How Do We Survive the Recession?

How are other charities and not-for-profit organizations adjusting to the economic recession? What follows is a letter written to a pastor by a church member who works for a financial firm as a consultant for non-profit organizations. (Names and details have been edited to protect the confidentiality of the church and individuals.) The letter contains helpful insights for every church leader in these perilous economic times.

Hi Pastor,

In your voicemail message you pondered whether we needed to be thinking about the current situation differently, or addressing the congregation differently. As you know, I spend a significant amount of time with not-for-profits, who are also being hit hard by the economic downturn. While a little different, I thought it may be helpful to share with you what we are seeing.

Not-for-profits across the board are experiencing sharp drops in giving. The dollar amount of the average gift is dropping, and the number of donors is dropping by double-digit percentages. Large, medium, and small gifts are all shrinking. In addition, the tax benefit derived by donating appreciated securities has also been virtually eliminated due to sharp declines in the market.

We are also seeing a significant shift in charitable organizations’ messaging to their donors. The messaging seems to be taking on a “fireside chat” kind of feel, with organizations being transparent about how the downturn is specifically affecting the organization. There is a sense that we are all being affected by this together. An important point here is that the organizations have shifted their thinking toward accepting that the downturn will affect them too. There is a sensitivity to not being viewed as selfish. Not-for-profits don’t want to communicate that they are going to maintain current levels of spending while everyone else is having to cut back.

There is also a sensitivity to not “poke faithful givers in the eye”—that is, avoiding applying pressure to long-time givers in a time when many have lost significant wealth, jobs, and even homes. Many have counter-intuitively reduced their year-end pleas and mailings for this very reason.

Organizations are being very specific in their communications about the effects on their budgets of reduced giving. There are clear communications on management’s actions taken to be responsible stewards, including hiring freezes, staff reductions, reduced mailings/publications, and cancellation of costly events. Rather than being negative, communications have taken on more of a sense of focusing efforts on top priorities and cutting waste or extras.

Organizations are also doing everything they can to visibly demonstrate their commitments to cutbacks. The nice Christmas cards have been replaced with postcards (saving on printing and postage), nice events are scaled way back, mailings are replaced with email or text messages, etc. The prevailing thought is appearances are everything.

I think donors want to know first that the organization they are giving to is doing okay. Many studies show that it is difficult to raise money for organizations that are losing money. They want to know we have been excellent stewards. Second, donors want to know that the organization they are giving to is willing to tighten its belt to the same degree the general public is tightening—accepting the fact that the economic downturn will affect the organization at least as much as it is affecting the general public. Third, when things are tough, donors need very little to give them an excuse to stop giving. Being able to visibly demonstrate significant fiscal conservatism is very important during this time. Donors will be looking for signs of excess spending.

You have done a great job, Pastor, in speaking about giving over the past couple of months. In the past you have explained to the congregation that we have limited our spending to amounts given. I think that message is important today. While we are behind in our giving, we have also limited our spending to amounts given. I think that message also reinforces the reality in everyone’s mind that giving determines ministry. Thank you for your strong leadership in these times.

In Christ,

Church Member