Recession strategy: Don’t treat giving as a financial transaction

Many arts groups face trouble raising money now, which their fund raisers are quick to blame on the bad economy, says Karla Williams, a Charlotte, N.C., fundraising consultant. After all, they say, the arts seem less urgent to donors compared with providing basic necessities to recession-battered families. But there is another reason: Arts groups and other charities have been too focused on the benefits donors get, she says.

“What seat do you get? Are you invited to the green room? These things are shallow,” Ms. Williams says. “These are philanthropic transactions, not gifts. It’s not about the mission but about what seat you get. Those relationships are the first to go.”

Back-to-back capital campaigns in many cities have led to another unfortunate type of charitable transaction, Ms. Williams says. Donors are now getting invoices for payments toward campaign pledges they made in better times, without any acknowledgment from the charity that they have an option to reduce the size of their annual payments.

“Resentment starts when we push donors to fulfill obligations, and they don’t have permission to give less now,” says Ms. Williams. “I still see institutions assuming that a contract is a contract.”

Instead, Ms. Williams and other experts say, charities would do better to treat long-term donors as they would a close friend or family member. For a growing number of organizations, that means learning how their donors have been affected by the recession before a making a pitch. Some charities are including donors who can’t give this year in special events, membership programs, and other activities, with the expectation that their contributions will resume in better times.

For example, UJA-Federation of New York raised $18.8-million in a single evening at its Wall Street dinner in December for stock brokers, hedge-fund managers, and others who work in financial services.

While that’s less than the $21.6-million raised a year earlier, officials say the event held up surprisingly well, in part because it reserved 50 seats at no cost for former Wall Street supporters who had lost their jobs or were suffering other financial troubles. In addition to laying the groundwork for future gifts when times improve, the federation is working to keep those supporters involved. For example, some prominent Wall Street executives announced at the event that they would chair charitable projects the federation supports and sought out volunteers. That was attractive to former donors who are seeking new jobs and want a chance to meet leading executives in their field.

“People who have been loyal, but haven’t been giving lately, we want them to understand that they are family,” says Stuart Tauber, the federation’s senior vice president of financial resources development.

— Holly Hall and Paula Wasley