Don't recede during a recession
Spent the week meeting with about 350 non-profit leaders, representing more than 120 non-profit organizations (Nopes), about surviving the current economic crises. It was an exhausting and invigorating experience. It was an attempt to give these executives and fundraisers a reality check. As a serial non-profiteer I know that adapting and changing is not a core competence for this sector. But the world has changed and hunkering down to endure this period is essential. Chronicle of Philanthropy estimates that a 100,000 non-profits may close early next year. One thing is certain, this crises has hammered all organizations across all sectors.
- 66% of all charitable giving comes from individuals
- Every 100 point drop in the S and P 500 equates to a $1.5 billion drop in individual philanthropy. That translates to a $12 billion loss this year!
- Very wealthy will continue to give but "middle class" donors will significantly reduce or stop giving.
- Planned giving will increase as a % of overall giving. During the depression planned giving was 40% of all charitable gifts.
- Government grants, corporate, and foundation giving will drop precipitously. $10 trillion in market value and equity lost this year.
- Competition for gifts and attention will increase.
In short the pie has shrunk and is shrinking from every side.
For the non-profit organizations I met, individual giving represented less than 15% of their income.
- Prepare for less and create budgetary scenarios that should start with a 10% to 25% cut as the starting point.
- Return to the mission of the organization, to the reason the NPO exists. Consider paring back or lopping off efforts that have been the products of mission creep and mission drift.
- Increase communication to your Board to your donors. Tell them the truth and engage them in the effort to preserve what is important.
- Develop a new elevator pitch that reflects the new reality, that shows that the NPO is responding to community need vs the NPO's organizational need. No one cares that the NPO has to cut back, everyone is cutting back. What is the NPO doing to re-focus and respond?
- Develop an investment/investor approach to current and new donors. Donors increasingly want to know that their gifts have a return on investment (ROI) not just keeping the lights on and the staff paid. What does a gift do for the community, for the constituents?
In short, the world has changed for NPOs as well and they have to adapt to survive. They have to act quickly and urgently NOW to evolve to fight another day. Consolidation, partnerships and new forms of collaborating have to be explored. It is the greatest time to do what needs to be done. As the incoming Chief of Staff Rahm Emanuel said when he was appointed, "Let's not waste this crises." Make this crises the moment of change, the time to start the new chapter, and the chance to make our organizations better.
- Pick a NPO and a mission you really care about
- Conduct due diligence on the NPO to insure compatibility
- Ideally align the position with your career interests and the NPO's greatest need
- Make sure you understand the expectations of the volunteer position to meet and exceed them
Volunteer opportunities in California, Secretary of Service and Volunteering Karen Baker and I met last week and her office has put together a fantastic resource for residents of California to find opportunities. Outside of CA there are similar resources. It helps to know what causes, issues, constituencies you care about most.