After the fall
November 2009
Andrew Watt looks back at the economic shocks in the US and reflects on how fundraising and communication campaigns have taken new directions
In 2009, two thirds of the foundations in the US expected to reduce the number and the size of their grants. The Madoff scandal hit US charities to the tune of $2.5bn. Pledges to charity are going unpaid and some charities are closing their doors. It’s hard to believe that this apocalyptic picture represents the United States of America, the country seen to be at the forefront of professionalism in fundraising.
Fundraising in the US has been based on two things; professionalism and community. The scale of the environment is so large that flexibility and innovation, while clearly demonstrated in certain areas, have not been drivers of change as they have been in many more emergent fundraising markets. Lifetime engagement with an organisation or a cause has been ensured by a supremely professional approach to the individual, exemplified by organisations such as Harvard, Johns Hopkins or the Metropolitan Museum. The American people have always believed in the power of the community and the individuals within it to achieve change, rather than in the transformative powers of government.
Trends drawn from the Association of Fundraising Professionals’ annual State of Fundraising Survey [1] demonstrate the consistency in delivery and growth that US fundraising institutions had come to expect, year on year (see figure 1 below).
Results from 2002 demonstrate the devastating impact of the events 11 September 2001. Setting this particular year aside, the expectation has been for incremental improvement year on year – the results of a professional and consistent approach to donors. Then along came 2008 where 40 per cent of organisations raised less that year than in 2007. And those raising more dropped from 65 per cent in 2007 to 46 per cent in 2008. The indications are that more charities will be experiencing declines in 2009.
Fundraising techniques
In the past, data of this sort would have led to increased activity in direct communications, principally by mail and telephone. It will be interesting to see if this trend is sustained or if other fundraising techniques begin to dominate.
According to our survey, direct mail and telephone fundraising, the traditional pillars of the fundraising campaign in the US have not proved to be the areas that have yielded the most positive returns; major gifts, special events, corporate and foundation and most particularly, online fundraising (including social media) saw the strongest returns through the downturn. Anecdotally, these areas continue to be the strongest performers in 2009. It’s hardly a coincidence that organisations such as Greenpeace have seen significant growth in income from online sources in the US over recent years. Greenpeace’s online community is one of the most highly developed in North America. It offers a menu of opportunities to supporters and helps them to participate in an online community of their choice and making – speaking to the value placed on community in the U.S. but in an entirely new way.
Major donors
Tomorrow’s Philanthropist, a report by Ledbury Research for Barclays Wealth
[2], polled 500 high net worth individuals in the US and the UK. in May 2009. The report indicates that despite the current state of the economy, high net worth donors continue to give generously and do not intend to stop. Many of those polled suggested that they would sooner cut back on what they saw as inessential personal expenditure than on charitable giving. Younger donors had increased giving by 3 to 4 per cent to help charities.
What emerges from the study is confirmation of the developing trend of greater involvement by major donors in the causes that they support. Donors expect charities to allow them to apply their skills and expertise to the programmes they support; they wish to be drivers of real social change, more so in times of economic hardship than before. They expect charities to use their support to leverage other forms of funding. The growth of organisations like the UK.’s Impetus Trust encourages the trend, as do forums such as those provided by bodies such as the Center on Wealth and Philanthropy at Boston College or the Wealth and Giving Forum in the US. It’s ‘hands on’ philanthropy which, while a developing trend over the last few years, has gained significant pace in the last two.
What is also evident is an increasing emphasis on integrated partnerships, between foundations and the funded, between corporate partners, individual donors and the
organisations they support and invest in – looking for long term and sustainable impact at a time when society in the US is approaching a moment of significant change in the mechanisms for government support for the social infrastructure.
Governments and civil society
The operating environment has seen shifts with the advent of a new political administration. A president elected on the premise of ‘change’carries a huge burden of expectation on his shoulders. The new White House Office of Social Innovation and Civic Participation is to act as a facilitator to heighten the impact of the best ideas in the nonprofit community, provide leverage for the funding power of foundations and to create a working partnership between government and the nonprofit community. It sounds familiar to those of us who have worked under the terms of the UK governments ‘Compact’ but it’s a less familiar concept here in the US. While the funds at its disposal will be relatively small, it may well prove that the catalyst provided by this office is instrumental in sparking a vigorous debate about the role of the nonprofit and government in civil society.
One of the key issues to be addressed is to understand how government and civil society can partner to effect greater participation and engagement with the policy making process – in effect helping the public, through the nonprofit community, engage more closely in policy making in the social arena. Hardly a small agenda, but one that is seen as critical in developing the mandate of the new administration.
The impact of opening up the dialogue in this way and focusing on the power of the relationship between government and the nonprofit community is far from the picture of small government and active, independent communities traditionally seen as the ideal model. It is hoped that the administration will be able to draw on the creativity of the nonprofit community to invigorate its policy-making agenda.
Technology advances
That model is becoming a two way process. Many elements of society in the US are inherently conservative and respond cautiously to change. The professionalism that is one of its greatest strengths can also inhibit creativity or innovation. Yet, as we have seen, some of the fastest and most recently growing areas of philanthropy are those making use of new technology. This has happened extraordinarily fast. Use of web-based or cell phone technology has been commonplace in Europe, Asia and parts of Latin America for many years yet not in the US. Social media however, have not only arrived, they are at the forefront of many recent fundraising campaigns. The use of technology to support the Obama presidential campaign has had an extraordinary public impact – translating directly across into nonprofit fundraising and communications campaigns.
This movement, for lack of a better description, taps into one of the core pillars of the social structure of the US – community. Not only is this reflected in the way in which organisations such as Greenpeace interact with their external communities, it’s also proving to be profoundly influential in the way in which professionals, fundraising or otherwise, develop their own communities of support. Mentoring, information sharing and communications – all these have exploded using the vehicle of social media. The immediacy of the medium is allowing nonprofits to fine-tune their fundraising programmes and budgets in a way rarely seen before. It allows them to communicate with their audiences, interact with government, make their voice heard using channels unthought of until now. Innovations are shared, through virtual communities and implemented online. Costs are held down and impact maximised – a familiar story in many other environments around the world but only now coming to the forefront here in the US.
Riding out the storm
The current environment has allowed the American nonprofit community to break down the barriers of accepted practice, to take a new phenomenon and make it its own. In building on the strengths inherent in this society, adapting new tools in a distinctively American way, communities in action are riding out the
financial storm.
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