How to Navigate Inflation as a Nonprofit

Inflation in the U.S. reached the highest level in over four decades in May of 2022. We’re breaking down what this rise in inflation tells us about fundraising and how nonprofits can confidently recast their strategy with seven subtle shifts.

The Impact of Nationwide Inflation

Nonprofits kicked off 2022 with optimism around the generosity of American donors. 

Following a record year of donations in 2020, 84% of donors were ready to match or increase their contributions through the final months of 2021. 

When we entered 2022, a number of events occurred to further impact the economy to where it is today. Russia invaded Ukraine in February. Harvard Business Review shares how the resulting sanctions, pandemic-related shutdowns in China, and other lingering impacts caused significant bottlenecks in the U.S. supply chain. 

The impact of inflation and talk of recession should influence organizations to evaluate their current financial positions and take action where they can today.

Fundraising Through Economic Fluctuation

Rising inflation has a direct impact on fundraising. Nonprofits should consider proactive measures to prepare for donors who may have less to give, and pivot to anticipate higher fundraising costs. 

For organizations that provide human services, demand for help increases alongside the price of essential supplies. With more demand comes a greater need for volunteers to keep operations running, although it may be harder to motivate people to dedicate their time without financial return.

Nonprofit organizations will likely need to earn more through fundraising to offset the cost of inflation and meet any distribution requirements without dipping into their assets. While several financial strategies can support budgeting and expenses for the year, we’ll focus on fundraising tactics you can immediately implement.

An important focus area for organizations, regardless of size, may be to ensure donors understand how they can continue supporting your cause as the economy fluctuates. 

7 Shifts for Nonprofits to Sustain Fundraising

1. Be Clear About the Impact of Inflation

Donors don’t want to see their contributions diminish in value. Still, they won’t immediately correlate inflation to depreciating donation amounts. Be transparent to inform donors about the reality of the situation early.

Frame your messaging and appeals in a way that carefully communicates the impact of inflation on your nonprofit with individual supporters who are likely facing personal financial challenges during this time. It’s okay to ask people to increase their generosity if your outreach is thoughtful. Express that you know not everyone can help but that you’re grateful for anyone who has a bit more to give.

Most importantly, this is not the time to be vague. Add as much detail as possible about how each additional contribution impacts your goals, mission, beneficiaries, and ultimately your ability to continue serving your community. Call on your supporters to become the heroes who can ease the burden of inflation, which we’ll explore below.

2. Rethink Recurring Gift Appeals and Amounts

As you reach out to various groups of supporters, your recurring donors are a great place to begin. It’s much simpler to budget for the year when you know what you can rely on from monthly donations.

The fall and winter seasons present new opportunities for recurring donations as Giving Tuesday and the year’s final days incite generosity. We’ll talk a bit more about how to attract new donors during this time, but building sustainable revenue is more about retaining these year-end donors. It’s a great time to reiterate the value of recurring donations and what your cause is doing with the funding these individuals provide.

Ask recurring donors to:

• Consider increasing their existing recurring gift size by  $5, $10, $20, or $50
• Increase their giving frequency  to weekly, bi-weekly, or daily for the next few months
• Recruit others in their network to start a recurring gift at a frequency and amount that works for them right now

Call on one-time donors to:

• Break up their year-end, annual gift amount into a monthly recurring donation starting now to make their donation more affordable in high-inflation months
• Find a frequency and gift amount that works best for their budgeting needs
• Make a recurring donation on behalf of a loved one or celebration this year

Understand What Retains Recurring Donations

3. Forge Partnerships With Corporate Partners

Nonprofits that rely more on corporate giving may not see the same impact from inflation.

As the most recent long-term financial strain to hit businesses, the COVID-19 pandemic is an interesting indicator of how corporate partners increase their focus on charitable giving in an economic downturn.

A Fidelity survey of approximately 1,200 workers across the U.S. found that 66% of respondents felt it’s important for companies to be philanthropic and support different causes in 2020. Among millennials, it was 75%.

In 2020, U.S. companies provided $6.2 billion to nonprofit organizations to COVID-19 relief. Corporations and businesses recognized the value of expanding their charitable giving and taking action when the community needed it.

That set the stage for continued engagement with nonprofit organizations into 2021 and 2022, making this a great time to build new relationships.

When thinking about organizations to connect with, consider Certified B Corporations. Focus on outwardly socially responsible companies that are well-aligned to your cause and likely draw in employees who are passionate about giving back to the community through their employer. LinkedIn is a wonderful place to connect with the right people and expose them to the good you’re doing first-hand.

An idea to get your thoughts flowing: Engage companies in employee giving through teams and team-building peer-to-peer campaigns. We recently highlighted how JoyRX Children’s Cancer Assocation brought together 19 corporations and partners through creative activity-tracking, making it easy to participate and expand their reach with more participants.

4. Diversify Your Fundraising Income Streams

Like any good financial strategy, the more streams of income you can secure for your nonprofit, the better position you will be in if one slows down.

We talk a lot about the idea of diversified campaign portfolios on our blog and in our annual report, The State of Modern Philanthropy. Nonprofits can utilize several concurrent campaign types throughout the year and their yearly or season-specific initiatives. This also expands to nurturing one-time and recurring donors and cultivating a network of reliable major donations.

Recent findings from our report highlight the most effective campaigns regarding acquiring specific donors during designated timeframes and based on your organization’s goals.

Here are a few key insights to showcase the importance of versatility in your fundraising strategy:

• Campaigns that are part of a peer-to-peer fundraising platform prove to motivate more donors, raising an average of 3.8X more than all other time-based campaigns combined
• Donation pages, or nonprofits’ main donation websites, bring in the most average recurring revenue of all campaign types and have the least likelihood of those recurring donors canceling their contributions in the first year
• Events bring in the most donations above $1,000 and show the highest conversion rates (defined as the act of a page visitor turning into a completed registration or donation)

Building various campaigns into your annual fundraising strategy gives new donors more options to support your organization in the way that resonates most with them.

5. Sharpen Your Grant Application Strategy

Grants can carry you through a more challenging financial time to help you rebound sooner once inflation levels out. Now is an excellent time to apply.

Write effective grant proposals by building off past grants and using your annual reports as a data source to support your request. Staying organized with documentation demonstrating your impact can make it easier to tailor your grant request in a way that resonates with the potential funder.

6. Lean on Free Resources

You can amplify all the tactics above with the right promotional strategies and materials. Luckily, you can access many free tools and resources as a nonprofit. Tapping into these now can help you reach the right audience who will support your cause through meaningful donations.

Here are a few free resources nonprofits can tap into:

• A $10,000 Google Ads grant credit to help maximize your reach and tap on new audiences of donors who can make a real difference in tighter months
• Elevate your marketing efforts with a Canva Pro membership to design professional emails, social media posts, videos, presentations, reports, and more based on pre-established templates
• Establish a nonprofit Facebook Page to boost your discoverability and quickly update a community of supporters as inflation impacts outcomes
• Tap into the YouTube Nonprofit Program to tell your story through video and enhance your social media presence

7. Prepare Now to Rebound at Year-End

Giving Tuesday and year-end giving through New Year’s Eve offer a great opportunity for nonprofits to connect with donors of all levels. It’s not just major donors who give more during November and December.

The State of Modern Philanthropy reveals several other data trends that point to year-end as a critical time for donations, including:

• Giving Tuesday and New Year’s Eve both see 2X the conversion rate of any other day on average
• Nonprofits acquire 10X more donors on Giving Tuesday compared to an average day of the year
• 30% of annual donation volume on Classy takes place between Giving Tuesday and December 31

Connect donors with the “why” behind their gifts through authentic appeals and powerful storytelling. If you can tap into empathy this year especially, donors will feel more called to do what they can to support you.

See More Timely Fundraising Trends

Stay Prepared to Keep Fundraising Going

Regardless of what’s next, it’s all about what you can do today to prepare for economic uncertainty. The tactics we discussed here can benefit your organization’s long-term and short-term outcomes, and you can apply them in any moment of urgent need moving forward. While we hope you never have to tap into your safety nets, it’s essential to know they are there.