Eight Ways Your Organization Can Cope with the Recession

By Mal Warwick

Copyright © 2008 by Mal Warwick

It’s time to consider how your organization can continue to thrive despite the fast-weakening economy. So let’s focus on the simple steps you can take as a chief executive, a trustee, or a development officer.

1. Don’t panic!

Yes, chances are strong your fundraising revenue will decline as the recession unfolds. However, the impact is likely to be delayed for a matter of months, since fundraising revenue is what economists call a “lagging indicator,” whereas other signs of recession such as failing banks and slumping stock averages are “leading indicators.” It will happen, though, months later. But in the economic history of the world, there has never yet been a recession—or, for that matter, a depression—which hasn’t led to a subsequent boom. So, grit your teeth, tighten your belt, and be patient. The world will right itself.

2. Be analytical

A recession won’t have the same impact on every aspect of your fundraising program. Corporations typically suffer early as their profits decline, and foundations decline as their investments shrink in value. But, while corporations may pull back on giving as soon as the warning signs are clear, foundations tend to make decisions based on last year’s stock values, which can delay the impact on your fortunes. Typically, too, direct mail new-donor acquisition tends to slump early in a downturn as prospective donors become more cautious about taking on more charitable obligations. Gifts from existing donors are slower to show the impact.

3. Don’t cut back on donor acquisition

Tempting though it is to reduce the volume of your new-donor recruitment efforts, it’s one of the biggest mistakes your organization can make. Time after time, nonprofits have learned the hard way that cutbacks in donor acquisition produce a cascade of later financial troubles: the donor file shrinks, next year’s revenue drops off even more sharply than this year’s, and it can require years to recover lost ground. If you absolutely, positively must reduce your investment in acquisition, do it selectively: drop only those lists and packages that yield donors with lower long-term value. You’ll still be shooting yourself in the foot—but it won’t hurt as much.

Here are five additional steps you can take to minimize direct mail fundraising expenses during tough times:

4. Focus on list exchanges

Exchanging rather than renting to acquire new donors has two benefits. It’s cheaper to exchange a name than to rent it, reducing your overall acquisition costs. And in most cases, exchange names perform better than rentals in acquisition mailings, because they come from lists filled with donors who’ve shown they enjoy giving to a cause like yours.

5. Mail your lapsed donors

If you now ignore your recently lapsed donors, a recession is a good time to include them in your acquisition mailings. If it costs you less to reactivate a lapsed donor than to acquire a new one, you aren’t mailing your lapsed file deeply enough. Lapsed names are free to mail, and reactivated donors can have higher long-term value than new donors because they have established relationships with you.

6. Focus on your highest value donors

It can be tempting to mail your entire donor file at nonprofit rates or skimp on personalization to cut down on costs. But there is a core of your file—maybe 10 or 20 percent—that generates most of your net revenue. These are the donors you need to be certain receive your mailings—and you can only really do so by paying for first-class postage. You should also invest in inspiring them to respond, either with increased personalization or by paying return postage. Don’t make the mistake of cutting corners in your communications with your most valuable donors.

7. Gang print

A different outer envelope may make absolutely no difference in response or revenue. If you can’t think of a reason why you’re producing different components from mailing to mailing—get rid of them. By printing in larger quantities, you can save thousands of dollars.

8. Reduce your postage expenses

Make sure your lettershop is taking the fullest possible advantage of postal discounts. Correct your file regularly using NCOA (the National Change of Address list) to achieve the best nonprofit rates, and commingle with other mailers to get even lower postage and faster delivery.


About the author

Mal Warwick has been raising money professionally since 1979 and has gained worldwide recognition as an author, consultant, and trainer. He has written or edited eighteen books, including the standard texts How to Write Successful Fundraising Letters and Revolution in the Mailbox. Founder of Mal Warwick Associates, Mal is a top-rated speaker at fundraising conferences globally. He has taught fundraising on six continents to nonprofit executives from more than 100 countries. Contact him at www.malwarwick.com.

Information about his books and where to purchase it can be found here.