The financial assets of U.S. foundations declined by an average of about 26% in 2008, which is said to be the biggest drop in recorded history. A fourth of donors have reduced the amounts that they give to charity as a result of the economy. The current financial situation is a difficult one for everyone, especially nonprofit organizations that often run on shoestring budgets. This post shares a few words from the experts and ideas for staying afloat and effective during these tough economic times.

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In the U.S., roughly 6% of foundation giving is to a category including “environment and animals” [3] Of that amount (just over $1 billion in 2005), the lion’s share goes to environmental groups and conservation organizations, with a relatively small amount going directly to animal-related nonprofits. Funding for animal protection is unfortunately just a niche of a niche. And like foundations in general, grantmakers funding animal issues are currently tightening their belts.

According to a recent survey by the Foundation Center [4], nearly two-thirds of foundations (63%) expect to reduce the number and/or size of the grants they award in 2009. Here are some other findings from the same survey:

• 44% of foundations also anticipate reducing the number of multi-year grants.
• Foundations giving $10 million+ were less likely to anticipate reducing the size of grants (38%) and multi-year grants (39%).
• 80% of foundations expect to maintain the current number of program areas, while 3% expect to increase the number of areas supported.
• In response to the economic crisis, 54% of foundations say they will likely engage in a broader range of non-grantmaking activities and 36% will initiate more collaborative projects.

The good news is that although foundation giving is decreasing, the breadth of that giving from a program area perspective will remain largely unchanged. This hopefully means that foundations that give to animals will continue to do so. Nonetheless, animal groups need to be prepared to weather the storm, and a recent article from the Stanford Social Innovation Review could help. In the article, Fundraising in Tough Times, Mal Warwick recommends a “cautious middle course” for non-profits. He makes nine specific recommendations, summarized here:

1. Reassess the whole ball of wax: fundraising, marketing, communications. Establish a regular procedure to maximize the efficiency and effectiveness of all programs.
2. Strengthen your case for giving. Communicate to donors the need for your services and emphasize the steps you are taking to increase your efficiency and effectiveness.
3. Stick with what works. Efficiency is more important than creativity.
4. Cut costs with a scalpel, not an axe. Recognize that fundraising requires continued investment and ongoing care.
5. Fish where the big fish are. Focus more time, effort and money on generous, responsive givers than on those who are less likely to contribute.
6. Be attentive to your donors. Stay connected to reinforce the relationship.
7. Do due diligence. Personalized, specific efforts will make greater impressions than generic appeals.
8. Step up your efforts online. Consider investments in online communications as another avenue of potential fundraising.
9. Break down the silos. Centralize scheduling among competitive offices or organizations to reduce competing traffic, which can lead to decreased donor attention.

To these good ideas, Faunalytics will add just a few more for you to consider:

• Make your appeals specific. In one survey, 60% of people who give to charity prefer (if given a choice) to give gifts to organizations that specify exactly how donations are used. While 25% say they prefer unrestricted gifts, it’s clear that a majority of donors respond to specific appeals tied to tangible projects and outcomes.
• Don’t stop doing research. Decisions to focus one’s efforts, which are usually necessary during a down economy, should be based on solid data. Even very small investments in research can do much to ease the pain of making difficult decisions.
• Collaborate with others. This is an excellent time to explore new collaborations that require investments of time, but not much money. As someone who has worked for foundations, I know that collaborations appeal to funders. And sharing costs during a bad economy should appeal to everyone.

Numbered Sources:

1. U.S. Foundations Lost 26% in 2008 as Stocks Slid, Study Shows
2. Many Donors Giving Smaller Charitable Contributions to Fewer Organizations
3. Highlights of Foundation Giving Trends (PDF file, 875k
4. Foundations Address the Impact of the Economic Crisis