When business leaders hear the word recession, it conjures up images such as budget cuts, productivity initiatives, and hiring freezes. For leaders in the nonprofit sector, however, there’s a very different reaction. They start to worry about the very survival of their organizations.
That’s because nonprofits depend on the generosity of donors, and their disposable income tends to dry up in a recession. Without a steady stream of donors filling their coffers, a nonprofit could face draconian cuts to staff and operations or outright dissolution. And it’s already happening.
A recent study of giving trends in 2022 indicates that nonprofits had fewer donors and weakened retention in the first half of the year. That’s happening as inflation starts to sap the disposable income of small-dollar donors. If the economy tips into a recession—larger donors won’t be far behind.
All of this means nonprofits must come up with a strategy—right now—to deal with a looming recession. The good news is that it’s not an impossible task. With the right priorities and approaches, nonprofits might even find a path to growth, despite economic headwinds. To help nonprofit leaders do it, here are 5 ways to grow a nonprofit in a recession.
Invest in Retention
The first thing nonprofits need to do to grow in a recession is to stanch their bleeding bottom lines. The only way to do that is to invest in donor retention. It’s important to recognize that most people give to causes they support because they believe in them. That belief doesn’t disappear just because economic times get tough. However, it helps to remind donors that their support is even more critical during a recession.
One excellent way to do this is to look for ways to boost direct donor engagement. Offering repeat donors a way to get directly involved with supporting a nonprofit gives them a meaningful way to keep contributing, even if they don’t have the financial means. However, simply keeping a nonprofit’s messaging in front of donors will go a long way toward stabilizing incoming donations, even in a recession.
Turn to Technology Upgrades
The next thing nonprofits can do to grow in a recession is to upgrade their technology. Today, nonprofit technology is the key differentiator that most successful nonprofits leverage to succeed. Everything from CRM systems to donation software and automated digital marketing solutions plays a key role in improving donor outcomes.
The trouble is that plenty of nonprofits are loath to invest in technology during good times, believing that it’s unnecessary since they’re already meeting their goals. Then, in a recession, when that’s no longer the case, they worry about spending too much of their dwindling cash reserves. That’s precisely the wrong decision, though. By investing in the right technology, nonprofits can reach the right donors with the right messaging at the perfect time—improving their performance.
Leverage Low to No-cost Advertising
Operating a nonprofit costs money. So anytime there’s an opportunity to advance a nonprofit’s aims for little to no cost, it’s a big deal. There’s no better example of that than low to no-cost advertising opportunities. And, when it comes to nonprofits, there are plenty of such options.
For example, nonprofits can avail themselves of Google’s Ad Grants program, which can help get their message out online for free. The program offers up to $10,000 of advertising credits per month for nonprofits that qualify. And that’s not the only grant program available – there are other online platforms that allow nonprofits to find and apply for marketing grants. By leveraging advertising and marketing grants, nonprofits can take the pressure off their bottom lines and get back to growing.
Embrace Board Diversification
One of the keys to modern nonprofit growth is having a board that can tap into the philanthropic community to attract a donor base. However, that singular focus often leads nonprofit boards to look homogenous and nothing like the communities the actual nonprofit serves. In fact, a recent survey indicated that only 38% of nonprofit executives thought their board reflected their community.
By working to diversify their board members, nonprofits gain several benefits. First of all, they’ll have board members with different donor connections within different communities and social circles. That alone makes board diversity worth embracing. Second, diverse nonprofit boards foster more creativity and innovation that can power a nonprofit toward growth—even in a recession.
Measure Program Impact
During a recession, nothing is more important than making sure that every donor dollar has a meaningful impact. Nowhere is this more important than within the charitable programs a nonprofit supports. That makes collecting as much data as possible about program effects and outcomes crucial. That data can provide would-be donors with hard data upon which to base their giving decisions. And that matters quite a bit.
A recent study found that donors gravitate toward nonprofits that can back up their work with hard impact data. In a recession, when donors may be scaling back contributions, this can be the difference between retaining a regular donor and losing them to another nonprofit. That means it’s also the key to fueling growth during an economic downturn.
Doing Well at Doing Good
With a thoughtful strategy in place, a nonprofit can continue to grow, even in a recession. The five tactics discussed here offer a roadmap to just such a strategy. Of course, though, no two nonprofits are alike. That means leaders in the nonprofit industry will need to build around these tactics to find success in their specific charitable lane. With the right additions, any nonprofit can get back to doing well by doing good—advancing their chosen cause no matter what types of economic conditions prevail.