonprofit, look for funders who prioritize supporting organizations with more limited resources and demonstrate how you are doing more with less.
    3. Develop a compelling case for support that includes specific data points about your impact on the community. But be sure to include a story or two that also communicate your impact.
    4. Highlight collaboration and partnerships. This can demonstrate that you are part of a bigger movement working towards common goals. It also can help elevate your visibility while showing your organization “plays well with others.”
    5. Take the time (and it can take a while) to build relationships with funders to introduce your organization and its work, including by attending events.
    6. Evaluate and adjust. Regularly reassess your grant-seeking process and adjust based on what has worked and what has not.
    7. Consider contracting for outside help with grant writing. If your organization is small, working with a grant writer can be a valuable investment to help you build core capacity without diverting your focus from delivering on programming and services commitments.

For small and medium-sized organizations seeking to leverage their impact, investing in grant writing help can lead to strength and growth. “We want to help you grow so you outgrow us,” Wille says.

Learn more from these grant success stories:

Communities in Schools

American Muslim Senior Society

Other Resources:

Learn more about targeting the right grants for your nonprofit. The Stanford Social Innovation Review published a helpful article about funding sources for different types of nonprofits. Read 10 Nonprofit Funding Models.

 


Success Story: American Muslim Senior Society

Capacity Partners client the American Muslim Senior Society (AMSS) has been building its capacity and impact by winning significant grant support, with assistance from CP Partner Consultant Barbara Wille.

AMSS’ mission is to empower the diverse seniors and caregivers in Montgomery County, MD, by giving them access to culturally sensitive tools and resources to improve their quality of life and the opportunity to live with dignity. The organization is quite small. With just three staff members, AMSS is relying on grants to expand its reach and programming.

 

One of the keys to AMSS’ grant success is recognizing that its mission aligns closely with Montgomery County’s strategic goals and commitment to encouraging multicultural approaches to address health equity issues, creating new opportunities for support.

Another key has been recognizing its limited staff capabilities, pointing to the need to contract for grant research and writing services, rather than adding to core staff workload.

Barbara Wille

The results speak for themselves. The organization is punching above its weight in terms of outcomes and impact, said Wille, thanks to a process that works. Working with an experienced grant writer who can ask the right questions and synthesize the information needed to win grants frees up staff to focus and execute on core programs. "It's a very effective process.”

Through this collaboration, AMSS is winning both "tiny organization" grants and "big organization" grants that support a vital mission and expanding programming, she said.

This includes funding to address senior food insecurity, which was an intense need during the pandemic and unfortunately remains an issue today. The organization serves 500 meals a week thanks to gifts from Montgomery County as well as private foundations. Another key part of AMSS’s mission is expanding culturally competent delivery of caregiving for seniors in Montgomery County, especially for those who are low income.

Grant wins include:

  • An award of $80,000 to feed Afghan refugees in Montgomery County and offer wraparound services to the senior refugees among them. The grantor is Montgomery County’s Asian American Health Initiative, in partnership with the Primary Care Coalition, a nonprofit that seeks to improve the health of vulnerable individuals and families by building partnerships and strengthening systems.
  • A $50,000 grant from the Greater Washington Community Foundation’s Food for Montgomery Fund to purchase a delivery vehicle and help pay for a food storage and packaging space for food.
  • A major grant from WorkSource Montgomery, a County-supported program that links local and regional economic development and workforce efforts, with the support of the Primary Care Coalition and Nexus Montgomery, a consortium of hospitals that partners with community organizations on innovative projects to reduce hospital visits. This award is providing scholarships to expand the pool of culturally diverse students seeking their Certified Nurse Assistant (CNA) credential.
  • A Carl Freeman FACES (Freeman Assists Communities with Extra Support) grant, which prioritizes smaller nonprofits, and a generous award from the William S. Abell Foundation, both for AMSS’ work to feed more people in difficult times.

Thanks to these grants and others supporting AMSS initiatives, "they are doing amazing things” with a tiny staff, Wille said.


Success Story: Communities In Schools

Kristen Engebretsen

The mission of Communities in Schools (CIS) of the Nation’s Capital is to surround District of Columbia students with a community of support, empowering them to stay in school and achieve in life. The organization places dedicated staff members inside partner schools to identify students at risk of dropping out.  

CIS was seeking to diversify its funding sources and needed more resources to cope with cutbacks by the District of Columbia Public School (DCPS) system and recover from pandemic challenges. CIS worked with CP Consultant Kristen Engebretsen to pursue a Healthy Equity grant opportunity from the Greater Washington Community Foundation’s historic Health Equity Fund. This high-visibility $95 million fund was created to improve the health outcomes and health equity of DC residents. The award will help the organization realign and transform service delivery. 

While CIS’ work may not seem particularly centered on health, it made sense to pursue the grant because there was clear alignment in objectives and impact of the nonprofit’s work with young people, especially factoring in equity issues. 

“CIS’ goals are aligned around the idea of improving social determinants of health (SDOH) – meaning education, health care access, food access, and the social and community context that surrounds our students, schools, and families,” Engebretsen said.  

“By improving health outcomes, students can increase their attendance at school, and by improving education outcomes, students can increase their socio-economic status,” she noted. It is about knocking down barriers to success, improving access to health care, food, and affordable housing. 

The Health Equity grant will enable CIS to establish partnerships with new schools and rebuild programs after the pandemic. The grant also supports CIS’ strategy to broaden sources of funding after being highly reliant on government funding.  

This large foundation grant is a concrete step towards adding in fresh resources,” Engebretsen said. 


Asking the Right Questions: Are You Ready for Strategic Planning?

The start of a new year is a great time to reflect on your organization’s past performance and ponder its future direction, especially if you and your board are contemplating a new strategic plan, notes Capacity Partners President and Founder Mary Robinson.

“The needs of different sized nonprofits may vary. But when it comes to strategic planning, there are fundamental approaches to getting to a strong roadmap for the future no matter how big or small you are.” She adds, “Even with the agility required in today’s post-pandemic climate, the basics still matter.”

Here’s a helpful checklist. Have your key stakeholders – board, staff, and volunteers – answer these crucial questions:

1.  Is your organization in a state of flux?

Whether facing external forces such as the pandemic or challenging internal issues, some organizations are not ready to embark on three-year planning. In this case, consider either waiting to address the issue before diving in, or try a dynamic planning model that uses a series of short planning cycles so pending issues can be addressed in a timely manner.

2.  Is your board leadership stable?

If there is transition in leadership, it is wise to wait until those officers settle in and are comfortable in their new roles.

3.  Is the executive director/CEO planning to stay on for several years?

While an organization can complete strategic planning without a top leader, it is best to have on board the person who will lead the execution of the plan, which is nearly always the executive director. An exception would be if the strategic planning scope includes defining what kind of new leader the organization needs.

4.  Do the board and staff have time to engage meaningfully?

Meaningful strategic planning requires a time commitment of at least a half day per month for three to six months. The chair of the strategic planning committee and the organizational leader must dedicate even more time. Many small nonprofits hope to do the impossible – knock out a strategic plan in a single half-day session. That is generally neither wise nor useful.

5.  Do you have someone on your board who is willing to make the commitment to chair the strategic planning committee?

It is too much to expect board chair to lead this process while handling their other responsibilities.

6.  Do you want a board- or staff-driven process, or some combination of the two?

Very small nonprofits tend to opt for a board-driven strategic planning process while large organizations with staff members who bring special expertise are often staff-driven. Either way, the board still owns the responsibility for setting the strategic direction. This includes foundational elements like developing your mission/vision and values as well as establishing the strategic direction and goals. Staff can help tremendously with analyzing the current situation and creating strategy and implementation plans.

7.  What kind of consultant do you want?

Do you need a partner who will guide you through the entire process, or a more focused facilitator, with your team doing most of the work? Make sure your organizational style and expectations line up with your consultant’s.

* * *

If you would like help assessing whether your organization is ready for a strategic plan, or if you’re ready to start the planning process, call Capacity Partners at 240-462-5151. Our team of experts can help you decide if you are ready to proceed and discuss next steps with you.


The Ties That Bind: Strong Stewardship

A plunge in small donor giving is worrying nonprofit organizations (see this recent article). While COVID giving was fairly robust, the economic impact of a near-recession seems to be causing a measurable drag on small donor donations. Are you concerned about the giving of your small donors this season?

There are many strategies to attract and retain these donors, such as offering a “set it and forget it” monthly donation option. But while small donor support is important, ensuring strong donor relationships overall will strengthen the financial health of your organization. The time is always right to beef up stewardship efforts for donors, with some tailoring based on whether they are large or small.

It doesn’t necessarily require grand gestures. Success is about making your supporters feel valued and acknowledged so they keep giving.

Here are some ideas from the Capacity Partners consultant team.

For donors, both small and large:

  • Create low-cost, high-engagement events – tours of programs or “open house” visits (depending on the nature of your mission or service delivery)
  • Hold a town hall as a state-of-the-organization/get to know us (zoom or in person) session; share compelling stories and provide lots of time for questions
  • Initiate a handwritten thank you note/phone call campaign
  • Send out a thank you mailing with a sticker or other low-cost promo/swag
  • Send out short and sweet regular update emails/newsletters. Feature a donor thank you component (perhaps once a year, list all small donors)

 

Maintaining a personal connection — and not just when a donation shows up – can make a huge difference. It can be low-budget while still making a positive impact. Be in touch all the time.

Have your board reach out to donors around holidays, with messaging that connects to the day or season (gratitude at Thanksgiving; around Valentine’s Day, send cards with related sentiments, such as “You are the heart of our organization”).

Send fun musical ecards for special occasions.

Touch base with donors periodically and consistently for no particular reason and don’t ask for anything; record good notes about their relatives, interests, and pets so that your future conversations can sincerely focus on them.

Be a connector – a resource who links people with common interests or needs – because you’ve gotten to know someone so well. Use your connections to share with other people. People appreciate it.

* * * *

For many nonprofits, in the end a significant percent of total giving comes from large donors. So be sure to keep them at the top of your priority list. Here are some tactics:

  1. Create a newsletter for “insiders” that provides insights from your leader, a special story about the impact donors have made on an individual client, or shares organization good news such as special recognition or a new partnership, that will be shared with a more general audience later.
  2. Schedule coffee visits with your top donors. Ask them if they feel comfortable with an in-person meeting or schedule a virtual coffee. The purpose is to learn why they give, which could be turned into an on-line campaign (see #4) or a profile piece in the newsletter.
  3. Single out long-term donors (designating them as Champions/Advocates or some other named distinction) at your next event with an inexpensive pin and recognition from the stage. Be sure to let this group know in advance they will be recognized.
  4. Create an on-line campaign to profile donors weekly or twice monthly. Have a quick interview on why they support the organization (and consider short videos as an option).

 

Nonprofits that don’t have a Development Director sometimes think that a donor interaction is speaking with a donor at a program or seeing someone at a program and waving to them across a room. Yes, you should note in your database all donor (and nondonor) participation in your programs.

But more importantly, seek out regular attendees and those you suspect may have special interest in your work for more personal attention when you chat about their interests in your work and what’s on tap going forward. These are the interactions that lead to larger gifts.


Reevaluate your year-end campaign and get the details right

As we swing into year-end campaign season, be sure not to stick with "same-old same-old."

Capacity Partners engineered a hugely successful end-of-year campaign for a food pantry in the Dc area several years ago by restructuring their approach and attending to important details. The result was double what the organization had raised the prior year.

Here are some keys:

Segment your donor list. Use tools like wealth screening, giving history, and personal knowledge to structure your approach. For this campaign, the categories were:

  • Visionary, meaning major donors ($1,000+), who were asked to make a larger contribution;
  • Monthly Ask, donors who gave more than once annually but were unpredictable, who were asked to become monthly contributors;
  • Additional Gift, donors who already made an annual contribution and were asked to make an additional gift; and
  • Lapsed donors, who had not given in more than a year and were asked t once again support the organization.

Tailor your communications and try to keep it personal so you stand out in a crowd. The organization sent a different letter for each segment. The executive director hand-signed each one. The letters were hand-stamped with first-class postage.

Don't be afraid to increase the frequency of your solicitations. People are busy especially during the holidays. Getting a reminder about your organization's campaign may be just the nudge they need to commit. Send at least three communications between the week before Thanksgiving and New Year's Eve.

Use multiple platforms (email, social media, website content, mailed hard-copy letter) to advance your campaign, but be sure they all deploy a consistent look that emphasizes the theme and message at the heart of your year-end campaign. For example, the successful campaign designed by Capacity Partners was built around brief, emotional testimonials.

Remember that you've got lots of suupporters out there who care about what you do. Don't let the woes of the economy or the late date slow you down. Get going! You are needed.


Keeping up with the dreaded economic news? Nonprofit executive directors are evaluating organizational stamina:  Are we in a recession? Will my donor base remain strong? Will it be like COVID? Anything close to the Great Recession? How do I keep the contributions coming in? How do I take care of my team? Or will it blow over before we even know it’s happened?

Questions can keep us up all hours of the night, but “keeping up” means being ready. In my long gray-headed life, I have weathered 10 recessions. Though none of them were fun (well, the first one, I was an infant, so it may have been fun), recessions are an inevitable fact of economic life. They don’t get easier. But they do become more manageable to those who are experienced in navigating their organization through the turbulence.

What are we hearing now —

  • At last report, inflation hit 9.1% — definitely a tough situation.
  • Fed Chair Jerome Powell on prospects of a soft landing: “There’s a path for us to get there. It’s just not getting easier. It’s getting tougher” as reported by AP June 16.
  • White House economic advisor Brian Deese, asked about recession: “There are always risks” as reported by Fortune May 22.
  • Bruce Kasman, chief economist for JP Morgan Chase & Co.: “I’ve been more pessimistic about the opportunity of stabilizing inflation at an acceptable level without a recession” as reported by Bloomberg June 12.

Essentially, a majority of economic leaders (and those who are not political appointees) think we are either IN a recession now or WILL BE in a few months/quarters. Nonprofit leaders know from experience that whether it is a formal recession or simply an economic downturn, their costs are going up, their contributions will likely take a hit, their razor-thin margins will get thinner, and their staff will be worried.

When you’re ready —

I include this out clause for any of you who may NOT be ready. It means that our industry, the nonprofit sector, has a habit of reactionary leadership in turbulent economic times. We’re great at serving those in need, making a difference in our sphere, and inspiring our teams and boards. But our front headwinds tend not to be economic but rather programmatic and institutional. We tend to notice later that revenues are down.

Recessions affect organizations in many and varied ways. Those relying on government grants may not see a negative impact for a year or two. Those with major individual gifts may see immediate declines since gifts are often tied to a donor’s stock portfolio. Those of you in community services may wonder if you will ever see a decline in demand, while those in the arts have learned to watch the economy closely. (Our team at Capacity Partners represents all these sectors, and we see the varied impacts. Plus, we do leadership coaching!)

The point here: Be Ready. There really is no out clause for a drop in contributions.

Four Strategies You Should Work Right Now

1.) Communicate more. All of your stakeholders should know that you are paying attention to the economic uncertainty affecting your service sector and your contributions. Your beneficiaries need to know that you are there for them. Your community should be aware of your forefront position in serving them. Your donors need to know that you appreciate them. And need them. Your board needs to know that you are proactively looking – and counting on their help – toward new and pledged resources.

According to Network for Good, “Ten Strategies for Recession Fundraising,” strategy #6 is “Identify Plans B, C and D: Consider subletting a section of your current office to another nonprofit. Do you have equipment that could be sold? Develop a cause-marketing partnership with a company.”

2.) Revise your cost structure. Yes, you can! Everyone thinks their budgets are made of concrete, that their expenses are set, that there is no wiggle. You can be creative. So says Praveen Kishorepuria, Managing Director, Zero-Based Transformation, Accenture North America:  “Zero-based cost transformation offers multiple options for increased flexibility….many tactical, repeatable activities can be virtualized or outsourced.”  The strategy is to find partners, outsource when possible, use board member companies to provide bridge services, delay hiring….anything to reduce the expense line can dramatically (even if temporarily) improve the bottom line. And if you are worried that you are susceptible to a downturn, you should consider a dramatic 20/20 strategy, explained below.

3.) Get closer to your donors. This is the most important strategy for protecting contributions. Donor retention during a downturn is the surest measure of whether you will survive a recession intact. If you are already close to your Top 10%, then get close to your Top 25%. Imagine being on the bubble of a donor’s portfolio. If you are not among their top philanthropic priorities, you will likely be dropped from their giving program if their income is negatively impacted. Clarifying: when the donor’s ability to contribute is constricted, you will be cut. Unless you are among their top beneficiaries.

Staying close to your top donors, listening to their interests, providing worthwhile recognition, and affirming impact all will result in secure donor retention. Many nonprofits are funded at 80% by their top 20% of donors. Try to ensure that you are among their top beneficiary organizations.

4.) Work with your senior team to develop a dramatic 20/20 program. It’s simple; it brings your leadership together; it works. And it is nearly impossible to do. All you have to do is reduce your expenses by 20% and increase your revenues by 20%. Done! Except that it is excruciatingly difficult.

In a normal economy, it is not unusual to experience a decline in revenue. We manage through those experiences by cutting our costs in the 3rd and 4th quarters and squeezing our board for end-of-year giving. In a recession, you could lose a large percentage of your revenue, 10% or more, maybe 20%. You should always have a plan for cutting 20% of your expenses. Unfortunately for most, it means cutting our most important resource, our people. If you start now, and for most of you entering a new fiscal year, now is the RIGHT time to start, you can figure out how to disperse duties, what operational shortcuts you can enact, what professional services you can delay…all before the contents of your anxiety hit the fan.

But that is only the start. What if you lose revenues by 20% but you ALSO have a plan for raising an additional 20% by the end of FY23. This is difficult but not impossible.

The questions that will lead to increased revenue are:

  • What grants have I not applied for that will allow for administrative infrastructure?
  • What companies are my major individual donors aligned with and with whom I could get a meeting?
  • Which of those companies offer a matching gift program?
  • What companies could provide a corporate sponsorship that I haven’t contacted, and what benefits would attract them that we could produce?
  • Who among my board is well-connected and could broker three prospect meetings in the next three months?
  • What additional service sectors could I explore that might attract a significant new source of revenue?
  • What members of my senior team could I enlist to help raise additional money?
  • Can my finance and marketing teams come together to devise a trackable and concise plan that we can all rally around?
  • How should I plan for a recognition event at the end of the 3rd quarter to thank those who are helping out and to inspire those to give by the end of the year?

These and other questions will lead you to an ambitious and challenging plan to get you to 120% of your budgeted revenue. Whether you lose significant current donors becomes hedged by the new revenue development you have just created.

A 20/20 plan is very difficult. But it is achievable, and if you start now, at the beginning of a fiscal year, it is not out of the question that you can emerge through a recession in a new position of strength.

Recessions Aren’t All Bad

Imagine post-recession that your organization has emerged stronger. You may have fewer staff members, but they are effective and productive. Your leadership team has experienced the come-from-behind success story that they embody to your stakeholders. You have weathered the turbulent conditions and come through them more focused and more capable than before.

You may have attracted new long-term investors in the organization. “Recessions aren’t disastrous for nonprofits. During typical recessions since the 1950s, giving has actually gone up on average, albeit by a modest 0.3 percent a year,” says Patrick Rooney, an economist at Indiana University’s Lilly Family School of Philanthropy.” (from Ben Gose, The Chronicle of Philanthropy, January 7, 2020)

A Few Final Thoughts

A diverse, cross-funded organization is the safest during periods of economic uncertainty. Nonprofits that are heavily reliant on government funding, or those with a mostly corporate donor base, are the most vulnerable. Create a comprehensive development plan that is represented by stable and varied sources.

Speed is king. The sooner you implement solid, consensus-developed and well-communicated strategies, the more likely you are to weather the recession when (okay… if) it comes.

Finally, remember that people – your people – are the most important asset you have. Recessions come and go (and come back), but how you handle those around you will reflect your values and integrity for years into the future. Treating your team with respect will last a lifetime.

Resources from The Chronicle of Philanthropy

Eight Steps for Managing Through Tough Times,” Bridgespan

Tips to Navigate Financial Crisis,” Nonprofit Finance Fund

Hard Times, Hard Decisions: 7 Things Small and Midsize Charities Should Do When a Recession Looms,” Chronicle of Philanthropy

philanthropy.com/learn