Despite a recent thawing in the nation’s pessimism, donors continue to experience stress and worry because of the stubborn effects of the worst economic crisis since the Great Depression. More than half of older adults – likely the demographic that comprises the majority of your donor database – said their net worth dropped “significantly” in the current economic downturn, according to one recent survey.
Even more significant, 3 in 5 older adults made the surprising statement that “they fear depleting their assets more than they fear dying.” The conclusion: death may be frightening, but to a majority of older Americans, the possibility of outliving their savings is an even more terrifying prospect.
What was most surprising to the consumer marketing research people who conducted this survey was “the level of fear” among older Americans. It was much greater than they had anticipated, raising the question: “How much will older Americans pull back on their charitable giving?” In the aftermath of the longest and severest recession since The Great Depression, economic uncertainty may be fundraising’s greatest headwind in 2012 – even as the nation’s economic engine seems to be picking up a little steam.
Behavioral economists are telling us that in the aftershock of The Great Recession, with the near collapse of consumer confidence, many consumers have adjusted their spending (giving?) behavior in fundamental and perhaps permanent ways. Only time will tell how recession psychology will impact giving long term.
But we can do something today. Here are 4 strategic recommendations to help address the fear that plagues so many of our donors:
1. Leverage highly empathetic approaches with donors. For example, if you see a recent trend with a segment of donors to give smaller gifts, consider offering pledge options to spread out their giving. Or you can provide more wallet-friendly offer amounts until you see an uptick in their average giving amounts. Emphasize greater value for their donations by offering more frequent gift-matching amounts. Include language in the letter or email that lets the donor know you empathize with their situation in this economy. The key here is to ensure that your donor knows that you understand their situation and are entirely sympathetic. Empathy will enhance their loyalty. Long-term, it will enhance their giving.
2. Focus on Y-touches that show you care about the donor. For example, conduct a phone campaign with donors who demonstrate recessional behavior and ask how you can be praying for them. This is also a great time to update donor profiles with these donors.
3. Be as “remarkable” as you can. Instead of just basic “blocking and tackling” – through a robust thank-you receipt program and welcome series, make your donors feel highly valued. Target donors carefully and be relevant and specific when asking as well as reporting back on how their gifts are being put to work. In addition, think of and test other ways that your organization can be seen as the one that stands out from all the others. For example, what if you offered donors a “Money-Back Guarantee?” There are many other ideas that will make you stand out from the crowd and cultivate trust and excitement in what you are accomplishing.
4. Deepen your relationship with donors even if their ability to give is diminished. Make sure that you keep applying a range of Y-touch interactions, such as ongoing gratitude for donor loyalty and support of the mission during these hard economic times. Right after 9/11, many nonprofits halted their donor-engagement efforts, fearing that they would appear inappropriate in the aftermath of a national tragedy. That kind of all-or-nothing thinking resulted in shrinking donor databases to uncomfortable levels. It took years for many nonprofits to recover from the economic downturn of 2001. (Many organizations still had not returned to 2000 levels by 2005). By deepening donor relationships in this “Great Recession,” you will significantly increase your ability to recover quickly and effectively. History tells us that markets have always rebounded. How quickly you get back to prerecession levels will depend on how many donors you keep engaged.
If we walk with our donors through this journey of uncertain times, relationships will deepen and flourish in significant ways. Your ministry will benefit both today and for the long term.