Remember when the economy fell apart back in 2008-2009? Hard to forget, we know. However, a new piece from the Nonprofit Quarterly makes the case that nonprofits weather economic storms better than our for-profit friends.
Interspersed with the anxiety of living through a pandemic are moments of wonderful levity. My five-year-old son, for example, asked me if, “just to be funny,” I would mention Spinosaurus, his favorite dinosaur, in this article. Challenge accepted, buddy.
Perhaps even more valuable than a good silly anecdote, however, are the moments of hope. The reminders that while our current reality is painful and stressful, it will not stay this way forever.
Here at Thread, we found such a moment of hope in reading Jon Pratt and Kari Aanestad’s article “Deconstructing the (Not-So-Great) Nonprofit Recession” in the Nonprofit Quarterly. Pratt and Aanestad guide the reader through an extensive data study from the Great Recession of 2008-2009, with the ultimate conclusion that the nonprofit sector fared much, much better than you would have assumed based on how badly the private sector took it on the chin.
Now of course, if you’ve lived through one recession, you’ve lived through one recession. History does not always faithfully repeat itself. But there are hopeful lessons here, and the article is worth your time to read in entirety. While we hate to spoil the surprise for you, at this crazy moment in history, there are three lasting lessons we want to make sure really hit home.
Your Community Matters More than Big Data or “The Sector”
While there is much talk of “The Nonprofit Sector” as a proper noun (and Thread is certainly sometimes guilty of this too!), nonprofits are wildly diverse. Pratt and Aanestad’s analysis underscores that, “there is more than one way of understanding the sector, and differences among the types of nonprofits (and how they are funded) matter.”
This reminder is important to keep front and center because it means that the only context that is important is yours. It truly doesn’t matter what’s happening to arts organizations or basic needs providers across the country or even in your region. What matters is how your unique community of stakeholders needs you, what they will do to support you, and how you connect back to them. Keep your focus on your community, not big data trends.
Your Own Data Is Your Best (And Only) Guide
One of the reasons you can’t treat nonprofits as a monolith is because there’s a huge data lag on nonprofit financial information, which means, “Researchers and practitioners are always waiting at least five years to get the most accurate picture of the nonprofit economy.”
In this time lapse of accuracy, you can’t really know how nonprofits en masse are doing year to year. What you can know, however, is how you’re doing. Now more than ever, reliably tracking and analyzing your donation data is critical. There are very likely tough decisions in your future, and the only way to navigate them responsibly is to know your own performance data inside and out.
Here Come the Major Donors
For community-based nonprofits, one of the most uplifting findings that Pratt and Aanestad share is that during the last economic crisis, major donors notably turned their attention away from the fundraising behemoth that is higher education. The authors say, “With an increased demand on nonprofit services (especially basic needs), it appears higher education became a lower priority for wealthy donors during the recession, while other core areas (such as health and human services) grew total contributions during this time.”
No one knows how the economy will fare coming out of this crisis, but a philanthropic turn toward frontline, direct service providers is not irresponsible to hope for, especially given how obvious and extensive the strain this crisis has put on all households. Social media is not hiding how much regular people are hurting.
The important suggestion here is that donor outreach and cultivation need to be a very top priority from this moment forward. Not that it was ever so, but it is absolutely no longer viable to be shy about donor relations. You need to invest in your donor relationships now so that when the economy chugs back into action, your donors will go into action for you too.
Once you get to read it, let us know what you think of the article. We’d love to hear what lessons stick out for you! Email me at [email protected] to share your thoughts and opinions.