As the national economy sinks deeper
into a recession, experts say that it
will continue to get worse before it
starts to get better. Due to the recession,
companies across the country continue to
cut jobs in an effort to control costs.
With less people working and generating
a disposable income, how can businesses
that rely on the donations from others keep
their head above water?
“Historically, nonprofits have relied primarily on private and corporate donors to
raise money,” says Susan Holcomb, vice
president for Wells Fargo Bank in Houston.
“It’s no secret that our economy has
reached an economic low of recessionary
proportion.”
Smart Business asked Holcomb how the
recession has affected nonprofit organizations, including churches, and their ability
to raise money.
How has the economic downturn affected
nonprofits’ ability to raise money?
Many corporations have had to trim their
budgets to keep their doors open and don’t
have the large philanthropic budgets to
contribute at the same generous level as
they have in the past. The amount of revenue available every year is uncertain for
most nonprofits. Unlike most for-profits,
nonprofits don’t depend on product sales,
relying instead on the generosity of contributors. Even nonprofits with large
endowment funds have uncertain revenue
because their investment income depends
on the state of the financial markets.
Charitable contributions typically shrink
in more difficult economic times. In recent
years, the level of charitable donations was
impacted by the stock market and other
investments. During difficult economic
periods, the stream of small donations at
many charities is unaffected, but big donors
give less. As a result, nonprofits are having
to watch every penny they generate and
pay closer attention to all expense line
items. Now more than ever, nonprofits
must be even more prudent and fiscally
responsible if they are going to be able to
continue to provide services to the communities in which they serve. Nonprofits today
must be creative and create multiple revenue streams if they are going to survive.
Do churches have an easier time raising
money?
The religious community may have a little easier time raising money, but it’s still
not that easy. An advantage a church might
have over some nonprofits is that a church
traditionally relies on the faith of its members to tithe to the church and its ministries to sustain its existence. Although
attendance and membership dynamics
vary significantly for different churches
and regions, older Americans are more
likely to be regular church members and
contributors. Faith-based organizations,
predominantly churches, are seeing an
increase in the number of giving units,
which makes up in part for the decrease in
the giving by the individual donor. The
tragedy, however, is that many churches
are having to lay off employees in the same
way that many corporations have had to
due to a sluggish economy.
Another advantage a church may have is
that it can create subsidiary nonprofits and
a community development corporation to
help create multiple revenue streams.
Are there different tactics used to raise
money in today’s economy?
Internet fundraising has gone from being a
luxury to an everyday necessity for nonprofit fundraising. We all saw how Internet
fundraising helped President Obama raise
enough capital to win the presidency. This
shift is especially effective among the demographic change to a younger giving base.
Also, this method of fundraising is crucial to
reaching a mass audience. Of course, there
are still the traditional methods of fundraising that will always be around, such as the
written letter request, the phone call and/or
a face-to-face meeting.
What is a bank’s role concerning nonprofits
and churches?
The bank’s role concerning nonprofits
would be to first understand the DNA/personality of the nonprofit. The banker must
take the time to understand the nonprofit’s
mission, objectives, balance sheet, funding
sources and funding cycles. The same
applies to churches. Our job is to make
sure that when providing products, services or credit, that it’s a win-win situation for
the bank and the nonprofit. If we don’t take
the time to ask the right questions and to
do our due diligence, then we are not doing
our job and don’t deserve the business. At
Wells Fargo, we have a specialized team of
bankers with many years of experience
with working in our communities and with
our churches and nonprofits.
Wells Fargo senior management also
encourages each of its team members to
support the respective markets they serve
through charitable monetary giving, time
and talent via volunteer hours.
SUSAN HOLCOMB is a vice president at Wells Fargo Bank. Reach her at (713) 284-5477 or [email protected].
