Three Years of the C’s

By J. Donovan - B. Carlton • January 20th, 2012

As we begin a new year, we want to share with you the lessons we learned from the past three years. Clearly, the past 36 months were a challenge for many nonprofit board members and staff. Regardless of where you are located in the U.S., chances are you can relate to what we call “three years of the C’s – cash crunch, collaboration and consolidation.” We hope our suggestions for dealing with the C’s in 2012 are helpful to your board and staff.

Cash Crunch — Clearly this started with local government which became cash strapped due to lower tax collections, less funding from the State and huge cuts in Federal funding – a perfect storm. Nonprofits from the arts to zoos had to dip into cash reserves, conduct emergency appeals and in some cases invade their endowments. The social service sector saw demand for its services reach record levels. Social media, like Facebook, kicked into high gear at many organizations. Special requests for additional major gifts from longtime individual donors spiked. It was a dash for cash.

Collaboration — In some situations, nonprofit leaders turned to grant making foundations for a special one-time grant to make it through the tough times. A few succeeded. However, many were quizzed by foundation executives as to why they hadn’t done a better job of seeing the cash crunch coming and were told they now need to consider collaborating with a similar agency if they expect a grant. Collaboration is here to stay.

Consolidation — Those that did not give serious consideration to collaboration, found themselves facing consolidation of programs and services due to dwindling resources. In other words, more focus on the core mission. In some cases, even layoffs of staff.

Lessons Learned/Suggestions for Success in 2012

Don’t let your organization get caught in a similar cash crunch in the years ahead. We have heard from dozens of board members during this recession and they are quite burned out and can’t wait until their term is up. As they verbalize their experience to others, this will make enlistment of new board leaders a real challenge in 2012 and beyond. The most common remark, “If only we had done a better job of strategic planning and building up our endowment to weather such ups and downs in the economy.”
Follow the money. Keep in mind 85% of all giving in the U.S. is from individuals. It’s so easy to become dependent on that county grant of $100,000 each year and not have to organize a donor club of 100 friends at $1,000 each. We call this kind of donor club a Living Endowment, as the 100 friends are giving $100,000 or the equivalent of the earnings from a permanent endowment that can generate this amount. At today’s interest rates it would take an endowed fund of several million dollars to generate $100,000.
Update your case for giving. Make it more compelling, urgent and relevant. Test it, tweak it with donors, potential donors and friends. Make sure your case is about worthiness, not neediness. Explain why your organization is worthy of the donor’s gift. Donors respond to the former.

Call a Time Out

Step back and reflect. If there ever was a time to assess the past and think strategically about the future, now is the time. No matter how busy your organization is keeping up, struggling to survive, there is always time to hold a retreat and ask these five key questions:

Where do our philanthropic resources come from now?
Where must they come from in the future?
What is our plan to keep the donors we’ve got, upgrade them and to obtain new donors?
What human and financial resources do we need to attract increased philanthropic support?
Where can we get assistance in securing those resources?

Consider Outside Assistance to:

Conduct prospect research, a screening/wealth analysis of your current donors
Conduct a Rapid Organizational Assessment to determine what is working and what needs fixing
Plan and facilitate a day long board retreat to set strategic goals
Conduct an Online Donor Satisfaction Survey
Conduct a study to test the feasibility of your plan to increase philanthropic support
Train volunteers and staff on how to solicit major and donor club gifts
Ratchet up your planned giving efforts to take advantage of the trillion dollar transfer of wealth

All the best for a prosperous 2012.

Jim Donovan Bill Carlton