This, our second economic crisis in the past 12-years, promises to be 10-fold worse with a longer and more disruptive recovery. The lessons we as advancement professionals learned from the great recession offer little insight to our current crisis. Life and the economy as we knew it will be profoundly different, even after the widespread use of a Covid-19 vaccine.
While this is an enormously complex topic, I want to touch upon some likely societal changes and their implications for our work. Warning … the picture is not pretty.
Last year The Chronicle of Higher Education published a sobering report, “The Looming Enrollment Crisis,” which cited an 8 percent decline in college and university enrollment between 2010 and 2018. As birthrates have fallen, the percentage of young people going to college is not rising significantly and will not rebound in the prolonged economic crisis that lies ahead.
Thousands of universities and colleges are already struggling, and with expected state budget challenges, loss of ancillary income from summer school, food service, dormitories, and downward pressure on tuition, these schools face significant changes in their business model, the need to merge, or close shop. If students return to campus this fall, which is unlikely for many, lost income will further add to the crisis. The ramifications for low-income and minority students, today and into the future, could greatly diminish economic opportunity.
The financial needs are so large that philanthropy is simply not the solution. Given this, will the schools that survive choose to spend their limited resources on academics instead of fundraising?
Yelp recently posted that 40% of the 140,000+ businesses it lists will close permanently. As the pandemic sets the stage for industry consolidation, big companies will become bigger because they have more cash on hand and better access to financing than smaller at-risk businesses.
The commercial real estate, retail, airlines, hospitality, performing arts, and other industries will be hobbled for years to come and will survive only through consolidation. In turn, this consolidation will increase income and wealth inequality, in part because the largest companies are run by highly paid executives, typically based in major metro areas, and their company stock is disproportionately owned by the affluent.
This sets up further polarization of wealth among rank and file donors who will be more challenged by unemployment, under-employment, and downward wage pressure that puts greater wealth in fewer hands. Fundraising strategies will have to respond accordingly.
If Democrats take control of the White House and Congress, they will embark on a sweeping economic agenda that is likely to be supported by many Republicans.
We can expect an effort to reduce economic inequality through higher taxes on the rich, greater scrutiny of big companies, new efforts to reduce racial injustice, and more investments and programs for the middle class and poor, including health care, education, paid leave, infrastructure and renewable energy.
These are all worthy, but it will take time to develop and implement, and will take several years before the impact of this agenda is known.
Fundraisers are successful when they build relationships with their donors and make new friends who become donors. In the “old days” this meant face-to-face visits over meals, in homes and offices. While the pandemic has pushed all this online and camera-facing, only the bravest advancement officers are meeting with donors – masked and at a distance.
Fewer people will work from an office. Dining in restaurants will be a rare experience. And meeting people in their homes will be a warm weather patio strategy. Fundraisers will travel less and Zoom more.
Survival of Nonprofits
It is hard to image any nonprofit organization not being hurt by the pandemic. Lost revenue from declined giving, revenue lost due to program closures, lost volunteer assistance, and increased demand for services are just some of the issues. We already have seen significant furloughing of staff from medical centers to the smallest organizations – and the forgivable portion of funds from the Paycheck Protection Act expires soon.
It would be premature to make a prediction, but it is reasonable to assume that thousands of nonprofit organizations will not survive, or at best, will consolidate with similar organizations. Such mergers are often smart moves, but usually means a trimming of development staff.
1. It is prudent for us to plan for a new normal.
2. Building donor relationships will be more challenging in an environment where we meet through our computers,
3. Take advantage of webinars, blogs, and publications to inspire your thinking about dealing with this crisis.