Outlook for 2009: What the Recession Will Mean for Your Organization

Tuesday, January 6, at 12 noon, U.S. Eastern time

Richard Marker is a principal at Marker Goldsmith Philanthropy Advisors in New York, a firm that helps donors make financial decisions. Mr. Marker is also a senior fellow and associate professor at New York University's Heyman Center for Philanthropy and Fundraising.

Patrick Rooney is interim executive director of the Center on Philanthropy at Indiana University. where he manages the research and writing of Giving USA and the semiannual Philanthropic Giving Index, which gauges and predicts the climate for donor giving and philanthropic activity.

Brent Alexander is a strategic marketer for the Direct Marketing Alliance, a fund-raising consulting firm in Baltimore. Mr. Alexander specializes in direct mail, digital, print, and online media fund-raising campaigns.

A transcript of the chat follows.

Peter Panepento (Moderator):
    Happy New Year, everyone. Welcome to our first live discussion of 2009. Every Tuesday at this time, we bring together a panel of experts to take your questions on a topic important to the nonprofit world. As we enter 2009, there is no topic more important than the economy. With that in mind, we've brought in three excellent experts who can take your questions on how to manage your organization through what could be a difficult year.

Peter Panepento (Moderator):
    We've already received a lot of questions -- and we'll get to those in a minute. In the meantime, I encourage those who have questions to submit them as early as possible. To ask a question, please click on the "ask a question" link on this page and type in your query. One of our guests will answer your question during the next hour.

Peter Panepento (Moderator):
    Ok, let's get started ...

Richard Marker:
    The current deep recession has called upon my professional knowledge as much as any topic over the last number of years. I spend my time teaching and advising those who give money away - philanthropists, foundations, and families. As an educator, I chair the NYU Academy for Grantmaking and Funder Education, and as an advisor, I am co-principal of Marker Goldsmith Philanthropy Advisors. Virtually my entire 40+ years as a professional have been in the philanthropy, non profit, and higher education sector. It is my view that how we respond, especially at challenging times such as these, tells us a great deal about the very character of our society - and that the volunteer/philanthropy world has a great deal to contribute to enhancing taht character. It is my pleasure to be joining you today.

Patrick Rooney:
    Charities no doubt wish they could sweep out the economic concerns of the old year along with the remains of the New Year's Eve confetti, but they will carry over; 2008 was a challenging year for many organizations and 2009, or at least the early part of it, is likely to be as well. There are as yet no national numbers to tell us definitively what may or may not be happening to total charitable giving across the board right now, but clearly charities are facing a difficult fundraising environment. Overall, the sky is not falling but there likely will be some pain. The U.S. economy has been in recession since December 2007. While giving doesn't always fall during recessions, it generally does decline during longer recessions, by about 2.7 percent annually, according to the Center on Philanthropy at Indiana University's research for Giving USA Foundation.

It is important to note that the total picture for giving and fund raising now and the outlook for 2009 is complex. The nonprofit sector is not homogeneous, and different organizations will be affected differently. Many charities reported witnessing a slowdown in donations received in 2008 and are concerned for 2009, but other anecdotal reports and polls indicate that some donors intend to continue giving and some are giving even more than usual. Others will not be able to do so in the short term, but if nonprofits continue to engage them in meaningful ways, they are likely to become donors again in the long run. The Center on Philanthropy at Indiana University has developed a briefing paper on the economy and giving, which is available on our Web site at http://www.philanthropy.iupui.edu.

I look forward to our discussion of these issues today.

Question from Sarah Brophy, bMuse:
    I'm hearing many foundations say 'gifts only for those organizations with existing relationships'. Some foundations are asking current grantees to identify the issues they need the most help with, and then the foundations are reviewing their focus. I find this healthy and feel it provides some hope of stability, but I'm wondering how wide-spread are these two practices.

Richard Marker:
    Both are "trends." In both cases, they reflect that foundations are committed to doing the "best they can" for the organizations with which there is a proven and trusted relationship. It is an awareness that that trust takes a while to establish, and therefore to keep grantee groups as whole as possible, they want to not make grantees go through all sorts of twists and turns. As far as % of foundations, it is too early to know, but it certainly reflects a lot of what I am hearing from colleagues in the grantmaking field.

As a general rule, I agree that it is healthy, but I hope that foundations don't fully dispense with their r & d function - to keep innovation going when no one else can.

Question from Bill, Fox Chase Cancer Center:
    Can you provide some examples of how we can be creative and help donors make a gift but not necessarily go "all in" right now? (extending the length of a multi-year pledge, funding a portion of a trust now and delaying the remainder, etc...) Thanks!

Brent Alexander:
    Bill-

Great question! I feel as if you need to take the steps of adding incentives into your multi-year pledge programs. Create levels of engagement based on the give/pledge.

An example would be developing a program that provides the donor/prospect an opportunity to select which offer best suits their giving potential. The user will have access to alter their giving plan at anytime based off their giving capabilities.

I would implement a short "treed" on-line survey that provides your organization valuable insight into your current programs and create the ability to tailor a plan best suited to the donor.

Are your reminders primarily via direct mail? If so a personalized url (PURL) could be very beneficial to creating awareness and options related to current plans. Driving folks on-line via direct mail allows for your organization to capture valuable donor/prospect information related to your cause.

Are you doing email reminders? If so, are they personalized and are they targeted based upon the type of programs?

Reminders should be scaled back, but when reminders that do go out to individuals should be targeted and include relevant content that the donor values regarding your organization.

Example: regional stories, general overview about what there donations contributed to, make a reminder more of a thank you!

http://www.purldemo.com

I feel strongly that given a choice of giving plans will improve relationships and prompt individuals to give more!

Question from Kristi Puchbauer, Omega Development Solutions:
    Economic downturns in recent decades have proven to reduce the level of giving temporarily, but do not correlate with declines in long-term levels of giving. What are your thoughts on the continuing slow down in overall philanthropic giving and the rate at which contributions will rebound?

Patrick Rooney:
    I think the key is the economy. Given the absolute decline (40% plus or minus in the stock markets) we might anticipate that there may be a lag in the recovery in philanthropic support. People will want to wait and be sure that any stock market gains that they see are not transitory before making big gift commitments. It is imperative to note that historicaly, giving has not fallen through the floor in recessions, so we should not expect to see giving explode in the early stages of a recovery, when we get there.

In Giving USA, we see that historically, total giving is around 2 percent of GDP. Unless people dramatically change overall consumption, that rate is likely to stay relatively stable in the long-term.

Question from Chingwell, High Impact Consulting Services:
    What are some of the long-term ramifications of the current economic meltdown, especially when thinking about the survival of emerging and/or smaller community-based nonprofit organizations? How can a smaller organization stay financially viable in this crucial period, when they depend on the grant support from the foundations?

Richard Marker:
    In many ways, smaller organizations have an easier "strategic" challenge than larger organizations, but they may have a harder financial time getting there. Smaller organizations typically have limited focus and mission and are not carrying lots of extra and long term staff and facility costs. If I were addressing funders, i would emphasize a couple of things: the ability of smaller community based organizations to respond quickly and with agility to needs on the ground; the clarity of mission which means that funds are going to be used for the specific purposes given; that such organizations typically provide a type of service that larger organizations cannot and therefore it is healthier to keep them alive than to have to reinvent them after the downturn is over.

Question from Laurel Amabile, Unitarian Universalist Association of Congregations:
    Given the current economic indicators, what is the anticipated impact on giving to religious organizations in 2009, both in local congregations and at the denominational level?

Patrick Rooney:
    Historically, using Giving USA, recessions have had little effect on religious giving. In the four recessions since 1967 that lasted 8 months or more, giving to religion fell by an annual average of 1.4% adjusted for inflation.

In non-recession years, giving to religion increases at an annual average rate 2.8 percent.

We do not have data at the congregational or denominational level.

Question from Cheryl, Scholarship Organization:
    Hello, the question in our office has become, what will the impact of the be in 2009 as it pertains to direct response campaigns, corporat downsizing and their impact of philanthropic giving.

Brent Alexander:
    Cheryl- The same question is posed in my office!

The 2009 economic impact really is the great unknown.

It is my opinion that we will see a lot more prospecting than in previous years. However the types of prospecting will be different then what most direct marketers are accustomed to. Direct mail packages will continue, but there will be a bigger focus of driving individuals on-line. On-line fund raising will see a huge bump in 2009 and into the future when done correctly.

The question you pose is common around most offices, but I think the focus should shift from how to what steps can we take to position our organization post recession.

My answer to the question: What steps can be taken to position our organization post recession?

Prospecting, on-line efforts, integrated campaigns, co-op opportunities with corporations, data mining, relationship building, incentive based campaigns, thank you approach.

Even with Corporate downsizing the monies are still available and should continue to be sought after. Corporations allocate funds every year for giving and more than ever giving will be huge PR during these turbulent times.

Thanks for the great question.

Question from William Madsen, Protestant Community Centers, Inc.:
    Do you see a flood of mergers in the next year? It seems with this economy a realistic option for some agencies is to merge or at least share some services inthe new year.

Richard Marker:
    Many funders are convinced that mergers are the way to save direct service programs - and in many cases they are correct. But mergers, partnerships, and collaborations are not easy - even in the best of times. Cultures, missions, etc all have to be close enough to be in sync or at least to be complementary. As one who has helped facilitate several mergers - or almost mergers - i can tell you from first hand experience that it isn't easy, and not always right. And while the sticking point may simply be a recalcitrant but influential board member, if that board member can derail the work of the new organization, it jeopardizes all of the efforts.

If an organization has never had experience with sharing some sorts of services or collaborations, I would recommend starting with specific trials before going all out. But I do agree that this IS the right time to ask the hardest questions about your future.

Question from Lisa, American Express:
    There have been very mixed reports on the true affects of the economic downturn on charities. We have the statistics that the Center on Philanthropy have quoted showing that giving dropped on average of 1.3% during the five national recessions since 1973. What are we seeing from this year's recession? Are there any recent statistics showing how this year's recession has affected donations?

Patrick Rooney:
    We do not have national data at this time to show changes in overall giving in 2008. Giving USA Foundation will release its preliminary estimates on June 29, 2009.

The Center's Philanthropic Giving Index from December 2008 shows that fundraisers perceive that there is a negative effect from the economy on giving. Results are mixed: Fundraisers in the survey also said that among donors who gave $1,000 or more, 1/3 reported these donors were giving the same amount as in the prior year; one-third reporrted an increase in giving among these donors; and one-third reported a decrease in these larger gifts.

Question from Wil E. Giron, New Horizons Youth Services Bureau:
    What are some of the ways that small non-profits can reduce personnel costs in these tough times? We are pondering the idea of placing all of our full-time social workers on "contract" instead of keeping them as full-time employees; is this a good move to reduce costs?

Richard Marker:
    When i was the ceo of a substantial sized non profit, I had to weather a couple of downturns. Invariably, non profits look to personnel costs as the way to save. After all, it is typically the largest budget item. My own view is that it is a short term savings to reduce support for those you can still employ. It is better to continue to fully invest in fewer employees than short change and antagonize many.

I am not naive. I am fully aware that something has to go and it may be the choice of canceling whole programs and keep fewer employees. But in the nfp field, people are your strongest asset, and you need to continue to invest in them even as you make hard decisions.

It is certainly legitimate not to hire new full time employees and to choose to hire "contract" employees for any at risk project. But, as a rule of thumb, I would resist taking away benefits from continuing personnel. You pay the price later on with greater turnover.

Question from Tracey Beeker, Barkley:
    Will smaller donations play a larger role in giving overall? Should organizations focus more on smaller donations versus major gifts? If so, what is the anticipated average donation amount?

Brent Alexander:
    Tracey- The questions you pose couldn't be more important.

Smaller donations will play a larger role based on the economy and the trend of giving more to local charities (no evidence of this trend, just my opinion)… Smaller donations will allow organizations to cultivate more relationships, thus positioning themselves for a bright future.

Smaller donations have the potential to turn into long term annual donors if appreciated for their donations during these hard times. Using an integrated approach will allow for organizations to properly thank donors, build strong bonds and provide relevant content to their users.

Major Gifts: Always need to be sought after, but maybe the focus needs to more on seeking out future major gifts from those in the Baby Boomer Generation. Just a thought!

Appropriate Ask: $10.00-$20.00 with a matching program for anything over $50.00. Not a 100% match, but a match percentage of 5%.

Allowing people to give more when giving less

Question from Karen, large nonprofit:
    We are a national nonprofit just now starting a major gifts program from scratch. We provide affordable housing & support services for residents to get bacck on there feet. We have seen the need increase in this economy. What can we expect in the area of major gifts for 2009? In this economy how long do you estimate it may take to get a major gifts program to a point where we are seeing donations coming in. (even a range would be helpful here like 12-18 months, etc). I've heard some are saying major gifts will be smaller & decreased in number but I haven't heard actual numbers yet. What are you hearing or predicting for the percentage of major donations decreasing or donations in general? (I've heard that gifts in general were predicted to be down by 1.3% before the economy tanked). Thank you!

Patrick Rooney:
    If you are just starting a major gifts program, I think you are talking 18 months to 2 years before you see real returns.

Major gifts will typically come from current donors who have deep involvement with the organization and fully understand the case for support. Now is a good time to be deepening your organization's relationships with its most loyal donors and increasing their understanding of the case for building the housing.

The Center's Philanthropic Giving Index shows consistently that major gift fundraising is the most successful fundraising tactic; however, the level of perceived success in Dec. 2008 dropped to a level not seen since the summer of 2003. A significant number of fundraisers are having less success now with major gifts than they anticipated 6 months ago.

Question from First Step Transional living Foundation:
    We are a new foundation. How can we raise funds for new foundation?

Richard Marker:
    The word foundation has come to mean lots of things. I am assuming from your question that you are a public or re-granting foundation - meaning that you wish to raise funds in order to give them away. My expertise is on the giving side, not the raising side, but i would suggest that the best starting place is a core of people, very committed to a central idea, who will put the first money on the table. The quicker you develop a track record, even if at a much smaller level than you may ultimately desire, the more credible you will be when you go to others. After that, i turn the question over to the fundraisers who can share the techniques of finding others to help you expand your reach and fulfill your vision.

Question from Petra, ASU Foundation:
    How would you recommend approaching corporations about face-to-face visits in these times? I'd like to create and/or maintain personal connections without creating "worry" that I'd be asking for money during a visit. Thank you.

Brent Alexander:
    Petra

Very good question and tough to boot :)

I would approach corporations with the mindset of they are expecting you to ask for money. I would have a clearly defined campaign plan that addresses how their contribution would benefit the organization. I would also emphasize PR more than normal... PR is huge because of the economic situation and good PR can jump start and corporation.

Remember you are in a position of doing the tough job of asking for money. The corporations are going to continue to give, but they may be more selective to who they give to.

PR, PR, PR!

When do usually ask?

I wish you the best!

Peter Panepento (Moderator):
    I neglected to introduce our third guest earlier -- and he was added to the marquee just this morning. Brent Alexander is a strategic marketer for the Direct Marketing Alliance, a fund-raising consulting firm in Baltimore. Mr. Alexander specializes in direct mail, digital, print, and online media fund-raising campaigns.

Question from Robin, CA non-profit:
    With every industry and non-profit field looking to the incoming federal administration's new economic stimulus package for help, what do you think will be included and what do you think will have to wait?

Richard Marker:
    I will respond to a very small part of this very large question -the impact on philanthropy and the non profit sector. My sense is that there will be competing pressures:

1. Human service needs will continue to grow - even if the stimulus package provides lots of new jobs [a given], it will take a while for that to take effect and work its way through the system. Therefore, it is likely that there will be new incentives for private giving to relieve pressure on public funds for public need. Moreover, i wouldn't be surprised to see laws establishing mandatory 5% minimum payouts from endowments, and donor advised funds to match the 5% mandate on private foundatons.

2. The recent Madoff scandal and its impact on non profits and some foundations will reinforce transparency and accountability pressures in congressional reviews of charities. One never knows what new laws that might produce but I think that the entire non profit world will be under greater scrutiny. After all, charity is money for the public good and public needs are very great right now.

3. At the same time, when human needs are growing there is greater demand for services provided by the non profit sector. Therefore, I suspect that food and job areas will benefit. And a national health system is not far behind. The rest of the stimulus package is beyond the scope of my expertise and the scope of this medium.

Question from Karen McClellan, NYC Outward Bound:
    What are non-profit's financial expectations for benefit dinners/ galas in 2009 given the current economic climate? Specifically are they expecting a certain percentage less or more for their event?

Patrick Rooney:
    The Center's Philanthropic Giving Index for December 2008 shows that fundraisers are not optimistic for the first 6 months of 2009 for special events. The expectations index for the next six months is 12 points (of 100) lower than it was for the current situation in December 2008 (when is was 69 points).

Question from Darrell:
    As a consultant I work with several organizations. for my clients who are smaller and feel they need funds now what can I tell them so that they are prepared for any continuing economic problems.

Richard Marker:
    One of the great ironies of the last generation is a significant shift in the thinking of funders and foundations. Once upon a time, funders funded deficits; no reason to give an organization money that didn't need it. Today, the view is that a healthy organization worth funding is one which is able to have sustain reserves for a rainy recession. The organizations for which this is a great challenge is the small ones which are least able to develop reserves or endowments. A couple of approaches which are persuasive with funders: if a funder has been loyal for some time, tell them that you need them more than ever. You probably won't get too many new ones, but established funders will respect their key role in sustaining their pet project.

It is also a time when it makes sense to explore collaborations, etc. Funders will respect that smaller organizations are exercising their greatest assets - creativity and agility - in developing survival strategies. Ask funders for in-kind and increased board support instead of or in addition to funding.

Question from Kristi:
    We have been hit hard this year. I just wonder how my counterparts are doing? Our donations are down about 30% from last year. And our grants are very minimal. We gave a 5% out last and only 2% this year.

Patrick Rooney:
    One source for comparisons among types of charities is the Philanthropic Giving Index, which measures fundraisers' perceptions, rather than dollar amounts. The most recent PGI was released mid-December 2008.

In any given year, when we've done surveys (and confirmed by AFP and Guidestar in their studies) between a third and a half of charities see a decline in giving. We saw one-third of charities reporting a drop in giving in 2000, which was one of the strongest economic years. We saw just under one-half reporting a drop in 2002, which was a very difficult year in the economy.

Question from :
    How can I create an environment of stability & motivation for my staff during a time of budget cuts and limited funding?

Richard Marker:
    The key here is "do you believe in it?!" There are ways of investing in staff during cutback times but the senior execs and supervisors have to actually convey a genuine commitment. 1. Important to continue to provide certain kinds of staff investments during this time - educational programs, vacations, etc - which make the difference in quality of life experience. This conveys those who are still on staff are part of your future.

2. Involve staff in restructuring discussions -IF YOU WILL REALLY EMPOWER THEM. It is counterproductive to PRETEND to go through this process if they smell a disingenuous rat.

3. People are not naive. They know what the world is about. Those who are invited to stay must not be survivors but see themselves as creating a new responsive reality.

4. DON'T EXPECT 3 PEOPLE TO DO WHAT 5 DID BEFORE. Establish new realistic expectations so that you neither burn out nor antagonize the staff. For now they may need the job and put up with it; when things turn around, they may be less committed to you if they feel that you haven't been genuinely committed to them.

Peter Panepento (Moderator):
    We are about halfway through today's hour-long discussion. Please remember that you can ask a question at any time by clicking on the "ask a question" link on this page. Our panel is eager to hear from you.

Question from Lenore Von Stein, Artistic Director, 1687, Inc.:
    How can start-up art organizations position themselves for increased funding in 2010 during 2009?

Patrick Rooney:
    Starting now to raise funds for 2010 is a great idea. It gives you time to explore your options, build relationships, make your case for support, and find out whose funding cycles you can get into.

J. List at the University of Chicago and his co-authors recently found that challenge grants or gifts can help a charity raise its level of support. You might use this time to identify a donor or group of donors who would consider making a challenge gift.

Question from Elizabeth - Feed The Children:
    Re: Major Gifts Prospecting: Are there any specific demographic groups that should be targeted more heavily than others, given the economic climate?

Brent Alexander:
    Elizabeth-

I answer yes to this question... The Baby Boomers are the target, but the approach will be the key. Building relationships now and building for the future will position Feed the Children for a windfall of major gifts in the future.

I would co-op with corporations and position your organization to be in front of executives with major giving potential.

I apologize for the general nature of my response and would like to discuss this further once I complete this forum.

Please feel free to contact me to discuss this further.

Baby Boomer Tagets:

Board Members, Executives, Athletes, early Retirees...

Brent Alexander

Question from Eileen Heisman:
    With the rolling averages for foundation payouts going down over the next three years, foundations will be giving less if they use that as theonly benchmark. However, they could pay more if they wanted to do so. Will foundation boards be willing to and be brave enough look at increasing their payout percentages beyond the rolling average?

Richard Marker:
    Several issues here: since everyone has lost money, in fact, a 5% payout based on last year's averages is really 8-10% cash payout today. So the boards are already freaked out by reductions.

Some boards have been willing to reconsider what their 'baseline' should be. If they were making 15% for 10 years, and paid out only 5%, they have vastly increased their base over those years. Put that way, some boards have been willing to define their "base line" of corpus at an amount based on a previous time in history. Once doing that, it liberates the thnking to give more durign crisis times.

Having said that, I want to put in a plug for the legitimacy of not changing if a thoughtful board chooses not to: Private foundation funding is society's r & d fund. There will always be a need for innovation or experimentation - and for the next few years, precious little other money available for that. Even though the short term needs are very great, someone needs to be investing for the long term, and i would respect a foundation board which thought to do that.

Question from Juanita Ortiz, UWI :
    Do you have any data on how the recession both here and abroad are affecting worldwide giving?

Patrick Rooney:
    There are national studies in other countries, but as yet, there is no global giving report that would help us answer your question.

Question from Greg Demirjian iGivingWorld.com:
    Do you think, now more than ever, there is a need for greater collaboration and information sharing amongst philanthropists and foundations?

Richard Marker:
    The easy answer is "of course." More than they like to admit, funders and foundations act in silos and are often competitive. There are often great benefits to partnerships and collaborations - beyond sharing information - as a way to leverage $s, increase expertise, share risk, and add gravitas to a cause.

However, the devil is in the details. A flawed collaborative or partnership is worse than none at all. Not every funder is suited to partner, and not every project lends itself to a collaboration. [if you are interested, contact me after this to receive a check list/ppt to help funders think this question through.]

Question from Ketura, editor, The Nonprofit Board Report:
    How does the current economic climate affect what can/will be expected of boards of directors, particularly in the area of fundraising? How should they think about cutting costs, and what are the ways they can have the most impact in raising money for their organization? Thanks.

Brent Alexander:
    Ketura- Board Members should become more visible and active within the organization they are associated with during these hard economic times.. I'm not saying that Board Members aren't active, but some are serving on Boards for personal PR and recognition.

Simply being more visible and active within organization initiatives and events will ultimately improve fundraising, thus eliminating the question of costs.

Thanks for the great question.

Question from Ann Rogers, Lutheran Family Services of Virginia:
    What business sectors offer the best potential as prospective philanthropic donors in 2009?

Patrick Rooney:
    Overall, fundraisers' reported success with corporate giving on the Philanthropic Giving Index has plummeted a total of 20 points (of 100) in the past two years. In Giving USA, corporate giving fell an annual average 1.6% in recessions that lasted 8 months or more (from 1967 to 2007).

The PGI and Giving USA do not look at industries specifically, but historically, the finance industry gives a large portion of its contributions cash; manufacturers give a large share of their support in-kind. Our hypothesis is that in-kind donations by corporations will play a larger share of total corporate giving this year because of excess inventory stocks and low profits.

Question from Doug Weinbrenner (Director Small NP, MPA Grad Student):
    One of the keys to longevity in the public and private business is taking calculated risks. I would assume in these volatile times, though it would seem counter intuitive, these times are the best for risk (incorporating new programs, funding sources, etc.)

Am I off base here ?

Richard Marker:
    In a previous answer I hinted at this question. It depends on what is one's understanding of the role of private philanthropy. If you believe its role is to provide for immediate human need, then one lets others define the need and you simply provide funding. If, though, you view private philanthropy as society's risk capital, then innovation is vital.

Here is the issue though: don't impose that on an organization just because you think it is a good idea. Many nfp's are really struggling to provide basic services. It may be that they simply don't have the human resources to implement innovation. Let them alone. If you believe they are doing something worthwhile, then fund them. Don't impose your concepts of innovation on an organization at this time.

But then go look for a more innovative or start up organization to try out your commitment to risk. There are lots of them and some are really worthwhile [some will fail!] When we emerge from this mess, you will have invested in an idea which will be ready to make a real impact.

Question from :
    What can our organization do in terms of marketing and communications, when we lost our budget and can barely afford business cards?

Brent Alexander:
    Do you have a website? If so it is important to add some type of viral marketing vehicle.

I recommend trying to work with other organizations to ease the burden of your administrative costs and promote the organization.

Please keep fighting and if you a website please send it my way.

Brent

Question from Jeannette Archer-Simons, CFRE, Consultant:
    Knowledge is a critical factor in organizational stability and innovation, yet in difficult times, training and development of boards and staff often is cut from budgets. If you could recommend the top two priorities for education for organizational leadership in 2009, what would they be and how would you justify including them in tight budgets.

Richard Marker:
    Boards are not simply enablers; they are partners in the ability of an organization to reach its mission. Boards should invest in organizational leadership for themselves and for their staff. It isn't extra - it is key. After all, every organization is going through a thoughtful strategizing. If a board isn't fully bought in, empowered, involved, they can never approve appropriate next steps and set priorities.

As I have suggested in other answers, i profoundly believe that an organization must always invest in its core strength - in this case of boards and staff - if it is to survive and ultimately thrive. An uninvolved board which is only hearing stories of woe and being asked for more money will quickly run for the doors. An educated and involved board can provide inspired leadership. It isn't extra investment; it is essential.

Peter Panepento (Moderator):
    For those looking for more coverage of how the recession is affecting nonprofit groups, we've assembled a page that includes links to our previous stories, blog posts, and live discussions on the topic. You can find it here: http://philanthropy.com/financial_crisis/

Question from Alan Frosh, Philanthropy Fund of America:
    In 2009, do you expect growth in donations of complex assets, such as securities or real estate?

Patrick Rooney:
    I think it is reasonable to assume that we will see a drop in stock gifts -- given the downturn in the stock market -- because people will not be facing the same capital gains situations that they would face in a bull market.

Some donors, however, may determine that it is better to sell stock now at a loss and make the gift in cash as a tax-deductible gift, rather than transfer the security itself to the charity.

We can reasonably anticipate a similar fall in real estate transfers, because of the loss in value in property.

Question from Bridget, small non-profit:
    Do you think that organizations should continue to spend on technology, development, etc...or hold off until after the economy begins to settle? Why?

Richard Marker:
    From the perspective of a funder, it is important to see that an organization is trying to improve its operations [not simply for efficiency but also for long term effectiveness.] Some funders will be open to special funding to provide for capacity building, technical and organizational assistance, etc. This is a great time to make that case.

However, be careful: implementation is not only a financial commitment. It will also require major commitment of staff to learn new ways of doing things. Spending means time for learning curve as well of investment of funds - even with a generous funder. Make sure that you are prepared to allow that learning curve to occur during these challenging times or it will seem to be a wasted investment for all concerned.

Question from Zivanai Mutize, Grizzard Communications:
    What are you recommendations on prospecting ? A lot of non profits want to cut back or totally stop. How do we encourage them to continue to prospect ?

Brent Alexander:
    Zivanai- The bottom-line regarding prospecting is simply this:

Those who continue to prospect using integrated programs will reap the benefits when the recession ends. This is the time to cultivate relationships and learn about prospects.

It will be tough, but the losses will be more significant in the future if they pull the plug. Mail less, but mail smarter... Use integrated technologies, off-line and on-line.

http://www.purldemo.com Brent

Question from Jeannette Archer-Simons, CFRE, Consultant:
    Now is a great time for boards of directors and executive leadership teams of organizations to not only assess their organizations effectiveness but also identify strategies that will enhance their sustainability for the long term. What would be the top five things you would recommend in either assessment/evaluation or strategic implementation for 2009.

Richard Marker:
    Whew.... 1. making sure mission and program [and budget] are aligned. If not, why not?

2. make sure that core competencies of the org - including staff, facilities, etc are aligned with #1. In good times, orgs sometimes add all sorts of people and programs, and suddenly find that there is an imbalance between what is being done with core mission. [Has you mission in fact changed? Ask the hard question?

3. Does the "outside world" agree with your own internal assessment of #s 1 and 2. If not, are you beign honest with yourself about your potential, strengths, reputation, competition, etc.

4. Have you created a culture of openness to really enage these questions? The degree that you are looking backwards or only contemplating your own internal evidence - or have no safe ways for genuinely engaging challenges is the degree to which you will become irrelevant.

5. It is worth at least one "dreaming" session. What should you look like if you were the best you can be when you emerge from this time. Get away and get a facilitator.

Question from K, small nonprofit:
    Thanks for addressing the question of small donors. Are there statistics you could point us in the direction of to bolster the case for building relationships with smaller donors? We have a walkathon which secures about 2/3 of our annual donations (in number, not amount), but our agency instituted a policy of not tracking or acknowledging donations under $250 due to the heavy volume. I'd like to change that policy in order to reach many more donors right now, but could use some facts to back me up.

Patrick Rooney:
    Nearly half of all individual donations (amounts not number) come from people who make $100,000 or less. Some of those donors now will increase their income in time and be able to make even larger gifts.

The conventional donor pyramid has a broad base of gifts, often at $25 to $50, and over time, a percentage of those donors will increaes their giving. Some of those will become legacy/estate donors. Unless you build the base, you won't have a chance at the peak.

In the American Express Gift Study, about two-thirds of the separate contributions reported were less than $100. A frequent reason found in studies for why donors do not renew their gifts is lack of recognition or acknowledgment from the recipient charity.

Every gift should be acknowledged.

Question from Bruce Arbit, Independent Consultant:
    Thoughts about initiating a campaign or major gift effort in this economic climate. I've seen conflicting info about prudence and caution vs. using this time as an oppt. to position yor org for the future. Is the answer dependent on the mission of the org., i.e. one that deals with anything percieved as more 'basic' human needs as opposed to what may be considered 'not as immediate.'

Brent Alexander:
    Depending on the mission does play a role in determining how to approach direct marketing efforts in 2009.

I believe that positioning and cultivating relationships for the future should be the ultimate focus moving forward.

Major Gifts are still a necessity, but for the health of an organization, but the emphasis should be on the future.

Relying on major gifts will help some, but hurt the majority if the relationships aren't built starting today.

I would build a hybrid campaign (direct mail, eProgram and web based) that integrates several facets of an organization together. Through this campign I would be sure to learn as much as possible about the individual to better position myself when the economy turns around.

I have some examples, if interested.

Brent

Question from Marina, HIAS, Inc.:
    What can large international organizations do in the economy, given less agility and larger international staff?

Richard Marker:
    I will answer exclusively from the perspective of funders [these are NOT comments on HIAS]: 1. There isn't a lot of patience for perceived "bloat"

2. There isn't a lot of interest in funding projects or programs or priorities that seem to be yesterday's issues [but have never been dropped.]

3. There isn't a lot of interest in funding projects or an organization which seems to duplicate what others do.

4. There is real interest in real outcomes - not simply vague statistics but what really has happened with the money given in the past. Is there evidence that your intervention brought about changes which otherwise could not or would not have happened.

5. Be focused. Funders want to know that you have asked the hard questions of yourself to make sure that you are using your size effectively and are willing ot make changes if necessary. Enough for now?

Question from Frances Sheehan:
    I'd love a copy of your ppt/checklist, Richard, re mergers and collaborations!

Richard Marker:
    feel free to contact me at marker@WisePhilanthropy.com.

Question from Rebecca, Grand Rapids Civic Theatre:
    Recent articles are reporting that the arts in particular should be prepared for a tougher 2009 because many individuals and foundations donors are focusing on general human needs. Do you feel that this prediction will in fact be the case?

Patrick Rooney:
    In the arts, fundraisers responding to the Philanthropic Giving Index in late 2008 showed expectations for the first six months of 2009 to be very close to the present sitaution index.

Giving USA Spotlight #3 2008 shows that arts giving slows its rate of growth during long recessions (8 months or more) to 2.3 percent (average annual growth adjusted for inflation), compared with growth during non-recession years of 4.7 percent.

In the 2005 Bank of America study of high-net worth households, about three-quarters of the participants gave to the arts. They also give to all other types of charities. Making your case for support will be especially important.

You should continue to ask throughout the business cycle. All research shows that if you don't ask, people don't give.

Question from Stuart, small non profit:
    My non profit is a church. reaching out to people with new media such as facebook and twitter sound wonderful and cost effective, but wont hit what are considered to be 'base demographic'. do you think this might be evolving; do you see people who are not typically used to that type of media going this route to locate local churches and nonprofits?

Brent Alexander:
    Stuart- Great question... While it is cost effective the results will take time. I see more and more folks opening up to this type of direct marketing to locate local churches and charities.

I recommend that you have someone active on these sites to promote your efforts.

I would also make mention of this to the church congregation and see what kind of results they foster.

Be sure to add a viral marketing tool on your site.

I'm building a huge church campaign as we speak!

Brent

Question from Patti, nonprofit:
    As a nonprofit new to soliciting grants with the economic downturn, what is the best way to position ourselves?

Richard Marker:
    It depends what you are doing. In general, if you doing new things, look for venture philanthropists or venture philanthropy funds to get your start. Funders are not interested in starting new relationships with groups they think are doing things simply incrementally different than other groups. But some [SOME!] funders are open to new IDEAS and PROBLEM SOLVING. If you can make that case, you can position yourselves in the eyes of the small group of funders who want to continue to invest in change.

Question from Elise, One Heartland:
    We are increasing the amount of online fundraising in order to save money on printing, postage, etc. Do you have a few tips as to how to encourage donors to turn to our website instead of looking for a direct mail piece?

Brent Alexander:
    Elise- I love this question... Yes I can offer you up some basic points of emphasis. Have you attempted an integrated campaign?

Using direct mail to drive folks on-line using a PURL has shown huge results.

Survey the responders to how they want to be communicated with. Use an incentive of an on-line newsletter.

I have several examples I can show you.

I am not trying to cut this short, but I want to be fair to everyone who has posed questions.

Please email me at brent@directmarketingalliance.com I'll send you samples and some specific strategies.

Brent

Question from Tracey Beeker, Barkley:
    To what degree will cause marketing be impacted by the economic climate? Will companies still be successful in cause marketing endeavors?

Patrick Rooney:
    We can't predict what will happen, but we know from the past that casue-related marketing expenditures typically come from advertising or marketing budgets, not from philanthropic arms of companies. If companies cut costs by cutting advertising, then there is potential that cause-related marketing will be affected.

However, the work of Cone, Inc. and others has established very clearly that consumers expect companies to be good citizens and say that they guide their purchasing decisions at least in part based on corporate connections to charities. Companies that market directly to the public, rather than to other businesses, are aware of these consumer preferences.

Question from Jami:
    With large foundations receiving more and more proposals, how do larger, more established re-granting organizations position themselves to show the need in their community?

Richard Marker:
    This question actually has been a live question for 10-15 years. And time and space don't allow a full answer. But I would say that the most persuasive cases to be made to all funders in this downturn time are:

1. Evidence that the largest numbers of people are being served by the agencies covered by the regranting organziaton and

2. There is the expertise in assessing need and mandating accountability that individual funders may not have and

3. a large regranting organization is more able to monitor trends and changes than an individual organization that is simply making its own case

4. There is a responsibility to maintain the nfp/social service infrastructure. Regranting organizations temper the tendency for fads in philanthropy which would not happen so well if such groups didn't exist.

5. Having said that, foundations are not going to change their strategies [not because of the number of proposals but becasue they see themselves as the regranting org.

Peter Panepento (Moderator):
    We have quite a few outstanding questions, so we'll keep the discussion going for a bit longer. We'll try to get to as many of them as we can based on the schedules of our guests.

Question from Lee Collinge, Metropolitan Group:
    Does your thinking about smaller and fewer major gifts also apply to capital campaign projects? And if so, are you seeing trends about the giving areas donors are currently preferring to make an investment -- buildings or programs?

Brent Alexander:
    These investments are an interesting concept. I did not take that into consideration; shame on me!

Land, buildings, programs are great gifts and would be appreciated by local charities. However these types of contributions do not benefit all organizations.

I will have to some homework on this question. I really appreciate your inquiry and would like to revisit this with you soon.

What are your thoughts? Please contact me.

Question from Steve, Start-up Non-Profit:
    I am involved with a newly formed charitable organization. On the one hand, I see the current economic climate as an opportunity because, in order to get started, my organization does not have the burden of a large (or any) overhead. On the other hand, however, my organization has no programmatic track record. How do I best take advantage of my lean status and deal with funding sources that are skiddish about funding an organization without a track record?

Richard Marker:
    Start small with a very small number of board members and funders who believe in you. Develop a track record of doing what you can during these times. As i suggested in a previous answer, some venture funders like start ups but they need to believe in your vision and be persuaded that you can deliver. You may need to put a lot of sweat equity out there for a while. Scale is NOT your main goal for now; limited but measurable success is for now. If you can do that, when the economy opens up, you'll be better positioned for mezzanine funding.

Comment from Nancy, small non-profit:
    what is "viral marketing"? several answers have contained that phrase.

Peter Panepento (Moderator):
    Hi Nancy. I'll take this one. Viral marketing usually refers to the use of word-of-mouth and online tools to spread your message. Traditional marketing usually involves the use of paid advertisements and press mentions. Viral campaigns hope to get a lot of free attention for a group by getting others to spread the message for you. The goal is that the message spreads virally -- where one person tells 10 people, who, in turn, tell 10 more people, etc.

Question from Bill, Fox Chase Cancer Center:
    To the advisors on the panel: Are there specific questions that you are being asked by high-net worth individuals, relevant to the downturn in the market and how it is impacting their philanthropic plans?

Brent Alexander:
    Bill-

This is risky because I'm not sure there is a large enough of sample questions and results for such type inquiries.

If it were me I might try and massage the information w/o asking the question.

Depending on what you already know about the individual would dictate my approach...for instance if I had inside information that they were big in the automotive industry; I would try and discuss the economic struggles being faced in that market.

Just a thought!

Brent

Question from Karen, NYC Outward Bound:
    What innovative strategies are some nfps doing to secure new corporate donors?

Brent Alexander:
    Karen:

Personalized Video http://www.yourmessagegoeshere.com I am offering a lot of suggestions and not all of them are being done at this time within the NP world... On-line auctions...personalized invites to events... I have a lot of ideas if interested.

Brent

Question from Michon -- small-nonprofit :
    How effective do you think viral marketing is for a small non-profit?

Brent Alexander:
    Michon:

Michon- HUGE... Take advantage of viral marketing. You can capitlaize on the fact that not everyone has taken the steps to incorporate viral tools. samll--to medium--to big! Viral Marketing can help!

Brent

Peter Panepento (Moderator):
    While we wait for our experts to catch up on some of the outstanding questions, I'd like to point out our schedule for the next few weeks.

On January 13 at noon Eastern time, we'll have a panel of career experts on hand to take questions about how to make yourself a better asset to your organization during this tough economy.

On January 20 at noon Eastern time, we'll discuss how to create winning marketing messages for your group.

On January 27 at the same time, we'll have some of the nation's largest donors available to take your questions about how to win the attention and support of major donors.

We'll post more info about upcoming events at

http://philanthropy.com/live

Peter Panepento (Moderator):
    I'm afraid we've run out of time. Because of the high volume, we weren't able to get to everyone's questions today. But I do hope that you were able to get valuable information from today's discussion. We'll attempt to address the unanswered queries in a future discussion. And our guests are also available to take questions offline. If you'd like to contact one of our guests, please send me an email at peter.panepento@philanthropy.com.

Thanks, again, to our guests for taking the time to join us today. And thanks to all of you for helping make this an enjoyable and informative discussion.

Richard Marker:
    It was my great pleasure to have been with you. Please feel free to follow up with me at marker@WisePhilanthropy.com. Thanks.

Question from Maxine Moshay, Beyond Shelter:
    We rely on individual donors, small and some major gifts to fund our general day-to-day operations. What with the current economic climate, is this a good time to even contemplate embarking on a Capital Campaign?

Brent Alexander:
    Maxine:

Yes, a regional small "test" campaign would be advised. Be sure you to keep your organization visible. If a campaign takes off then you create additional value to those who are major donors/gift givers.

Brent

Question from Melissa, Arts Fundraising Consultant, NYC:
    Many individual donors are indicating that they need to focus their giving on organizations who are helping to feed and house people, over organizations that foster arts and culture. What kinds of messages can arts organizations communicate to encourage donors that their support of arts and culture is also crucial to the current economy?

Brent Alexander:
    Melissa:

All organizations have a target and I would advise that you present a message showing why supporting the Arts are important to the current economy. Playing on the economy can be risky, but I would take the risk. I would take the risk because the economy is going to turn around and when it does you will have more evidence to why the arts are important to the health of the economy. Be aggressive and smart...be sure to use viral marketing and share all the stories you can.

Brent

Question from Leticia, Development Job Seeker :
    What are some key donor demographics and most successful fundraising strategies during these challenging economic times?

Brent Alexander:
    Leticia:

I would look at industries that are staying strong. What industries are those? Healthcare Common Trade Companies Military Child Care I would look to target individuals who work within relatively stable business markets. I never want to ignore anyone and believe target the unexpected and get unexpected results (Positive off-course) Best of luck in 2009!

Brent

Comment from Brent Alexander:
    

    Thank you for the great questions. I hope you found my responses to have value. I learned a great deal from each posted question and hope to continue this dialog in the future. I wish everyone the BEST in 2009! Feel free to email me at brent@directmarketingalliance.com