Nonprofit Impact Report, Issue 4: Fundraising Through the Pandemic

Houston is known for its ability to weather dramatic events, but the events of recent weeks have tested our fabled resilience in ways we could not have imagined when the year began. As the pandemic persists, our energy-driven economy has taken a pounding, unemployment is rising, and nonprofits’ revenues are suffering.

Health and human services organizations are seeing unparalleled increases in the demand for their services, putting pressure on programs and staff that were already running at full capacity before the crisis began. Schools are incurring additional costs as they transition to remote learning and try to meet their students’ other needs, and organizations that depend on earned revenue (for example, from ticket sales) have lost a primary income stream. Houston’s nonprofit sector has its hands full. One silver lining is that many nonprofits have fared well in their applications for the SBA’s Payroll Protection Program (PPP) forgivable loans, which has helped some delay the need for furloughs. However, there seems to be little doubt that everyone in the sector is looking for ways to do more with less and evaluate scenarios that will allow them to get through this period of unprecedented challenge.

As nonprofit leaders grapple with how to move forward, the top questions we are asked: How do we raise money right now? Is it okay to ask for support? Are people still giving?

We’re glad to report that all signs indicate that philanthropy is alive and well—but the environment is changing, and we must adapt and stay flexible.

A recent Blackbaud donor survey indicates that over 50% of donors say that they expect to give at the same level as they did before the virus, and 30% say they plan to give more. Anecdotally, the Sterling team has also seen many individuals, foundations, and corporations giving to local organizations in extraordinary ways over the past few weeks.

Many organizations have emerged from the initial fog of the crisis and are actively fundraising. A recent Sterling survey of 160 Houston-area nonprofits indicated that two-thirds of respondents are asking or plan to ask for philanthropic support to shore up their budgets during the pandemic. While organizations across the area continue to approach fundraising differently, many still share the same questions and challenges.

In this Impact Report, the Sterling team answers the most frequently asked questions we’re hearing about fundraising during the pandemic, and we offer some additional suggestions that may help you perform competitively. Of course, we do not have all the answers—no one does—and solutions will vary depending on a number of factors, but we hope that these insights are helpful to your organization as you consider the best way to tap into the generosity that drives the spirit of philanthropy.

Is it appropriate to fundraise during a pandemic and in this economy?

Yes—but how you go about it depends on the level of your organization’s need and the focus of your mission. Our best advice is to resist the temptation to make broad assumptions about what your donors will or will not do right now. If you don’t communicate with those who have supported you, they will not know what you are doing, and they are unlikely to spontaneously send you a gift. It is essential that you stay in touch with your donors and that you listen and respond to their cues about their life situations and feelings on giving. Some will be quite willing and able to give, but others may not be. But the age-old fundraising adage holds true even now: If you do not ask, you will not receive.

In an energy-driven economy, how do we move forward with fundraising when oil prices are so low?

History tells us that charitable giving, especially from high–net worth individuals and foundations, correlates with the stock market, not with the price of oil. Although more Houstonians are dependent on employment tied to the energy sector, and their net worth is tied to energy more than the average American, we should not rush in with an assumption that giving in Houston has stalled. It has not, and we have seen time and again that Houstonians rally when the chips are down—during the oil slump in the 1980s and other downturns, after 9/11, during the 2008–09 recession—and take care of others even if it requires personal sacrifice. Do not be fearful!

Our organization does not provide direct services. Do our donors want to hear from us if we are not on the front lines?

It is true that health and human services organizations have a strong case for support right now—but that doesn’t mean that your mission is no longer important or compelling. If your donors believed you were important before the virus, then chances are they still do. We encourage you to tell your story and communicate your needs. Again, don’t assume that your donors will not give. Have the conversation.

Should we limit our requests to gifts directed to COVID-19 response and recovery?

Not necessarily, but you should acknowledge the impact of COVID-19 on your organization and our city or you will seem tone deaf. We recommend including a brief update on the impact of the virus on your programs and how your organization has adapted and is responding. Most of all, your appeals should clearly articulate your organization’s needs. When we emerge from the immediate impact of the crisis, we will still need the entire nonprofit sector to be there to serve our society—advancing education, human services, arts and culture, the environment, animal welfare, social justice, and many other mission areas that enrich and sustain our lives.

How direct should we be in our solicitations?

It depends on the donor and how you are asking. It is often true that you can improve your fundraising results if you ask for a specific amount, but right now it makes sense—and will likely be more comfortable—to tread more carefully. Solicitations must always be carefully worded so that you’re not perceived as aggressive or entitled. For major gift requests, it is wise to consider each donor individually and decide based on what you learn in the cultivation process. For larger-scale solicitations, you may consider asking donors to give at the next giving level: “Would you consider a gift at the Silver level this year?”

How do we stay connected to donors?

Organizations are approaching donor communication in a variety of virtual ways. We are hearing from clients that reaching donors is easier now, since everyone is homebound—and they report that donors are largely responsive. Video calls, like Zoom and GoToMeeting, have become commonplace, but good old-fashioned emails, texts, and phone calls are still going strong. The most important thing to remember is to communicate in a way that the donor prefers. Not everyone loves Zoom!

For broader communication efforts to a larger group of donors, some organizations are relying on their established newsletters or have developed COVID-specific updates. Others are hosting online town hall meetings with their CEOs, short performances or readings, interviews with program staff, and other live activities that are more likely to be viewed now than before the world became as Zoom-centric as it is today. Remember that inboxes remain overloaded, so keep email communications brief. For web meetings, we suggest a tightly facilitated session of 45 minutes or less—and test your technology before the call begins!

Should we try to reach out to new prospects?

Our short answer to this question is yes—but it could be difficult to make meaningful connections remotely, so keep your expectations in check. It is much more likely that your existing tried-and-true donors will see your organization through these tough times than it is for a new major donor to ride in on a white horse with significant new funding. If your organization came into the crisis with close relationships with donors, keep them close—because people are giving. If your donor relationships are not fully developed, it will be more challenging, and you may want to refrain from rushing to the ask.

How should we risk-adjust our goals?

In Sterling’s recent survey, most respondents indicated that planning during this time of tremendous uncertainty is one of the most challenging aspects of managing their organizations through the crisis. This may be especially true when developing revenue projections. Risk-adjusting tactics will vary based on your organization’s unique situation organization, but we advise that organizations remain cautious about budgeting and continue to be conservative in projecting income—both earned and contributed.

How are foundations responding to the crisis?

Every foundation is responding differently. Some foundations are making grants to support COVID-related expenses, and many have indicated that they will forge ahead with grantmaking in their upcoming cycles. Others are experiencing significant losses to their corpuses because of the decline in the market. It is important for organizations to be in touch with their foundation contacts to let them know about your response to the crisis and your needs and to understand how they are approaching funding through this time.

Should we pause our capital campaign?

Again, this is a decision that each organization will need to make based on your own circumstances, but we generally recommend that capital campaigns that are in motion remain in motion—even if it is necessary to re-pace your solicitations for a time. It can be extremely challenging to restart a campaign if it’s been inactive for several months—so keep it going by staying in touch with individual prospects and foundations and determining next steps prospect by prospect.

Our organization’s budget depends on event revenue. How do we retain event donors when we can’t have our event?

Organizations that depend heavily on event fundraising to bolster their budgets may feel the pinch more than those who do not. Events present an opportunity for donor development beyond the ballroom, but many organizations do not consistently cultivate event donors in a way that would build relationships and foster mission loyalty. Sterling encourages event-dependent organizations to use this time to engage with donors to learn more about their connection to your mission and to share your missional impact. This will help you determine which donors love the mission more than the party.

Will we have to/should we give money back if we cancel our event?

We believe offering the option for a refund is the right thing to do, but many (if not most) donors will likely allow you to keep their donations. We’ve seen some creative and inexpensive stewardship in the wake of cancelled events—wine and flower deliveries, special videos, and other customized touches that say, “Thanks for sticking with us.”

How do we plan for our fall event when we don’t know what the social distancing guidelines will be?

Sterling recommends developing multiple scenarios and detailed contingency plans for upcoming events. These may include laying the groundwork for a virtual event as a possibility, moving your event to an outdoor venue, or initiating other measures to ensure social distancing. Event and annual campaign solicitation took a breather, but it appears to be picking back up. If you choose to move forward with fall solicitations over the next couple of months, we recommend that you acknowledge the effects of COVID-19 on your organization in your donor communications. Further, we suggest that you clearly communicate with donors that your organization will be closely following social distancing guidelines and will adjust plans accordingly closer to the event date.

If you have questions about how COVID-19 is affecting the nonprofit sector, email us at hello@sterlingnonprofits.com, and we will address your question in our next issue­—or be in touch to discuss with you personally.