As a result of global efforts to stem the spread of COVID-19, stock markets are tumbling and unemployment is spiraling. Colleges and universities will face tightening revenue streams on all fronts, including charitable giving. Business as usual has been disrupted. Fundraising may have to lead the way to revenue recovery.
While donor capacity may have diminished, generosity is likely deepening. As long as boards, presidents, and chief advancement officers respect both realities, three pivots can preserve and propel development performance through the crisis:
- Appreciate Assets: Update and review your stock transfer and gift acceptance policies with Finance, Advancement, and an attorney who specializes in charitable giving or tax law. Make sure your gifts officers know how to encourage donors to talk with financial advisors about the possible benefits of donating appreciated assets (e.g., stock, real estate). While most stock prices have dropped, some investments are gaining value during the crisis, and the market value of a long-held asset may still exceed its cost basis. If cash is in short supply, making a gift of appreciated assets may be the most advantageous way for a donor to continue to support your institution during this challenging time.
- Retain Earners: If you lose a top producer during a recession, you will fight internal budgetary pressure to leave that position vacant. As other revenue streams dry up, you need to invest in your best gifts officers. Look at the numbers: Identify those who have the highest percentage of repeat donors, those who have the highest number of new donors, and those who have the highest average gift size increases year over year. Offer those high-performing gifts officers a retention bonus for staying through the next twelve months now and hold on to them through the recession.
- Lean in: Don’t pretend times are normal for you or your constituents. Alumni will lose jobs during a recession. Launch a suite of useful upskilling courses—on campus and online—to help them make the most of their job search. If you do this right, you also could help your institution open up a new revenue stream that outlives the recession. On top of that, your temporarily cash-strapped alumni will remember that you were there when they needed you most.
Having moved into the college presidency from advancement on the heels of the Great Recession, I want you to be ready for an economy and fundraising environment that may be even worse than it was in 2009. Now is not the time to freeze development operations. Pivot and persist.
Bonus Tip: Bring that endowment spend rate back down to below 5 percent of a three- or five-year rolling average. You are not alone in your “irrational exuberance” in the face of tight cash flow and stock market gains, but it’s time to rein it back in, even though it hurts. Retaining (or, more likely, regaining) endowment value is not only a strategic business move, but it is appropriate stewardship of past gifts.
Opinions expressed in AGB blogs are those of the authors and not necessarily those of the institutions that employ them or of AGB.