Campaigns, This Side of the Recession

A Marts & Lundy report recently highlighted the drop in major gifts to colleges and universities this year, and made recommendations that institutions embarking on a campaign expect to rely on fewer multimillion-dollar gifts and concentrate on securing more contributions of under a million. This report came quickly on the heels of statistics from The Chronicle of Philanthropy showing that 2009 to date has seen six gifts over $50 million, compared to 31 in 2008 and 43 in 2007.

Given these numbers, we asked Bruce Flessner, principal at Bentz Whaley Flessner and a leading consultant on institutional advancement, to offer his insights on the best decisions development officers can make right now in positioning their shops for the climb out of the recession. Despite the reports on a slow 2009, Flessner emphasizes the need to focus on pursuing major gifts again.

Look 6 Months Ahead, Not 6 Months Back

"First," Flessner suggests, "you need to understand that the recession is coming to an end, so focus on the next six months, not the past six months." The slew of reports coming in about the slack in major gifts in 2009 may be frightening, but the focus needs to be on 2010 and 2011. And that suggests a brighter picture: stock markets are recovering, and many development officers are hearing their donors starting to ask not "Will the recession ever end?" but "When do we get back to normal?" Flessner notes that while manufacturing continues to struggle, other sectors are rebounding, including the energy and financial sectors. "A year ago, banks were a disaster, now we have Goldman Sachs trying to navigate the waters of record bonuses."

"Last spring you couldn't talk to people about giving very easily. They weren't sure whether stocks would drop further. Most donors are now psychologically in a very different spot. They're talking about recovery. When the controversy is over the pace of return, that's a very positive thing."
Bruce Flessner, Bentz Whaley Flessner

"Look down the road," Flessner suggests. Check with the economists. Look for indications where we're headed, and adjust your approach appropriately. This is the time to be talking with your prospects more, not less.

A Market of One

"When dealing with big gifts, you're dealing with a market of one. The overall market matters less than what that one donor or corporation is thinking about right now. Focus on knowing your prospects well."
Bruce Flessner, Bentz Whaley Flessner

Flessner recommends that development officers start to categorize their major gift prospects according to their mood. He suggests that there are four primary "groups" of prospects right now. There's a "green" group -- that includes potential donors who are seeing their funds spring back, who may even be thinking about gifts they can make this December in preparation for the end of the tax year. There is also a "blue" group -- these prospects are a little cooler. They are not as wealthy as they were a year ago, but they are ready to start talking again. "They're prepared to have the conversation," Flessner remarks. "Last March, many of these weren't."

There's a "yellow" group. These are the cautious ones. "Stay involved with them," Flessner advises. "Don't have a conversation today about their next gift, but stay in touch."

There's also the "red" group. There are some bankruptcies, some careers that have come to an end. "The important thing is that this is a small group."

"As you're sitting around that living room with that couple, determine where they are. Are they a red, a blue, or a yellow? Don't be too focused on your side of the story, your endowment being down, your construction needs. Focus the conversation first on how your donors are doing."
Bruce Flessner, Bentz Whaley Flessner

Flessner advises taking a good look at your portfolio -- what percentages do each of the color groups supply? If you have mostly yellow and red, Flessner suggests, then you need to make more cold calls and look for new prospects who are taking advantage of this economic upheaval and are positioning themselves to emerge much wealthier in the future.

"Who bought those bank stocks when they were cheap last spring?  Who is part of the takeovers of the banks closed by the FDIC? Someone is going to buy all this commercial real estate we're worried about at a low price, and is going to do very well. Nobody should have a fully red donor portfolio."
Bruce Flessner, Bentz Whaley Flessner

The Best Decisions You Can Make

Flessner suggests that the best decisions development officers can make right now include:

  • "Go out and make a lot more calls" -- collect information; you need to find out who your blues and reds are
  • "Take a step back, look at broader economic trends" -- which areas are seeing the quickest recovery? Look at what trends are shaping your prospects
  • "Stay with them"

Flessner reminds us that there are prospects who believe the university only approaches them when it needs money, and ignores them the rest of the time. "The last year was our chance to prove them right," he quips. Once you know who your blues and yellows are -- those who are not ready to offer a gift -- it is critical to keep in touch with them. Development officers must not let the pressure of the recession cause them to forget that cultivating potential donors is about creating a lifetime relationship.

Keep a Long-Term Perspective

Campaigns have grown longer over recent years, until we have begun to see many 7 and even 10-year campaigns. "The business cycle is faster than that," Flessner notes. "There's a good chance that in every campaign, you'll have bull market quarters and bear market quarters. If you have a longer time horizon for completing the campaign, your chances of getting in and out without a recession are difficult." It is important to keep your perspective mid-campaign. Respond to the changes in an economy, but in a way that is based on your knowledge of your prospects and on your commitment to long-term relationships.