The impact of COVID-19: Outcomes of a recent survey of nonprofits

By October 27, 2020November 11th, 2020Featured, Industry Trends & Commentary

There’s been a great deal of discussion about the impact of COVID-19 on the philanthropic industry. Yet, so far, the hard data on the outcomes have not been fully realized.

The industry relies on a few key reports. Two examples from this select group are Giving USA, an annual report on philanthropic giving per sector; and the biennial U.S. Trust Study of High Net Worth Philanthropy, co-authored by Bank of America and the Indiana University Lilly Family School of Philanthropy. These reports are critical to understand the full landscape of philanthropic activities in the United States. However, given the long-term nature of these research studies, the full impact of COVID-19 will take some time to be researched and articulated.

Organizations are eager to understand the broader ramifications of what is happening now, and it is important at Graham-Pelton that we understand the immediate impact the global pandemic has on the nonprofit sector.

As a result, we conducted a targeted survey to share real-time outcomes, challenges, and needs. Before we share key takeaways, an important point to share regarding our data collection: Survey respondents represented independent schools, higher education, social change, religious, and healthcare subsectors and educational institutions comprised 77% of responses.

With this in mind, there are important lessons to be learned from this real-time feedback and analysis, no matter your subsector.

Part I: OUTCOMES | What We Learned

1. The majority of respondents who did not reach their fiscal goals stated they were off track before COVID-19 first shut down the United States in March 2020.

Sixty-five percent of respondents reached their fiscal goals. Of the 35% who did not reach their goals, they raised 85% of their stated goals on average. But what’s more interesting is that a majority of respondents who did not reach their goals stated they were off track before March 2020, while those who did reach their goals had targeted plans and strategies in place and were meeting monthly goals in the first quarter. Donor retention due to the economy was the biggest concern of all respondents.

2. Eighty-three percent of reporting organizations experienced successful major gift solicitations and close rates since March.

Of these, the average gift solicitation was $1.2M and the average close was $750,000. On average, the gift closure rates remained typical at 60%. Sixty-three percent of all solicitations were conducted virtually using online meeting platforms. The remaining 37% were made by phone, mail, and email with a small minority of these major gift asks being conducted in person.

3. A majority of responding organizations plan to maintain or increase their annual giving goals for FY21.

This reflects an optimistic commitment on the part of Development team leadership to effective prospect management and promoting their organizational missions, as well as the possibility that some organizations are being instructed to maintain/increase their goals. Fourteen percent of all respondents are lowering their fiscal goals in the next year. Those organizations lowering their goals are targeting a 10% reduction on all goals on average.

While many responding organizations expressed concern about losing donors and donor interest in the wake of COVID-19 and ongoing unrest and uncertainty, a majority saw their LYBUNT rates decrease or remain flat in FY20.

4. More than half of all respondents created an emergency-related or COVID-19 response fund.

Sixty percent of respondents reported creating a COVID-19 or emergency response relief fund. This ultimately played an essential role for those organizations that met their annual giving goals in FY20, demonstrating that donors are motivated to be generous and willing to pivot in the face of the compelling needs set forth by organizations.

5. The majority of organizations that had to cancel events due to the pandemic successfully created online events or directly solicited event participants in lieu of an in-person gathering.

More than half of all respondents had established events that were canceled as a result of the pandemic. Of the 58% of respondents who needed to cancel events, 59% either created a virtual event or asked for donations to fund a specific initiative instead of attending and giving to an event.

Part II: CHALLENGES | What We Observed

1. Planning has a significant impact on fundraising outcomes.

We consistently found lag where initial planning had not been fully realized or adapted throughout the organization. With a targeted plan, it is easy to stay on track. Annual planning should commence three months in advance of your fiscal year’s close and should be collaborative. Engage organizational and board stakeholders in your plans.

2. Goal setting is still problematic at many organizations.

The best practice for goal setting is to set the new goals against actual outcomes in the current year. This enables you to have real, achievable goals. Setting a goal against an old goal that was not achieved sets teams up for failure. Selecting a goal based on a financial gap also does not take into account the actual pipeline and potential of any given fundraising program.

While remaining open to executive-level conversation and input, such as with your CFO or Executive Director, goals need to be set that can be reached or exceeded. If there is contention that is insurmountable, consider tiered goals such as Low, Median, Stretch.

3. COVID-19 has impacted operations far more than fundraising.

In most cases, it has brought out the best of donors who can give. According to participants in the study, the average gift sizes have increased on the whole. Do not make assumptions and stop or lessen your fundraising efforts. It’s more important than ever to be strategic, persistent, and bold.

Part III: NEEDS | Planning for the Future

1. Focus not only on recapturing LYBUNTs, but also on recapturing SYBUNTs.

It is possible that some donors could not give or were not asked to give in FY20. For this reason, those donors are now SYBUNTs, but they should be prioritized for active solicitation in FY21.

2. Develop a stewardship plan for all donors to COVID-19/emergency-related relief funds.

This includes a special touchpoint and update once again thanking them for their support and demonstrating with specificity how the funds were used to propel the organization forward. Continue to steward donors by showing how their support helps your organization respond to challenging times, and provide tangible examples of the impact their support has on your organization and constituents.

3. Pay particular attention to what inspired first-time donors to make their first gift in FY20.

Use the data to inform future requests for donations. Research first-time donors who made their gifts through the COVID-19/emergency-related relief fund, and add these donors to Annual Fund solicitation lists moving forward. They may also be added to major gift portfolios for additional qualification and cultivation based on research results.

4. Continue to engage, cultivate, solicit, and close major gifts, even in virtual or socially distant settings.

Many donors have increased comfort levels with Zoom, FaceTime, and other virtual settings. Donors are also more understanding that face-to-face meetings are not possible. Fundraisers should continue to engage prospects using virtual and/or socially distant settings as much as possible.

5. Based on the success of and new familiarity with virtual events, consider how to scale back future events to reduce costs moving forward.

This may mean shifting the event’s focus or redeploying staff time away from event details and toward personalized donor engagement and cultivation. Events that continue should have clear goals and expectations for engaging attendees with the organization beyond the event itself.

6. To combat fears about a lack of donor interest, focus on proactively communicating with donors and the community.

Be specific and direct about what is needed. In particular, education sector institutions can develop candid and carefully worded messaging about the costs of equipping schools for COVID-19, the value of the education still delivered even in a remote learning environment, and how tuition dollars do not cover the full cost of educating all students.

Use all types of communication channels – digital, print, virtual platforms – to continue to inform and engage your community and donors, as well as to make solicitations and offer thanks.

Jennifer Harris, Ph.D., is Senior Vice President and Erica Pettis is Managing Consultant at Graham-Pelton. They can both be reached via email or by calling 1-800-608-7955.

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