Tuesday, May 19, 2009

2009 and the Economy

It’s almost a cliché to say now that we are living in "challenging" times and that the economy is affecting everyone. Except that clichés are based in truth, and the truth is, the economy IS affecting everyone, including the fundraising profession and the nonprofit sector.

Not only is the demand for services rising as individuals and families struggle with the economic downturn, but charities find themselves with depleted resources as government and individual contributions are, for most organizations, declining.

In AFP's most recent State of Fundraising Survey, just 46 percent of respondents raised more money in 2008 than they did in 2007, the lowest figure ever in the history of the survey. At the same time, 40 percent raised less, which is the highest figure we've ever seen in that category. Anecdotally, I've heard from some members that this is the toughest fundraising environment they've ever experienced.

AFP has been affected as well. Over the last six months, we have cut approximately $1.7 million from our original 2009 budget of $12 million. We've managed to do that in a way that has had a relatively small impact on our ability to deliver core programs: by freezing vacant positions and salary increases for vice president level staff and above; suspending staff retirement contributions; subleasing additional office space and reducing meeting and travel expenses, as well as other expenses in all areas of operations.

The most difficult reduction was the elimination of six staff positions. I want to stress that all of these decisions, including the staff positions, were made with extensive and frequent evaluation and discussion. We took a hard look at all staff and chose areas where we could most easily cross-train staff or transfer responsibilities to similar positions.

This is probably a familiar scenario you have seen played out at your own organization or one of your colleagues'. All of us are doing more with less, and despite this, charities are still seeing success. As I look back again at our State of Fundraising numbers, it’s remarkable considering this environment that 54 percent of organizations still managed to raise the same or more funds in 2008 than in 2007. As we review media stories from across North America, I'm still amazed at the number of mentions of charity campaigns meeting (or exceeding their goals). True, there aren't as many as in past years, but success IS possible. (Access some of the free resources AFP has put together.)

One of the reasons that charities are successful in this environment is that the economy is forcing them to focus their fundraising on what they do best. In a similar manner, AFP has protected its budgets and programs related to ethics, education and training. These areas encompass our core missions, and we are committed to providing the same level of high-quality programming as we have in past years. In fact, if anything, we're delivering more services and many of them for free.

Is the economy turning the corner? We are seeing signs of improvement and hopefully these signs will become stronger and more apparent in the coming months but we are likely to see a continuing challenge to our fundraising efforts.

So here's the point I'd like to leave with you. Despite everything that has happened, remember that you are still in control of your own destiny. The decisions made by you and your charity have more influence on your future success than anything the economy might do. You have a significant amount of control over your fundraising fortunes. Good strategic and tactical decisions, made through due diligence and consultation with colleagues, volunteers and supporters, will most often result in positive numbers over the long term.

So stay positive. Yes, the economy is affecting everyone. Yes, you have to do more with less. But wealth is still being created, and people's generosity continues unabated. Focus on your core strengths, and you can get the job done.

Let me know your thoughts: what do you predict awaits us in the near future in terms of the economy and giving? And if you want, tell me how your organization is doing! I look forward to hearing from you.

6 comments:

  1. Dear Paulette,

    Firstly welcome to blogosphere!

    It is truly fantastic to hear from you what AFP is doing to ensure consistent delivery of critical programs. It is also great to know where AFP is tightening the belt and why.

    Our organization has maintained our individual giving and education budgets. YES AFP is a critical part of that. Although senior management salaries (mine) are also frozen.

    Our board approved a flat line budget. So far this year we have found we must work twice as hard for two thirds the result. The plan is simple focus on the basics, deliver results for our donors and be frugal where we can. This will serve us well when the economy bounces back. AND I believe it will bounce back.

    In the meantime we can support each other and share ideas through this great new blog.

    Thank you for your accessibility, candour and the time you are spending staying in touch with us.

    Kimberley
    Greater Toronto Chapter

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  2. Dear Paulette,
    I agree we need to keep a positive attitude for ourselves, our donors and organizations. A smile goes a long way these days and makes everyone feel better.

    Not to be "Pollyanna" about this. We are in tough times, no doubt. But as you saw from attending the AFP Chicago Philanthropy Awards luncheon last week, we have a great deal of which to be proud. The honorees were outstanding and the room was full. This is a testament to those who can and will continue to support good work and/or sacrifice for those less fortunate. Our honorees continue to do great work and inspire us all times like these.

    Thank you for your post and blog.
    Barbara Talisman

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  3. Kudos on the new blog and your candor in conveying what you, as the leader of AFP International, are doing retool. As a chapter president, I find the information you share and your transparency vital. Thank you!

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  4. Dear Paulette: I also appreciate the new blog, and look forward to hearing more of your thoughts on the changing philanthropic landscape - during this time of uncertainty for many seasoned leaders and their troubled organizations.

    I must say that I greatly appreciate your transparency and thoughtfulness in sharing about the operational adjustments made by AFP International; this will help to encourage many who desperately need it right now.

    I honestly believe that this time is an opportunity for many organizations to repurpose, reinvent and retool themselves for greater productivity and future longevity, but first - we all must become honest with our approach and focus on accomplishing our goals! Change readiness and organizational health are critical components of strategic management in the 21st century, and as long as we all don't revert back to old ways of thinking and doing - this time of challenge and change will benefit those committed to making a difference; amidst changing administrations, changing donor loyalties, and changing seasons!

    I look forward to learning alot from you and others!

    Thanks!

    Walter L. Smith III
    AFP Los Angeles Chapter

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  5. I’m going to try to find a regular time to respond but it's difficult with travel and everything else going on, but I do want to continue conversations as much as I can.

    Thanks for your comments. It's good to hear a lot of optimism out there, and yes, I agree, Barbara, the Chicago chapter event was so heartening. I've been pleased to hear similar things from other chapters as well.

    We have to remember that, as our chair Robbe Healey said at our conference, people's generosity hasn't changed. Abundance remains in our communities. Resources may have changed. Priorities may have changed. But people still want to make a difference. Our job remains the same: match the philanthropic aspirations of our donors with the mission of our organizations. Yes, we have to be more innovative (and probably more patient!), but we can continue to find success.

    And Walter, I really think your words about organizations reinventing themselves and change readiness are right on target. This environment really is an opportunity to go through everything you're doing and determine what is truly working (and what isn't!). You may find that some of your organization's "sacred cows" not only don't make any sense right now, but people's attachment to them aren't as strong because we're all focused on the bottom line. Don't make rash decisions, but this is a time for real change that can transform your organization.

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  6. Paulette, I'm so glad to have happened across your new blog as I was doing some research on what's being said about raising money in these times. It's great to see you doing this, and even better to see the confluence of our thought -- about being in control of our own destinies.

    Your articulation is among the most insightful I've seen.

    Bravo!

    Jim Lord
    jim at whatkindofworld dot com

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