How Charities Can Weather a ‘Perfect Storm’

Philanthropy is facing its greatest challenge in history. Just as an unusual series of meteorological conditions combined to create the “perfect storm” that Sebastian Junger depicted in his best-selling book, so too is philanthropy facing turbulent forces that could be devastating.

Coming together are four significant events: an economic recession, America’s war against terrorists, the unprecedented outpouring of money to a handful of charities dealing with the aftermath of September 11, and a decreasing trust in charities as a result of the way distribution of those donations has been handled. What’s more, the two workhorses of fund raising — personal solicitation and direct mail — face an uncertain future as Americans have become fearful of traveling and opening mail that could contain anthrax spores or other dangers.

Philanthropy could deal with any one of those challenges. However, the convergence of so many forces has swept donors into a vortex of fear, mistrust, and decreased resources, and many feel a strong need to focus on personal safety and security. As a result, nonprofit organizations must begin to change the way they interact with their donors if they are to survive and thrive.

Instead of just worrying about whether charities will be battered by changing conditions, all groups should be considering how they can mitigate the effects of the storm and ride it out. Now is the time for charities and their boards to take bold action and review all aspects of how the organization finances its operations. Donors have reordered their priorities and want to focus on meaningful issues; it is up to the nonprofit world to show donors how giving and volunteering fit those priorities.

That won’t be as easy a case to make as it once was. Donors are being told by the news media and members of Congress that their donations to September 11 relief efforts are not being used as many contributors had expected. That has caused donors to question some of the country’s largest, most trusted institutions. Donors may react by restricting or directing their giving rather than making that all-important unrestricted or general gift. Many nonprofit leaders have long known that baby boomers want a say in where their donations go, and have been bracing for what that will mean in years to come.

While some first-time donors may pull away from giving, longtime donors are unlikely to halt their donations. Still, charities should work with their loyal donors to explain that unrestricted giving is critical to the health of any organization. An educated donor understands the need for investment in administration and the future of the organization. The goal must be to re-educate donors about the organization’s mission, and to build the special trust that keeps donors giving the same amounts they did in the past, or more.

In conversations about a charity’s mission, it is important to relate the mission to what is on donors’ minds now. Relevancy, patriotism, safety, protection, urgency, and comfort can become important messages associated with the mission of the charity. Incorporating those themes in talks with donors helps them to see the relevance of a charity to the very things about which they care the most.

But charities have to do much more than change the language they use to reach out to donors. If nothing else, the Congressional hearings held last month should be a warning to boards and senior fund-raising leaders that they need to make sure all their solicitation practices are completely accountable. Boards need to review all fund-raising policies to ensure that donors are not being misled or their wishes ignored. What’s more, they must insist that such policies won’t be changed depending on whether too much or too little money has been raised. Additionally, boards and senior fund-raising officials may want to be sure everyone in the organization understands that to abide by the donors’ intentions, at times a charity may need to give money to another nonprofit organization or collaborate with another group. And, organizations may, on occasion, need to return gifts to donors because the charity cannot do what a contributor wants. Now is a good time to make sure that donors know such policies are in place to guarantee that their interests are protected.

Charity trustees and top executives should also look at how much is being spent on the organization’s fund-raising department. Too often, organizations attempt to keep fund-raising costs down by not investing enough resources in the back-office fund-raising operations. Executives must make sure that what happens behind the scenes lives up to what donors are being promised upfront.

Aside from guaranteeing that an organization is accountable to donors, charity leaders must think hard about how they raise money and should come up with new approaches — and not simply settle for a lower fund-raising goal. Organizations should reduce dependence on the most-vulnerable types of contributions, such as those coming from corporations, special events, and direct mail.

Charities should focus on the kinds of donations that are most lucrative — those provided by individuals. This is a good moment to start or ratchet up a major-gift program and to train all of the charity’s board members to make solicitations. The involvement of volunteers always brings enhanced credibility and trust. Some other suggestions:

Revise current fund-raising approaches. Most organizations should consider delaying efforts to solicit corporations or to find new donors until after the first of the year and then test the waters. But, for some organizations this might be the right time to mount an aggressive effort to seek first-time donors if the mission and focus of the charity have increased in relevance, such as providing services to the military, mental-health counseling, giving food to the needy, and other such causes.

Try new techniques. Both e-mail solicitation and telemarketing work well for many organizations and are excellent ways to bolster sagging direct-mail income. Boards are often reluctant to enter into those types of fund raising, but they should push the issue. Tone down special events, but don’t stop them. People need escapes, and they can justify a night out for a good cause. Develop family-friendly events that are meaningful to the kids, not just the parents.

Make strategic alliances. Boards and executives should consider collaborating with organizations that can provide complementary services. Too many organizations go it alone rather than form an alliance with other nonprofit groups. While the mission of a nonprofit organization may be unique, most of the administrative functions and fund-raising activities are not. Organizations can cut costs by aligning with other groups without giving up autonomy or focus of mission.

Start a volunteer drive. Conducting a volunteer recruitment campaign will bring attention to an organization and make it clear that a charity is critical to the stability and humanity of the community where it operates.

Philanthropy is an important and cherished part of our culture. The tremendous outpouring of giving after September 11 only reaffirms the generosity of Americans.

The danger is that “the perfect storm” of recent events may be creating a new environment in which the very charitable institutions that keep our country strong suffer due to a lack of funds. Organizations that respond effectively to the challenges not only can continue to support their missions, but also can help heal the nation by demonstrating their commitment to good stewardship of their donors’ philanthropic dollars.

We all have a desire and a responsibility to protect our way of life and the values that keep our nation strong. By demonstrating the resolve and resourcefulness of our nonprofit organizations in the face of national crisis, we will weather this storm and continue to receive our nation’s gifts, and our nation’s trust. We will also demonstrate the strength of our commitment to humanity, and not surrender an important American ideal to the terrorists.

Jennifer Dunlap is chief executive of Development Resources, a fund-raising consulting company that has offices in Arlington, Va., and Washington. She was the national senior vice president of development at the American Red Cross from 1996 until last August.