You can’t miss the headlines or the impact on your wallet — we are living in a time of record-setting inflation.
In our personal lives, we know what this means. Our household income does not go as far as it did previously when groceries, gas, and all sorts of goods cost more. Articles such as this from Business Insider explain the difference between purchasing power and inflation and how they impact finances.
“Economists can track changes in purchasing power to better understand the impact of inflation on consumers’ buying power. In a sense, purchasing power and inflation are two sides of the same coin. Purchasing power measures what a unit of currency can buy, while inflation measures rising prices.”
But how does inflation impact the nonprofit sector, and will it impact fundraising efforts?
Just as $100 buys less at the grocery store, a $100 donation pays fewer expenses at the nonprofit you care about. Nonprofits are paying the same high prices for goods, are managing labor market demands that further increase their expenses, and are faced with diminished philanthropy.
According to a recent AP story:
“Nonprofits by their nature are in a poor position to adapt to rising costs, experts say. While McDonald’s can offset higher beef costs by raising the cost of a Big Mac, for many nonprofits the only options are to cut services or hope donors will come to the rescue.”
Nonprofits must raise more money from donors to cover their increased costs at the same time that households are cutting expenses to make ends meet. And, with stock market declines, donors may not have appreciated assets to give in lieu of cash.
Giving USA’s recent data on charitable contributions in 2021 shows an overall increase of “4% compared to 2020, but a negative 0.7% when inflation is factored in. Giving dipped as a percentage of gross domestic product (GDP), from 2.2% to 2.1%.”
As gloomy as all this may be, we continue to counsel our clients not to use the need for money as their case for support in their fundraising appeals. It’s OK to ask for an increased gift, but never ever lead with a need for cash. The resulting answer will be: “get in line; who doesn’t need more cash right now?”
Donors want to know the impact of their gift. They know costs are up because they feel the pressure too. Keep your messages about impact, outcomes, and mission fulfillment. Remind them how much their support means to your organization and invite their investment in your work.
Be sure to involve your board in donor engagement opportunities to stay connected with your supporters, and make sure your stewardship messages are not a veiled solicitation.
We know these are trying times. We recognize the difficulty faced by the sector and we offer our letter scoring rubric to assess your donor communications. Let us know how it goes, and we hope you are able to increase the purchasing power of every philanthropic dollar.
Article by: Kerri Laubenthal Mollard, Founder & CEO