Big fundraising moments like Giving Tuesday and December 31st bring out a predictable set of tactics from nonprofits. Matches and thermometers, deadlines and celebrity senders – these moments and the financial targets demand that causes do what works. Rarely on New Year’s Eve will you see real-time fundraising experimentation or breakthroughs; the stakes (and budgets) are simply too high.
We shouldn’t apologize for tried-and-true tactics, but we should recognize the limits of what they can achieve. For many nonprofits, this year has been lackluster, with the economic climate a likely factor. However well-leveraged or messaged, a match or additional appeal is unlikely to inspire individuals who simply don’t have money to donate.
The economic headwinds of 2022 will not end on December 31st. Stock market volatility, mass layoffs, and recessionary pressures are likely to continue into the first quarter of 2023 and potentially beyond. Industry data suggests that it is small donors – who make up the majority of givers – that will be the most impacted.
According to the Fundraising Effectiveness Project, the volume of donors under $100 is down by more than 17% in 2022. This trend reflects a longer-term reduction in the number of US households who give to charity. According to the Indiana University Lily School of Philanthropy, the number of households giving to charity has steadily declined every year since the great recession of 2008. While larger gifts and more generosity from mid-level and major donors may be helping to fill budget gaps, there is a sizable exodus of donors from the marketplace.
The sector’s “tried and true” tactics may be driving these diminishing returns.
Can we leverage this downturn to drive positive change in the industry; bringing forward the fresh thinking to deliver the transformation that many are seeking? To find growth in a tough climate, nonprofits can’t resort to the same set of practices targeted to the same individuals. To win in 2023 (and indeed any challenging economic climate), causes will need to educate different audiences and differentiate in new ways. To find growth in a tough climate, nonprofits can’t resort to the same set of practices targeted to the same individuals.
It is past time to break through the sea of sameness and carve out space in an audience’s awareness and – hopefully – charity choices. To do so, causes will need to look beyond the playbooks of Giving Tuesday and Year End, and think creatively about their stories and diversify their audiences.
Ironically, while brand campaigns and upper funnel investments may be crucial to unlocking new audiences and revenue growth, these investments are hardest to defend in a soft climate. When revenue return is the driving objective, building brand and differentiating amongst less loyal (read as less profitable) audiences can be a challenge. Reductions in annual revenue lead Boards and executives to prioritize those tactics that generate the immediate return and harvest gains from existing donors.
For those that can invest in upper funnel campaigns, there is often pressure on the creative to drive both revenue and awareness. Many a great brand and storytelling campaign has failed when pushed to serve all audiences and objectives. For Boards and executives, the reticence is understandable amidst hard financial realities and limited funds.
While conservative may be the comfortable strategic response in a down climate, it is a self-fulfilling prophecy. We’ve seen the declining base of donors, and the same tactics that got us here won’t magically result in different outcomes.
We must diversify our playbooks as the “same old approach” isn’t going to cut it. As we look to economic headwinds ahead, it is time to innovate, differentiate, and diversify audiences to find new growth.
Let’s set a 2023 resolution to get out of our collective comfort zone.
Contact us if you’re ready to start brainstorming and innovating!