In early May, the Oracle of Omaha saw the future of the airline industry—and it was not good.
Berkshire Hathaway Chairman Warren Buffett told shareholders that he had sold all of the company’s airline stocks, admitting that the coronavirus had changed the business in a “very major way.”
“I don’t know that three, four years from now, people will fly as many passenger miles as they did last year,” he said.
As COVID-19 continues to reshape society, donors are having similar doubts about the long-term sustainability of some nonprofit organizations. With one eye on their hard-hit investment portfolios and the other on a drumbeat of predictions that many nonprofits won’t survive this crisis, they’re scanning their list of recipients, checking in with their guts, and asking themselves, “Am I throwing good money after bad?”
Right now, fundraisers’ livelihoods largely hinge on their ability to prevent donors from reaching this inflection point, at a time when one in five donors say they won’t be giving to charity until the economy is back up and running.
Fortunately, seasoned fundraisers told me that donors don’t jump off a sinking ship—they’re gently pushed. It’s usually due to a series of organizational missteps—poor pre-coronavirus financial stewardship, a lack of candid responsiveness in the face of crisis, panicked pitches—that nudge donors over the edge. Fundraisers won’t be able to sustain every relationship, but their odds increase measurably if the organization embraces transparency, data-driven strategic planning, and a calm and measured tone.
At the same time, Buffett’s reading of the tea leaves suggests that an organization’s operational effectiveness is only part of the equation. No matter how well the CEOs of United or Delta run their businesses, they can’t force customers to fly from JFK to San Jose, or prevent a new wave of COVID-19 cases this winter. Similarly, certain sectors that rely on philanthropy face seemingly insurmountable demographic and financial obstacles that are conspiring to lead donors toward that dreaded inflection point.
Desperation and its Discontents
Elizabeth “Liza” Yntema approaches this challenge as both a nonprofit leader and a donor. She’s the president and founder of the Dance Data Project (DDP) and has also underwritten ballet programs focused on boosting female representation in the field.
“I wish you could sit at my kitchen table and see the avalanche of requests coming through,” she told me. Many organizations pleading for cash were in “crisis mode” before COVID-19 struck. A pragmatic donor can’t help but ask: If this organization was struggling during one of the greatest economic expansions in history, does it stand any chance of surviving a global pandemic?
A track record of dysfunction coupled with a desperate pitch heavy on platitudes only makes matters worse. This, of course, isn’t to say organizations aren’t in deep trouble. Indeed, many face existential challenges. But fundraisers must honestly articulate the gravity of the situation. To Yntema’s ears, a cookie-cutter plea with strong-arming phrases—“can we count on your support to sustain our critical mission?”—suggests that the organization’s staff is either “flat on their back in despair or running around with their hair on fire. Neither is useful when you’re talking to a potential donor.”
Kathy LeMay, longtime fundraiser and founder, president, and CEO of Raising Change says instead of falling back on old boilerplate like “‘We need you now more than ever,’ state why a gift will make a difference to mission fulfillment. Ask and answer these three questions: Why is our organization asking for support? Why now? What present and future will these gifts help manifest?”
In fact, the less talking a fundraiser can do, the better. “For fundraisers, this is a time to radically listen,” LeMay said. “Listen like you’ve never listened before. Don’t try to talk someone out of what they’re feeling. Don’t talk through them. Don’t talk around their experience. Make room for what a donor is going through. If your organization holds a solution they are seeking, this will get revealed. But first, you must listen.”
Assess the Damage
Karen Brooks Hopkins, president emerita of Brooklyn Academy of Music (BAM), told me that the “first and most important thing” a fundraiser can do is give a “very factual assessment of what’s going on. Tell the donor, ‘We lost this much earned income in attendance, this much contributed income for projects, laid off this many staff, and this is the prognosis.’”
Some sectors will be better positioned to weather the storm than others. Once they’re able to reopen, Hopkins said, museums can revisit their “antiquated hours” and stay open till, say, 10 p.m. to reach more people and generate more revenue. Museums can also welcome mask-wearing visitors while acknowledging social distancing requirements.
The same can’t be said for a small theater used to packed, 500-person audiences. (To comply with six-foot distancing rules, René Conrad, executive director of Pittsburgh’s New Hazlett Theater calculated its seating capacity would shrink from 500 to 52 seats.) In the best case scenario, Hopkins predicts performing arts organizations can be back online in September. January, however, is more realistic, she said.
Fundraisers have no control over what the COVID-19 endgame will look like, but they can communicate the organization’s plans for reopening based on a series of scenarios ranging from the optimistic to the cataclysmic. “The key is to understand what you ask them to do with a beginning, middle and an end, instead of an ongoing cry for help,” Hopkins said.
Risk-based scenario planning goes a long way to talk donors down from that perilous psychological ledge. “It sets a baseline to the case, and from there, the conversation can really take off,” Hopkins said. “This is critical, and it shouldn’t be that complicated.”
Time to Get Personal
Development officers also need to personalize the pitch, lest donors feel as if they’re getting firehosed by frantic and indiscriminate fundraisers. “Dive into the database to look at donors with five-, 10-, 20-year commitments,” Hopkins said. “If you’re BAM and someone gave money to an old dance production, make sure the pitch hits on loyalty and dance.”
Fundraisers should dust off their “greatest hits” to engage donors, Hopkins said. Send a note and invite donors to discuss a previous event, fundraiser or performance. Get the director, writer or performer to participate. Pull some clips, whip out a glass of wine, and “remind people of the great experiences they had with your institution,” Hopkins said.
Ynetma told me she’s been deeply impressed by the Chicago Shakespeare Theater’s nimble COVID-19-era communications strategy, which, as it turns out, adopted many of Hopkins’ and LeMays’ talking points.
“They said, ‘Here’s how much revenue we lost, here’s how we’re planning to address it, and here’s what we’re doing for the community.’” Ynetma also forwarded me the theater’s latest email to donors and subscribers. The email was light on the call for donations and heavy on the theater’s streaming programming and outreach work, including its production team’s efforts to manufacture 100,000 patient masks for university hospitals and health care facilities.
The Argument Fundraisers Can’t Win
The life-and-death nature of COVID-19 has magnified what Jeffrey Wolfman, Fitchburg State University vice president for institutional advancement, calls the pre-crisis “hierarchy of philanthropy.”
The hierarchy consists of healthcare, religion, education and the arts. Donors collectively saw education and the arts as less important before the crisis, he said. Now, Wolfman finds himself competing against human services needs—or more specifically, organizations with one purpose: save lives in a global pandemic.
This is an unenviable position to be in. Barron’s Samantha Brooks writes that while giving to health-related organizations remains strong, foundations whose focus is outside the health crisis calamity are feeling the pinch. Greg Ratliff, a vice president at Rockefeller Philanthropy Advisors, agreed. “We’re seeing more of our long-term donors giving more money to COVID-19 charities right now.” Meanwhile, new donors are treading carefully. “They’re not fully backing away, but they’re rethinking their allocations,” Ratliff said.
Fundraisers may feel compelled to articulate the value of their cause—be it immigrant rights, economic justice, or animal rescue—in relation to the litany of coronavirus-related requests vying for donors’ attention. That would be a mistake, argues Hopkins. “Claiming that the arts is somehow more valuable than COVID-19-related relief work is an argument fundraisers can’t win,” she said.
Rather, Hopkins encourages fundraisers to make the case based on donor loyalty, community vitality and the organization’s civic mission. “It’s not just ‘do you like this show?’” Hopkins said, “but ‘do you want your community to come back stronger than before the pandemic?’”
The Limits of Fundraising
All of which brings me back to Warren Buffett. While his decision to dump airline stock wasn’t philanthropic in nature, it still suggests that donors concerned about throwing good money after bad will be sensitive to something fundraisers can’t control—a sector’s long-term liabilities.
Consider the fraught higher ed sector. Fundraisers have done a phenomenal job at communicating “clearly and transparently the impact that COVID-19” is having on students and “creating a connection between an organization’s mission/vision/values and how it is helping,” nonprofit fundraising consultant Paula Sakey told me. That said, a survey by educational advancement firm Washburn & McGoldrick found that 43% of university fundraisers still do not expect to meet their institutions’ fundraising goals this fiscal year.
In March, Moody’s Investors Service downgraded its outlook for the sector from stable to negative. Michael Horn, co-founder of the Christensen Institute, laid out a long list of universities that will be ravaged by the crisis: private, liberal arts, religious institutions, fine arts and music colleges, and colleges with high tuition discount rates and low endowments. Allen Koh, the CEO of Cardinal Education, a Bay Area-based education consultant, piled on, predicting that “five years from now, you’re going to see several hundred universities bankrupt.”
Investors may “buy low, sell high,” but many donors don’t operate that way. Small colleges have already gone under, suggesting that donors reached that dreaded inflection point—however subjective it may be—in which they concluded that no amount of transparency, sound strategic planning, or calm and measured pitches could have turned the tide.
Then again, fundraisers already knew this when they signed up for the job.
“It’s OK to be upset,” Hopkins said. “No one knows where this is going, and that can be very scary. But there’s also a lot of positivity and talk of recovery. The things you value and your mission becomes a tool in the story you’re telling. Now, it’s a matter of saying, ‘This is what we’re gonna do,’ and ‘Here’s how it’s going to be great.’”