YOU would have to be living in Antarctica not to have noticed that we’re in the grip of an economic downturn. With belts tightening all over the place and even the prime minister telling us to be more frugal, charity fundraisers could be forgiven for worrying whether, after credit card spending has been curtailed and gym memberships cancelled, donations will be next on the list of consumers’ expenses to axe.

When it comes to major donors, those who make gifts of £5,000 or above, things get more serious. This area of fundraising has come into its own in the past 15 years and previous downturns suggest that there is a lag of anything up to 18 months before charities begin to feel the effects.

Yet a small survey of charity professionals by Croner Reward, a pay and benefits consultancy, for Charity Times, found that 39 per cent of charities already believed they had seen a drop in major gift donations over the past year. Most were unsure whether the credit crunch had made it difficult to attract major donors, but 60 per cent expected the crunch to affect their major donor fundraising in some way.

Are major donors likely to reduce support?
The consensus among the experts is that on the whole, major donors will still give, and give generously. Unlike other forms of fundraising like collection boxes or those signed up on the street, major donors are the most committed – unlikely to pledge their support in an instant, but also unlikely to withdraw their support as quickly. They are likely to be affluent and so more protected from the effects of a crunch.

However, with an economic downturn comes uncertainty, and not everything is expected to be rosy. “Major donor fundraising will definitely be affected,” says Margaret M Holman, co-author of Major Donor Fundraising and president of Holman Consulting, a fundraising consultancy.

She believes that donors will streamline their causes. “People in the major gift range are going to narrow down the number of charities that will receive the money. They’ll still be generous but they’ll be more discerning,” Holman says.

Others feel that attracting new major donors is likely to become more difficult. Angela Cluff, deputy director of the Management Centre, a not-for-profit consultancy, says: “If you’re heading for very large gifts especially from people who haven’t given large gifts before, it’s probably going to impact that. But it doesn’t change donors’ motivation for giving.”

Megan Pacey, director of policy and campaigns at the Institute of Fundraising (IoF), says that for organisations running a capital campaign to secure a big gift, it will take longer and they’ll have to work harder.

So are major donors worth the extra effort? The answer is a resounding ‘yes’. The potential value of big gifts means that while other forms of fundraising might suffer, a regular pool of generous donors is all the more important to help a charity through hard times.

How do you attract and retain major donors?
The number one word is relationship. In a downturn, this becomes even more important. “Major donor fundraising is all about personal contact and networking,” says Cathy Pharoah, co-director of the Economic and Social Research Council’s Research Centre for Charitable Giving and Philanthropy, at Cass Business School. “There’s no easy way of getting that.”

Pharoah recommends a two-pronged approach: widen the pool and nurture existing donors. “Make them realise how important it is that they don’t alter their charitable giving.” She advises tailoring the approach to those who may be feeling the effectsof the possible recession less, such as those who are older without children at home.

“It might be worth spending extra time targeting the donors that you go to. People with families are under more pressure and are likely to put children’s needs first,” she says. Cluff of the Management Centre recently presented to the IoF’s National Convention on the myths that abound in major donor fundraising: one of the most prevalent being that a major gift always takes a long time to secure.

“You can get gifts of up to 6 figures in a relatively short space of time,” she says. Rather than going for a huge donation straight away, charities may be better off asking for a smaller amount first – and being upfront about it. “The theory is all about communicating perfectly – taking the donor through the process to get the perfect gift. That’s unrealistic – it’s never perfect,” Cluff says.

Charities should not stop asking for money. Most people can still afford to give more, says Pharoah. IoF’s Pacey agrees. “Charities should be asking on a regular basis donors to review their giving with the suggestion of what they could do with more money, regardless of whether it’s an economic boom time or not.”

In a nervous economy, however, donors will be less ready to ‘upgrade’ their donations, Pacey says. Making a strong case based on evidence of impact will become more important, while donor care – keeping donors informed as they wish to be, is also crucial. Charities should beware of ‘slash and burn’ – securing a major gift and failing to follow up – as a sure way to fail to get another one, Holman says.

Charities can lag behind when it comes to data management and performance measurement, says John Pepin, a charity consultant. Yet without these systems in place it can be difficult to provide evidence of the impact of work.

Present the business case
With less cash in the system and donors reducing the number of causes they give to, presenting a convincing case for support becomes ever more important. Whereas once a gift may have been a simple goodwill gesture, there is a trend to want to know where money is going – the social return, something that is heightened when cash is scarce.

Some 64.7 per cent of charities who took part in the Croner Reward survey felt that major donors were more likely to want to see a return on their investment, rather than simply making a gift outright. Holman says that ‘baby boomers’ simply look for evidence that their money is being used wisely, younger givers treat it as an investment. “Those in that generation who are capable of making big gifts want to have a say in where it’s going and what’s happening,” she says.

“If you’ve always relied on goodwill donations, the venture philanthropy approach can pay dividends,” Pepin says. The successful charities use business language and a business case – the same as the traditional case for support but delivered in a slightly different way. Charities need to understand the difference between four concepts: output, outcomes, impact and social return – and how they relate to their work. “You have to have an investible proposition to attract people,” he says.

Another argument to convince the financially-aware major donor is that the tax changes brought in by Gordon Brown increased the value of the tax break on charitable giving, making it cheaper for a higher rate tax payer. “They used to get back 18 pence in the pre-tax pound now, they get 20p. It’s a bargain,” Pharoah says.

However dire the prognosis, spending on luxury goods – and major donor fundraising falls into this category - in Britain is high, and likely to remain so, Pharoah says. “There’s plenty of slack.”

Case study: NSPCC
If the credit crunch wasn’t worrying enough, it can make the need for charities’ services even more vital. Alana Tubasei, head of high value donors at the NSPCC, says that the charity could be called on more during a downturn. “Children and their families are under more financial pressure.

People argue over money so there might be an increase in domestic violence and depression. Children often bear the brunt of that – calls to Childline are likely to increase.”

Yet no one at the NSPCC is panicking, she says. “The donors I have talked to have said they’re very much on board.

They’ve committed to something and it’s something they believe in.” To be on the safe side, the charity plans to put extra effort into nurturing its big givers. “We’re making it very clear to our major donors that their donations are incredibly important,” Tubasei says.

Her strategy is to keep major donors focused on the impact their gifts will have, regardless of the economy. She agrees that presenting a results-based case is crucial. “It’s about making our mission as compelling as possible, being able to communicate the impact that gifts are having, and that they are being used efficiently and effectively as possible.”

In the event that it becomes harder to sign up new donors, keeping the loyal supporter base on board [is important] because they are the ones who will support the charity through a period economic decline, she says. “One sure way to raise less money is to ask less.”

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