The economy is confusing as all get-out right now, and as the financial climate causes nonprofits to take a serious look at expenses, fundraising software and tools will consequently be analyzed for their rate of return. You're probably asking yourself: What fundraising technologies and tools are mission-critical for your nonprofit, even—or especially—during a recession? Here's a list to get you started plus some advice for getting your nonprofit through tough times unscathed... and possibly in a better place than before those dark clouds descended.
How to lead your nonprofit through a recession
First, let's talk to a nonprofiteer who's been in these recession-shaped shoes. For a bit of advice, prediction, and precaution, we went to Andrew Olsen, CFRE and SVP of DickersonBakker. Andrew has worked in the nonprofit industry since 2005 as a consultant, fundraiser, and instructor, and saw many nonprofits through the 2008-2009 recession.
Funraise: There's a lot of conversation about a looming recession. In your experience how does the current economic climate feel unique?
Andrew: In my opinion, our economy is not as elastic as it was in 2008 – 2009 for those reasons, which I expect will result in a longer period of economic instability. Add to that the ongoing global conflict in Eastern Europe, and other domestic policy issues that all contribute to increased costs, and we have a very complex and challenging financial situation.
Funraise: Heading into a recession is nervewracking, particularly for younger or newer leaders who could be looking at their first major challenge as a leader. How would you encourage nonprofit leaders during a time like this?
Andrew: Follow the data. Don’t make knee-jerk decisions... Understand that if you cut revenue-producing capabilities in favor of delivering program during an economic crisis, you’ll come out of the crisis unable to scale back up quickly, which will put your long-term vision at risk. For that reason, I highly recommend that organizations not cut marketing and fundraising capabilities during down periods.
Funraise: Having led organizations through recessions in the past, what tactics/strategies did you see nonprofits use to successfully navigate the market? What wasn’t successful?
Andrew: During 2008 – 2009, some of the most successful organizations were those that decided to engage directly with supporters during the crisis. These organizations updated donors frequently, and sought feedback regularly. We saw that organizations that did this were much more successful at retaining donors and growing their support through and after the crisis.
The organizations that experienced catastrophic failure during the crisis are those that “went dark” or cut back significantly on their marketing and fundraising efforts. Many of these organizations no longer exist today, and those that remain in existence are still struggling to reach their pre-crisis scale.
Recession-proofing your nonprofit
And as we dive into specific essential tools, let's hear how Justin Wheeler, Funraise CEO and Co-founder, and Andrew would advise nonprofits.
Funraise: In your opinion, what is the most important thing a nonprofit can do to prepare for/weather a recession?
Andrew: What we’ve seen in every other major economic downturn over the last 25 years is that organizations that invested in developing authentic relationships with their donors were able to weather the economy more effectively than those that were focused on transactional giving.
Justin: Be confident. It's an honor for donors to get behind your important mission. Build your brand around influence, be bold, and show off the real heroes of your cause: your beneficiaries. When donors are invested in your mission rather than guilted into giving, nothing will stop them from supporting you.
Funraise: Since the last major recession, what new fundraising tools/technology do you think will make the most positive impact in successfully navigating this recession?
Andrew: With the increase of machine learning and artificial intelligence, one of the most significant changes in the nonprofit landscape is our ability to more effectively target individuals and deliver relevant content to them in the channel that is most relevant to them, at the very time that they are most likely to respond.
Justin: This is a hard one! When it comes to technology and how we view it, the nonprofit world has come leaps and bounds since the last recession. But regarding specific tools, the innovative tactics around optimizing the giving experience for donor retention are some of the biggest steps that the nonprofit world has taken. With a national donor retention average at less than 50%, any tools that can increase that will make growth easier, faster, and cheaper.
Funraise: As budgets and buying power shrink due to recession and inflation, what fundraising tools are worth keeping or investing in, especially as boards and donors call to reduce organization spending?
Andrew: ...we find that it’s the organizations that invest in the downturn that come out of it most effectively. From where I sit, I’d recommend that most organizations stay the course rather than cut back. ...Anything that can help optimize for average gift at a time when response rates are declining will be most valuable.
Justin: It's really obvious these days that donors want to engage with nonprofits on their own terms. That’s why Funraise has been doubling down on what our suite of tools provides both to our nonprofit customers and their donors. Think about donor-facing apps, bi-directional texting, and push notifications for your peer-to-peer fundraisers.
Essential fundraising tools for nonprofits
Now that we've talked about how to get your nonprofit through a recession, let's talk about the tools you'll need to do it. The key here is these tools' essential-ness in bringing in donations versus the resources needed to access and maintain them—in other words, which tools are most profitable.
All-in-one fundraising platform
First and foremost, it's essential that you have an online fundraising platform. Today’s donor expects a high-quality, secure transaction experience that can happen smoothly from any device.
The power in this tool is that it touches everything donation-related: peer-to-peer fundraising, recurring programs, events, stewardship and cultivation, payments, marketing, communications, social media, financial records, your digital footprint, and so much more. By utilizing a digital platform like Funraise, you have access to fundraising tools that are both self-contained and the source of truth for a broad data-informed fundraising strategy.
Your fundraising platform needs to feed donor and donation data directly into your essential source-of-truth CRM. Your CRM will in turn allow you to view and take action on that accurate donor and donation data.
In addition to championing accuracy, a CRM allows you to segment your data, giving you the chance to maximize what that segment of donors can do by meeting them where they're at.
If the economy changes rapidly, your strategies might need to, too. Having accurate donor data helps minimize risk in determining the best strategies for your supporter base.
We say that nothing in fundraising is as important as the giving experience. And within the giving experience, donor confidence is everything; for many donors, the security of their transaction and personal information—which is your nonprofit's responsibility—is a major deciding factor between a transaction and abandonment. The opportunity cost of not having forms and campaign sites that are secure and branded is, therefore, very high.
Further, cyber attacks on nonprofit organizations are on the rise. According to the CyberPeace Institute, 50% of nonprofits reported being targeted in 2021, and with the average cost of a cyber attack hovering at $8.64M in 2020, nonprofits need to focus on preventative measures ...because we sure can't afford the cure.
Automated tools are essential because they take your team of few and make it seem like a team of many. Think ahead and get donor portfolios and segments set up now, streamline administrative tasks, and make social connections and integrations—in a contracting economy, you may need to take on more responsibilities or address layoffs or departures on your team. And if everything ends up rainbows and sunrises, great! Turn automations into efficiency gains by directing your small-but-mighty team's efforts toward other revenue-generating tasks.
Community support for your nonprofit through peer-to-peer and social fundraising
Your community is one of your strongest resources. Tap into it with peer-to-peer fundraising that's easy and engaging for them.
During a recession, you may find your nonprofit diversifying your strategies to meet different segments of your supporter base where they are in their capacity to give. Through P2P, someone whose own capacity may be limited can raise more for you than they would be able to give themselves.
And being on social media is free except for the time it takes to queue up posts. Stay consistent, share good news and appeals, and acknowledge your donors in the most public way you can.
Bonus: P2P and social media also help you expand your reach and touch new potential donors in a way that immediately boosts confidence and buy-in to your mission.
Who’s in your corner, ensuring that your toolset is working for you? Do you know whether you’re leveraging all you can out of your fundraising tech? And how about if you do pivot or layer in new strategies, and need to be trained on new toolsets? Make sure you have an advocate equipping you and a support team that’s reachable.
Bonus questions to ask your fundraising platform support:
- Am I using my platform to its full potential?
- Are there any new features that I have access to that I haven't implemented yet?
- Are there any features on the horizon that can help me improve my donor's experience? Is there a way to get early access or join a beta test group?
- Is there a community of active users and experts that's specific to this technology?
Tools your nonprofit is not yet using but needs to consider during a recession
One of the best and worst things about technology is that there's always more to it. Always something new. Always something cool that turns your head. Are these shiny new baubles worth your time and attention? Not always.
Here are a few tools that you've probably heard of and may even have considered using—and why you should give them the time of day.
Chatbots are those little widgets that pop up on your favorite websites to answer common questions, provide access to customer support, and deliver information like order tracking and such.
They're essential because of their effectiveness in facilitating donation conversions: website visitors are 82% more likely to spend money if they’re engaged in live chat. ...but only 12% of NGOs worldwide use live chat.
Even better, chatbots can make your support/administrative staff more efficient. Chatbots have been shown to reduce time spent on administrative tasks—like answering frequently asked questions—by up to 30%! Inquiries like, “Where do I find my tax statement?”, “Where do I park for my volunteer visit?”, or even “I need your services; who can I talk to for help?" can be addressed while your staff focuses on higher-priority tasks.
When we say "trigger-based tools", we're referring to a class of tools that includes (e)mail and text communications, donor tasks, post-sign-up welcome packets, and more. Think in terms of an action happening when a donation of a certain amount is made, a donor's credit card is expiring, or a donor signs up for your recurring program.
Trigger-based tools are essential because they're a set-it-and-forget-it alternative to the handwritten thank-you notes, field of post-it reminders, and manual swag mailings that traditionally form the core of donor stewardship—and as Justin noted above, "with a national donor retention average at less than 50%, any tools that can increase that will make growth easier, faster, and cheaper" ...which are essential aspirations during a recession.
Donor-facing donation management tools
In our immediate gratification culture, it's all about results. Donor-facing tools include anything that allows donors to manage their interactions with your nonprofit on their own time—mobile applications, for example.
Giving by Funraise is a donor-facing app that gives your donors the ability to change and update their credit cards, manage their subscriptions, and access their donation receipts—all tasks that you've had to do manually in the past.
A recurring program is more than just a "Donate monthly" button on your donation form. A recurring program provides your recurring donors with exclusive content, experiences, or swag with the sole purpose of establishing predictable revenue for your nonprofit.
A recurring program is essential because it represents revenue that your nonprofit can rely on in good times and in moments of uncertainty. A good recurring program not only brings in regular revenue, it also establishes a community of supporters.
Bonus reasons to get your recurring on:
- Recurring donors have the highest lifetime value of any donor segment.
- Recurring donors are typically the most invested supporters of your organization, often giving additional beyond their monthly commitment.
- Recurring giving programs are one of, if not the, best sources for planned/legacy giving.
Small, time-saving Power Ups that maximize potential donations
"Small, time-saving Power Ups that maximize potential donations", lol. Or you could call them shortcuts. Breaths of (technology) fresh air.
Shortcuts are one of those cheer-worthy giving experience innovations that Funraise excels at. They're often new, so we don't have stats on their efficacy—yet. But that's why we're suggesting that you get in on the fun early!
- Funraise's Donors Cover Fees feature recruits donors to help cover credit card and platform processing fees via a minimal increase in their gift. The beauty of this Power Up is an increase in dollars toward impact with no additional effort on your part.
- Recurring Upgrade automatically suggests a monthly donation option to one-time donors giving less than $100. Add this feature to any Giving Form with a simple on/off toggle.
- Abandoned Donor brings up a friendly pop-up as your donor navigates to a different page on your site, kindly asking the donor to complete their gift and then dropping them right back where they left off on your donation form.
- Text-to-Give is almost exactly what it sounds like—just better. A donor texts a code and is taken to a donation form customized for their donation.
- P2P push notifications for fundraisers give your fundraisers the ability to manage, share, and receive push notifications through Giving by Funraise, our donor-facing mobile app.
If you know, you know. Company matching is the easiest way around to double your donations.
Company matching is essential because there are billions—yes, billions—of dollars that go unclaimed each year, and all it takes to get your nonprofit's piece is to add Double the Donation's feature to your donation form.
Funraise's Pandemic Growth Stats*
Despite the difficult financial outlook of 2020, Funraise customers outpaced nonprofit industry standards, reaching beyond their fundraising goals. See for yourself and then get the tools for your nonprofit.
Online Donation Revenue Growth
Organizations using Funraise grew online revenue 77% on average in 2020.
For Funraise customers that raised in three consecutive years: 2018, 2019, and 2020, and were active customers throughout 2020, the average YoY growth of online revenue in 2020 was 77%.
Action Against Hunger is a great example of online donation growth. In A/B tests, AAH found that using Funraise's pop-up form increased their total combined conversion rate by 78.4% compared with redirecting donors to a traditional donation page.
Recurring Revenue Growth
Organizations using Funraise grew recurring revenue 53% on average in 2020.
For Funraise customers that had recurring revenue in three consecutive years: 2018, 2019, and 2020, and were active customers throughout 2020, the average YoY growth of recurring revenue in 2020 was 53%.
Recurring revenue is a proven tool to get nonprofits on a path to secure, predictable yearly revenue. One Tail at a Time relied on Funraise automations and reporting to grow their recurring donation program by 1000% over a 4-year period.
More Impactful P2P Fundraisers
In 2020, the average P2P fundraiser on Funraise raised $913, which is double the average for top P2P programs.
The average amount of donations attributed to individual P2P fundraising pages on Funraise in 2020 was $913. P2P Forum benchmarked the average raised per fundraiser from the top 30 P2P programs at $416.
Speaking of impactful peer-to-peer fundraisers, The Cupcake Girls really delivered. In their first year with Funraise, they doubled their number of P2P fundraisers for an increase in online P2P revenue of 386%.
Examples of nonprofits that have prioritized growth
DIGDEEP, a longtime Funraise customer, took the risky step of expanding their programming during the pandemic—they had previously focused on bringing cleaning running water to Navajo reservations, but realized that remote Appalachian communities were in need as well. This appealed to more donors, broadened the footprint of the organization, and gave DIGDEEP an additional place to land if their other programs lost their footing.
Caveat: Expanding during a time of economic uncertainty is only a great direction if you have a solid plan, the right people, and perfect timing—it's not a move for every organization.
During the pandemic, Funraise favorite Innocence Project transitioned their digital fundraising to Funraise as an investment in their future. In their first 16 months, they raised $10M from 70K donors, and in the year following increased their online fundraising by 50% for a total of $15M from over 80K donors.
What was the magic that allowed that growth? Innocence Project's prioritization of their team and their infrastructure... in other words, they worked smarter, not harder.
Recession takeaways and FAQs for nonprofits
What is a recession and how will it affect nonprofits?
A recession is a tightening of the economy, whether through increased cost of goods and services, reduction of real wages, or a decline in the value of investments like stocks or land.
No matter which factor(s) lead to a recession, it means that consumers and donors have less money on hand and greater uncertainty in the stability of their savings. These elements lead to less freedom with impulse buys, investment acquisition, and large purchases.
In short, a recession may mean less money being donated to charitable organizations.
What is the best way to grow your nonprofit, even during a recession?
According to Justin Wheeler, Funraise CEO and Co-founder,
"If you want to scale your impact, you need to focus on growth.
So what is the main catalyst for growth?
Scaling back investment in your programs will allow you to invest in people, systems, and other growth drivers—in turn, allowing you to scale up your programs.
This will most likely put you out of the infamous financial ratio you've been taught to maintain between programs and overhead, but this is the 21st century—high time for that mentality to be challenged and eradicated for good."
What is the one tool that my nonprofit needs to invest in during a recession?
Rather than thinking of what individual tool you want, talk to your team: What do they need? Reframe your perspective to start investing in your dynamic team rather than prioritizing one static tool.
*Where did Funraise get those growth statistics?
This report compares average growth performance on Funraise between 2019 and 2020 in four key areas: online revenue growth, recurring revenue growth, average recurring donation size, and average amount raised by peer-to-peer fundraisers. For several metrics, we’ve compared Funraise statistics with benchmarks as reported by M+R, and P2P Forum for the same time period. See more about our reporting methods and sources.