By (Deacon) Larry A. Vaclavik, Managing Principal of Dini Spheris
Dear friends and fellow nonprofit professionals, the following are some thoughts regarding how we can address the impact that the oil and gas price instability has on fundraising. These thoughts are intended to answer questions raised by boards and volunteers in the midst of planning or executing capital and endowment campaigns or major gift programs. Hopefully, these insights spark many conversations regarding how each of us might respond to the question of whether or not now is the right to time start a major fundraising campaign.
As we open the paper each day or listen to the news, there are two competing trends in stories that might catch our attention and that of our board members, donors and prospective donors. The first trend is that of stories noting the continuous decline in crude oil prices, the diminished demand for oil and gas in the U.S. and China and the ricochet impact of oil company budget cuts for exploration and production. The other trend is that of stories that celebrate the falling price of gas at the pump and the benefit to consumers and families. Sometimes it is hard to make sense of these competing trends. What we do know is that in regional economies which are literally fueled by oil and gas and their related service industries, falling crude prices that have reached less than 50 percent of the June 2014 price per barrel are undermining confidence in the economy in early 2015.
In boardrooms and fundraising committee meetings, trustees, volunteers and major donors are asking, “What impact will the falling oil and natural gas prices have on fundraising?” Now conversations are turning to the bleak prospects of companies shelving exploration projects and winnowing their mid-management staffs. While we cannot predict the future ― and I am not an economist ― we have learned much from the 2009 national economic recession that can help us to understand how people behave in times of economic uncertainty. The recommendations that proved successful in the context of a national recession can serve to guide organizational leaders and advancement teams through regional economic uncertainty such as we face today. Here are some of those lessons:
- Campaigns can be successful in inopportune economic times. What is required is a focus on core benefactors who have a history of support for the organization and who are approached with a truly compelling and clear campaign case for support.
- Donors tend to focus their giving in challenging economic times. They will tend to give more to those organizations with whom they have historic affiliations and the strongest current relationship.
- Giving decisions take longer, but major gifts continued to be made. Time must be allowed for deliberation and negotiation, because in difficult times, donors often see their major gift decisions as a choice of one cause over another.
- Finally, potential donors in difficult times tend to be risk averse until they have confidence that a campaign or initiative can be successful. When confidence in the external environment is shaken, the confidence of executives, trustees, advancement team leaders and campaign volunteers can make the difference.
The proven reality is that uncertainty and the consequent undermining of confidence in the regional economy do not have to end fundraising! In fact, through the course of the 2009 recession, Dini Spheris consulted on multiple campaigns that met the largest goals in their institutional history. Tens upon tens of millions of dollars were raised right through the recession. We recommend the following to those who are considering a campaign or are in the midst of a campaign in 2015 while there is so much concern over the regional economy:
- Stay in the major gift fundraising mode – continue to campaign and don’t go to the sidelines.
- Stay in touch with your core major donors and close supporters.
- Focus on core values for your organization and establish or maintain confidence in your organization.
As our regional economies work through this reversal of the oil and gas industries, instead of watching those daily barrel prices for crude oil or oil company values, nonprofit institutional leaders and advancement teams should turn their attention to the business at hand – their campaign, relationship building, donor cultivation and the next ask!
(This article was originally published on the Dini Spheris "Our Insights" blog.)