"I have the power": the impact of the GFC on your charity is in your hands

The recession can be a good thing for charities, says Sean Triner, but first we have to look within the organisation rather than outside to achieve positive results

Recently Pareto Fundraising hosted a debate, “The recession will be good for charities” in Sydney. Paul Wenck of Everyday Hero worked hard with Laura Camiato of The Cancer Council NSW to convince us the recession was good for us. Julijana Trifunovic of Children’s Medical Research Institute and Marcus Blease of The Spastics Centre NSW argued against them. In the end Julijana, Marcus and pessimists worldwide won the popular vote.

Paul and Laura’s approach was very pragmatic – use the global financial crisis to do stuff you know you should be doing, force change into your organisation, consider mergers and get rid of people who are not pulling their weight. 

I interpreted the Julijana and Marcus’ counterattack as a pincer movement; first, anything that potentially removes money for services is a bad thing and second, all the positive spin from Paul and Laura revolved around doing stuff that shouldn’t need a recession to get done.
But really, the impact of the recession will be enormously different depending on three variables. 
First, the country where the fundraising occurs, second, the ‘health’ of the organisation concerned, and finally the actions taken by the fundraiser right now. I am not about to ask people to move country so let’s focus on the latter two.

A ‘healthy’ fundraising organisation:

• Has a balanced portfolio of income (ie is not dependent on a handful of donors or just one income stream, such as one event)
• Has either three to six months of costs in reserve or has significant ongoing income streams such as a mature mass regular giving (automatic debit) programme
• Has a board that governs, not manages. This is dependent on competent management willing to make tough decisions
• Manages people, and moves people on when they are not up to the job
• Has a long term view, accepting the brutal realities of strategic fundraising such as:
  _It costs to get donors – and it costs a lot
  _Net income is more important than Return on Investment (ROI) or Cost of Fundraising (COF)
  _To raise money, you need to ask people for money
  _Freebies and pro bono support is often fraught with danger

Larger healthy organisations should easily survive the financial mess. But unhealthy organisations – and some smaller, healthy organisations – will struggle. Immediate needs will take precedent – cutting services to survive could be required. 

But also, management and boards should swallow egos and look carefully at themselves and ask ‘do we need to exist?’. I doubt any will answer ‘no’ – but the process should be followed by ‘why?’ and then ‘we are an independent charity – is that the best way to do this?’. The real answer to that last question will be ‘no’ for most unhealthy organisations. Be honest, and if this is the answer, please look about and join forces with others. There are far too many organisations with only tiny differences between them trying to do the same thing.

In his new book ‘Fundraising When Money is Tight’, guru Mal Warwick talks about the need for organisations to ‘scenario plan’ – no one can predict the future, but charities can take actions that will mitigate impact. That is the best way to keep an organisation ‘healthy’ – and merging is surely going to be a sensible option for many organisations so they can maintain their services regardless of the scenario that actually plays out.

What about the third variable? The actions of the fundraiser right now? The proposals and plans they put to their bosses right now, the arguments they present and research they do has never been as important as it is now.

The day after the debate, I held a workshop ‘Retaining donors during difficult times.’ Working through exercises designed to understand what was happening in the world, then looking at the health of each organisation, we concluded with brushing up on our ability to communicate the mission of our charities better through story telling.

But all the way through I kept emphasising the fact that whatever the outside world throws at us, there are things we can do internally that can have a much greater impact. We asked everyone to stand up and shout: “I have the power” (which they did, despite my nervousness of asking for such a blatant show of passion!)

Here are a couple of examples of how changes to donor communications tactics have outweighed external factors.

Over the past few months Pareto Fundraising has worked with eight charities in four countries (Australia, New Zealand, Hong Kong and Canada) on the first ‘Pareto-style’ mail appeal to house-files. In all cases the income was up considerably compared to previous appeals and trends – despite the economic woes of the country. 

One in particular, in Canada, was up well over 50 per cent despite the charity having been through a trend of decline in income from mail appeals. They know that if they keep using the new tactics they can expect a lift of 50 per cent on their entire mailing programme – a huge boost!

Another example is an Australian charity very worried about the heavy dependence it has on corporates and events – two areas most fundraisers are agreed are vulnerable. 

They have a medium sized database, but had never called those donors and ask them to make automatic monthly debits on credit cards or from their bank accounts. In their first test all those spoken with responded really positively, and one in nine actually agreed there and then to begin a regular debit and supplied their bank account details. The additional annual income from just this trial was over AUS$100,000 – a serious boost to their income.

These are not thinly disguised adverts for Pareto-style appeals or phone calls; they are stories to illustrate the fact that internal changes in tactics can have a much greater impact than external changes in the economy.

Ultimately, fundraisers are appointed because they are best qualified to raise the money that is needed. They need to think about short term needs (survival in some cases), medium term gains and long term growth. 

Unless their charity is meeting all of the need they must not forget to ensure the short term doesn’t cripple the long term. For any healthy charity, pulling back on all acquisition and legacy marketing, for example, will save cash now but will leave a less healthy organisation in a couple of years. 
For an unhealthy organisation there will be no choice – but this could be a good litmus test for a board to assess its own performance and that of the charity administrators.

So how does a fundraiser make the right choice?  How can they ‘get the power’? Well, there is a ton of information out there – some is contradictory, some is pie-in-the-sky, but my biggest tip is that the fundraiser must get out there and do the research. Within that research make sure it includes some numbers, test results and collected data, not just opinion. There is a load of information on Recession Watch (created following an impromptu session at the IFC) and don’t be afraid to Google. 

http://recessionwatch.blogspot.com/ 
For the latest on how the world of fundraising is coping with the financial disaster check out Recession Watch. For Sean Triner’s paper ‘Ten steps to fundraising in a recession’ click here.

http://www.recessionsupport.org.uk/expert_guides/ten_steps_to_managing_fundraising_in_a_recession 

There are also three books that are essential reading for any fundraising organisation – especially now:

• ‘Fundraising When Money is Tight’, Mal Warwick (available through Amazon.com)
• ‘Tiny Essentials of Fundraising’, Neil Sloggie (www.whitelionpress.com)
• ‘Tiny Essentials of an effective volunteer board’, Ken Burnett (www.whitelionpress.com)