Smart ideas from Hartsook Companies, Inc.

November 18, 2008

Fundraising in a Slumping Economy: Pay Yourself First

You have likely heard the adage, "pay yourself first." Doing so over time can build financial stability for organizations. In his article, William Barrett, senior editor at Forbes, suggests that, during economic downturns and subsequent challenging fundraising periods, nonprofits with endowments and cash reserves have fewer reasons to worry than those that do not (Forbes, December 2007).

Endowments
Most endowments are built primarily via planned gifts. Even in cases where donors are wary about their current financial situation, planned giving opportunities can provide them a way to support an organization without impacting their present financial state. With some planned giving opportunities, a donor's financial status can even be enhanced through the related tax savings and deductions, thereby providing the donor an added financial incentive to give in an uncertain economy.

Cash Reserves
Cash reserves act as a savings account for organizations and can help meet unexpected expenses. Cash reserve fundraising can be challenging because donors are unclear how their donation helps change the lives of those served by the organization. However, by soliciting in-kind gifts to cover specific items needed to run your organization (e.g. office supplies, hygiene products, etc.) you can reduce cash outlays. Funds previously budgeted to cover these expenses can then be shifted to your reserves.

Enhancing Operating Revenue
Most organizations rely less on cash reserves if they have stable operating revenue. Some may find raising funds for operating dollars to be difficult. Obviously more donors are drawn to the idea of supporting the programs that directly benefit your clients versus underwriting the cost of your light bills. However, operational funding is the core of your program expenses; it provides your staff with the supplies and resources needed to conduct programs and serve clients. Keep those you serve as your focus and the funds will follow.

How much an organization puts in each of these areas is dependent upon its needs and operating budget. An endowment is typically built so that its corpus can generate adequate interest or dividend revenue to support the organization's operating/program and capital needs. It is recommended that cash reserves equal six months to one year of operating/program expenses.

These resources can carry an organization through a slowdown in philanthropy. Any organization that does not already have an endowment or liquid cash reserves should consider getting one or both started as soon as possible.

Another Smart Idea...From the Hartsook Best Practices Collection^SM

"We recruit a group of community leaders and business people to spend a portion of their day with a 'disability.' It has been a great awareness event." - Shalle Wolff, The Bethphage Foundation (Omaha, Neb.)

If you are interested in Best Practices and smart ideas, see these additional resources from Hartsook Companies:

• Getting Your Ducks in a Row! . . . Proven Strategies for Exceeding Your Capital, Endowment and Operating Campaign Goals. No development officer should be without this book. Bob Hartsook's guide brings together outstanding authors and sources providing a tool box of strategies for effective campaign fundraising. Each page is filled with ideas, concepts, plans, strategies, approaches and suggestions that result in success. Available for $15 (plus $3 S&H) through ASR Philanthropic Publishing by calling toll-free 1-866-630-8500.

• "Best Practices Coast to Coast^SM," a compilation of best practices from every state in the union.

• "Hartsook Best Practices Collection^SM," our original collection of 250 best practices and great ideas.
  

For a free copy of "Best Practices Coast to Coast" or the "Hartsook Best Practices Collection", please email Gretchen DiGiovanni, gretchen@hartsookcompanies.com, or visit our web site at http://www.hartsookcompanies.com. We also invite you to contribute your own best practice by emailing Tami Druzba, tami@hartsookcompanies.com.

Career Booster!

Looking for ways to invest in your organization's future? Join us for a seminar packed with valuable fundraising strategies! The seminar will begin with Hartsook Companies' proprietary "Integrated Fundraising Campaign^SM" and will conclude with a bonus session.

December 12
Raleigh, N.C.
Hilton North Raleigh Hotel

This full-day seminar provides an opportunity for you to learn from some of our top consultants; network with fellow fundraisers, nonprofit professionals and volunteers; and gather valuable ideas you can implement immediately.

Visit the Hartsook Companies website at www.hartsookcompanies.com for more information.

Visit the Hartsook Companies web site for:

• Educational opportunities
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Strategies for Success explores smart ideas, connecting with more than 1,700 fundraising professionals bi-weekly. If you'd like a free subscription to Strategies for Success - or its monthly companion, eHartsook on Philanthropy - contact Gretchen DiGiovanni, gretchen@hartsookcompanies.com. You also can reach her at 316.630.9992.

Our web site is located at http://www.hartsookcompanies.com.