06 Oct CoronaVirus and Fundraising – 2021 and 80-100-120 Budgeting
6 October 2020
By David Allen, Development for Conservation
Q: What wine should I pair with dystopian outlook?
A: All of them.
There’s still a full calendar quarter to go, and I can’t wait for 2021. The future is as uncertain as it has ever been. And I’m talking about the next few weeks!
So what can we guess about 2021? And how should we plan?
Let’s talk about the Economy.
Some sort of global recession would have to be considered likely, if not certain. The markets are still strong, which is some kind of unbelievable. But the national debt is GI-normous and getting worse. People are out of work, and the true magnitude of the problem is masked by the fact that some – mostly women – have dropped out of the workforce altogether. Small businesses are failing. And an undertow of evictions is poised to pull thousands into homelessness in January.
I could go on, but it’s too depressing.
All that said, any kind of recession will not affect everyone equally.
It would be a mistake to assume that philanthropy will be affected to the same degree.
It would be a mistake to assume that our mission is somehow not as relevant during an economic recession.
It would be a mistake to stop or curtail fundraising activity, fearing the appearance of being “tone-deaf.”
It would be a mistake to say NO for people who care for our organizations and the missions we represent by not asking them to give.
Certainly there will be vulnerabilities – dependence on just a few grants or singular sources of revenue, dependence on transactional giving including revenue from large gatherings or events, and dependence on relatively impersonal fundraising strategies based on volume rather than relationships.
But keep these things in mind:
- Donors who retract their giving are more likely to sustain giving to fewer organizations than they are to reduce giving across the board.
- Philanthropy has historically increased during and immediately after economic crises, primarily driven by the wealthy in terms of real dollars, but still true across the other economic strata as well.
- Our missions – land conservation – are at least AS relevant during crises, and probably more.
If there was ever a year for scenario planning, this might be it.
If you are an organization trying to read these tea leaves, now might be a good time to consider an 80-100-120 budget.
- First budget as you would normally – as if 2021 would just be another normal year. That’s your 100% budget.
- Be very clear about your fundraising activities – including the planned expenses, the expected revenue, and the NET.
- Now create a new budget based on an assumption that fundraising spends just as much, but raises only 80% of the revenue expectation. This is your 80% budget.
- What will you cut? Some managers will be tempted to cut across the board. This always happens, but we need to remember that if we cut fundraising expenses – ie do less fundraising – we will need to also cut revenue expectations. Is there fluff in the fundraising budget? Almost certainly, but be careful when expecting the same investment result while also reducing the investment.
- Finally, consider the possibility that your organizational revenue will actually be UP. Create a third budget based on an assumption that fundraising spends just as much, but raises 120% of the expectation. This is your 120% budget.
- What can you add? What will you have put on the shelf that you can now pull back off?
This last exercise is more important than you might think. In so many ways we create the future we end up experiencing. If we stop scenario planning at the 80% budget, we are effectively EXPECTING that future, and we may very well play an unconscious role in creating it.
We need to remain open to the possibility that we could be much more successful.
I’m going to need more wine.
What are you doing to remain optimistic? How are you planning for 2021?
Stay safe and stay well,
PS: Going to Rally this year? Talk about optimism! There are more than 3,600 people registered! My session – A06. Creative Strategies for Member/Donor Engagement – is this morning at 9:00PT / 10:00MT / 11:00CT / 12:00ET. Hope to see you there!
Photo by Free Nature Stock courtesy Stocksnap.io