Predicting the 2021 Fundraising Environment
As we settle into 2021, I see some reasons for hope and optimism that nonprofits can have a better year, at least financially. I draw this conclusion based on the following observations, drawn from my research on the political, economic, and social forecasts that filled the media and various newsletters during the last quarter of 2020.
Unemployment hit relatively few Americans. While the media focused on high unemployment and heavily impacted sectors of the economy such as retail and entertainment, the fact remains that most of the country has continued to work. Granted, the people who lost their jobs or lost work hours because of the pandemic often lived at the cusp of poverty and could ill afford the loses, resulting in devastating impacts for them and their families. But, even at the height of the pandemic when the country hit 20% unemployment, 80% of the country’s workforce remained employed.
Many major donors have seen their wealth increase. With the stock market rebounding and flirting with record highs, major donors have not seen their wealth decrease substantially; some have actually seen their wealth grow. Couple that with fewer options for spending and many major donor prospects have more money to give to charity. How long they will hold on to that newly found wealth or when they will resume travels that 2020 suspended will, in part, determine how much they retain to invest in your nonprofit. The lesson here? Ask now; don’t wait until the end of the year!
Overall, the economy remains stable. In addition to the resilience shown in the stock market, overall consumer spending and mortgage payments have not suffered significantly in the pandemic except for those segments of the economy and employees that rely on service industry jobs. Most people could maintain their standard of living during the pandemic which bodes well for giving to your nonprofit.
Foundation giving should remain steady or increase. Because foundations generally rely on the performance of their endowment earnings when deciding how much to grant, the robust stock market means steady or increasing funds to donate to charity. Many use a rolling average of their endowment’s performance over multiple quarters which means that any dip gets moderated by growth from the previous quarters. In short, foundations should continue to provide a strong avenue for support. The lesson here? Keep grants as a key part of your development strategy.
Corporations have generally fared well in the current recession. While small businesses and corporations in certain industries – notably retail and entertainment – have seen significant negative impacts from the pandemic, many others have not. Some key industries have actually seen skyrocketing profits! Anecdotal evidence suggests that local Quad Cities companies have not seen significantly lower earnings as a result of the pandemic. (Check with your local Chamber for information on your community.) The lesson here? Strategically reach out to local companies for support. Ask how the pandemic has impacted their bottom line and ask for a gift accordingly.
Good news on the vaccine front points to a recovery in 2021. In December, the stock market rebounded on news of the emergency approval and distribution of the first two vaccines, suggesting overall confidence that the pandemic and its recession have their ends in site. Other economic predictions point to continued recovery in 2021 with 3.5% GDP growth and unemployment down to 5.9% by the end of 2021. The lesson here? ASK!!
However, 2020 certainly taught us the unpredictability of predictions! As such, a few factors may impact this overall positive outlook for 2021.
We swore in a new Congress a few weeks ago and will inaugurate a new president tomorrow. Democrats hold only a slim majority in Congress, likely not enough to implement sweeping reforms. Questions of stalemates and the ability and willingness of the parties to work together to advance the national agenda remain. The country still has deeply polarized views; its ability to heal and work together remains another unknown as we look to the future.
The vaccine will provide relief from the pandemic, but only if a significant number of Americans getting vaccinated. Questions of vaccine supply, timing, distribution channels, and the willingness of people to get vaccinated remain unknowns. Some predict that by June every American can get vaccinated. Should that prediction come true, it bodes well for the second half of 2021. If not, the current social, health, and economic pain could continue deeper into the year.
The pandemic has also significantly impacted state budgets. With little federal relief to the states immediately forthcoming and reliance on the states to distribute vaccines, the economic and social conditions of state governments can negatively impact the health and economy of the state and the nation. Should your state need to lay off employees, it will prolong the economic recovery as it will take longer for that unemployment to rebound.
We cannot underestimate the impact of the civil unrest following the death of George Floyd in May on the economy and government policies in the months and years ahead. Many funders have focused significant dollars on programs for racial equity which may detract from funding other types of initiatives. It bears watching local and national conversations around race for their impacts on the nonprofit sector. I also suggest that you examine your own policies and procedures to see how they help eliminate or contribute to systemic racism – and act accordingly.
Regardless of how and when the pandemic-created economy and social conditions recover, as a development professional you want to keep an eye on external conditions and continue to talk to and listen to your donors and stakeholders about their personal circumstances. And do not forget to ask them to support your mission!
