PJ’s Ret Boney talked to Tim Seiler, director of The Fund Raising School at the Center on Philanthropy at Indiana University, about when to launch a capital campaign in this post-recession environment.
Question: Coming out of the recession, when many organizations were forced to delay or cancel their capital campaigns, how do you know when the time is right to launch a campaign?
Answer: I don’t know that there’s a definitive answer. We know that the two primary economic indicators that affect charitable giving are personal income and the performance of the S&P 500 stock index.
As both of those factors become stronger, we would have an indication that that people would feel more comfortable about charitable giving.
So we’re still not quite at the right point for organizations to be actively engaged in capital campaigns at this time.
But it is a good time to be in talks with donors and potential donors as part of the planning phase or even as part of the cultivation phase – where the ideas are being presented to donors or there are initial offers to begin thinking about a gift.
Those who are more engaged with their donors probably will get a signal from their donors that they are thinking more seriously about a commitment.
So it’s a good time to be staying close to donors – staying in touch and sharing campaign plans and visions from the institution’s perspective.
And maybe some gentle, probing questions about when would be a good time to talk to them about commitments.
This is good preparation time, and as consumer and donor confidence comes back, it will be time to fully engage with donors.
Q: In your experience, when have capital campaigns rebounded after previous economic downturns?
A: There really isn’t much good historical information about when capital campaigns have rebounded following previous declines in the economy. The Center on Philanthropy’s research for Giving USA Foundation indicates that it has taken at least three years for overall individual giving to return to pre-recession levels once the recession ended. Experts predict that foundation giving will take longer to come back. Ultimately, though, the recovery rates of individual nonprofits will depend in part on their mix of funding sources.
Now the real question is how do we know when it’s really over?
While some indicators suggest and some economists say the recession is officially over, we still have a very high unemployment rate. And those people who are affected will be reluctant to think about charitable giving.
Capital campaigns likely will be driven by a small number of donors, most of whom probably didn’t lose their jobs, but there’s a general sense that these are tough times.
I don’t think we’re experiencing a rapid return to what has been an historically optimistic approach to the economy, to the assumption that that things will automatically bounce back.
This downturn was global. This is so pervasive, and we’re experiencing the real sense of a global village in terms of how the world’s economies are all tied together. It really has shaken that bedrock of confidence that the economy will rebound and be strong. This is important because the Center’s research shows that feeling financially secure is an important consideration in whether donors decide to give, even among the wealthiest households.
Q: How should development professionals be spending their time until the economic indicators, and donor confidence, start looking up?
A: They should make sure the organization’s case for support is in good shape and that it is compelling.
They should share it with potential donors and get feedback. Is this something you’d want to support when the time is right? How should we strengthen it? How should we refine it? Are there specific things it should address?
The recession should only affect case statements if the downturn has truly altered the need at the organization or the needs it serves.
If the need has grown or changed, then the case might have to take on that kind of different intensity. But that should not be part of the case unless it’s true. It would be wrong to create false urgency.
It is important to have a communication approach that invites donors and prospective donors to reflect on the organization’s plan and vision. Engaging donors in that real and meaningful exchange of ideas could and should be done right now.
And given that potential donors to a capital campaign almost always are current donors, there should be high-quality stewardship going on. Fundraisers should be expressing their gratitude for past support and reporting on the impact past gifts have had.
Nonprofits are continuing to look at the potential for a capital campaign and continuing to plan as they see a need. While the time is still not quite right for active campaigning, creating excitement among the organization’s closest donors now will build momentum for when donors’ general confidence is back up and they are ready to give.