How Much Does the Economy ACTUALLY Affect Fundraising?
The global economy is a complex, intricate network that influences many aspects of our lives, and fundraising is no exception. But how much of an impact does the economy really have on fundraising? The relationship is more nuanced than you might think.
Economic Trends and Philanthropy
When you first consider the question, a logical assumption might be that in strong economies, people have more disposable income and are thus more likely to donate. Conversely, in weaker economies, the rate of charitable donations might decrease. While this can be true to an extent, it is certainly not the full story.
Historical data shows that charitable giving is surprisingly resilient even during times of economic downturn. In fact, according to a report from Giving USA, charitable donations from individuals, corporations, and foundations increased during the Great Recession of 2008 and 2009, despite the economic turmoil.
The reason for this apparent contradiction? Fundraising efforts tap into more than just the donor's financial situation. They also leverage their empathy, personal values, and desire to make a positive impact. Just like the mistake in economics of looking at consumers as completely rational, fundraising hinges on more than just logical decision making.
A Deeper Connection
The financial ability to give is undoubtedly a significant factor in fundraising. But, equally as crucial, if not more so, is the emotional connection between the donor and the cause. Donors give when they are moved by a cause, when they believe they can make a difference, and when they feel connected to the organization.
This is where your fundraising strategy plays a critical role. Economic conditions may fluctuate, but your mission and your impact do not. This is the constant you should focus on in your messaging, ensuring that your donors see the value and necessity of your work, regardless of economic conditions. Arguably, they should see the impact even more during times of economic uncertainty.
Flexibility and Innovation
While the economy's overall health might not directly dictate fundraising success, it can certainly impact how nonprofits need to approach their fundraising strategies. Economic downturns might prompt organizations to be more innovative, flexible, and strategic with their fundraising efforts.
For instance, during the economic turmoil caused by the COVID-19 pandemic, many nonprofits successfully pivoted to virtual events, social media campaigns, and online peer-to-peer fundraising. These organizations adapted their strategies to the new reality and, in many cases, were able to maintain or even increase their donor engagement and revenue. We even had several of our clients have staggering success with asking for money over Zoom (which we recommended against pre-2020).
Final Thoughts
While the economy indeed has some impact on fundraising, it is by no means the sole determining factor. Those with the ability to give at the transformational level are less affected by the ups and downs of the economy, and have historically risen to the occasion in times of economic uncertainty. Fundraising success is more dependent on the quality of the relationships nonprofits build with their donors, the strength and clarity of their mission, and their ability to adapt and innovate in the face of change.
The bottom line is that the economy will continue to go through its cycles of growth and recession as it always has. As fundraising professionals, our task is not to predict these changes but to stay focused on our mission, cultivating relationships with our donors, and developing fundraising strategies that can withstand both the highs and lows of economic conditions.
Want to stay up to date on the latest fundraising techniques and solve your nonprofit’s budget problems? Attend our annual fundraising conference this year! We will cover trends, best practices, and perhaps most importantly, things to avoid when fundraising for your nonprofit. Let us help you support your mission!
