Scenario Planning: Maintaining Momentum in Uncertain Times – Bulletin 5
In this Bulletin, we provide guidance on how to tackle scenario planning related to fundraising revenues. While it’s inevitable that the COVID-19 situation will affect fundraising revenues in the short term, it’s important not to take too blunt an approach when determining what that impact will be. Instead, it’s critical to examine and understand the nuances of your specific situation and, perhaps more importantly, use that understanding to create a plan for how to respond.
1. Map Anticipated Impact.
The first step is to assess and map the impact of the COVID-19 situation in the context of your fundraising program mix. To help you do that, we have developed an Assessment Framework that enables you to unpack and examine each of your revenue streams through two lenses – DEPTH and DURATION.
Depth of impact refers to the degree to which COVID-19 will negatively impact the fundraising program’s ability to generate revenue. Low Depth is defined as anticipated revenue declines of 30% or less. High Depth defined as anticipated revenue declines of 30% or more.
Duration of impact refers to how long the anticipated disruption to the fundraising program will last. Low Duration is defined as lasting 3 months or less, a short term ‘interruption’. High Duration defined as continuing for more than 3 months, a ‘sustained disruption’ to the revenue stream.
Using this framework, examine and ‘map’ each of your revenue stream to ascertain the degree of impact you should be anticipating. In doing that, remember that different revenue streams have differing degrees of resiliency in times of crisis and economic downturn. The other important factor will be the relative percentage of revenue each program represents. As a result, your overall revenue impact will depend on your specific mix of fundraising programs and will be unique to you. To animate this exercise, see the illustrative example we have created in the Box entitled Anticipated Revenue Impact Map.
Anticipated Revenue Impact Map
MAJOR GIFTS (43% of revenues): Low Depth, High Duration
Depth could be lower as MG based on strong relationships. However, impact could be prolonged to due delayed decisions and pledge payments.
SIGNATURE EVENTS (22% of revenues): High Depth, Low Duration
High depth in the short-term…but an opportunity to strategize and reimagine (or simply delay)
DIRECT RESPONSE (16% of revenues): Low Depth, Low/High Duration
Approach can be unimpacted, but general economic challenges likely to reduce results over mid-term
PLANNED GIFTS (8% of revenues): Low Depth, Low Duration
Longer-term process unlikely to have major impact
THIRD PARTY EVENTS (7% of revenues): High Depth, High Duration
Might largely disappear in the short-term, and may not be a priority for third-parties in mid-term
MONTHLY GIVING (4% of revenues): Low Depth, Low Duration
Approach unimpacted, but general economic challenges could likely reduce results over mid-term
2. Model Scenarios.
With your revenue streams now mapped, the next step is to model a variety of scenarios. Given the uncertainty we are facing, it is valuable to model different scenarios to understand the range of possibilities…and to identify a range of responses. Remember as you undertake this part of the process, to be guided by a ‘spirit of realistic optimism’.
It is often effective to create three scenarios: 1) Best Case (‘hope for this’), which is the most optimistic of your scenarios; 2) Realistic case (‘plan for this’), which is the scenario that you think is the most likely; and 3) Worse case (‘prepare for this’), which would be a representation of the most serious and challenging revenue scenario you could face. Once these three scenarios have been identified, think through the responses merited by each.
3. Brainstorm Possibilities and Craft Your Response.
This step may be the most important part. Armed with a robust understanding of the reality of your specific situation, it is time to turn your attention to figuring out what you are going to do about it in both the immediate and longer terms. How are you going to manage through it? How can you mitigate losses? How can you recoup lost revenues?
To answer questions like these and develop your plan, it’s useful to think through these ‘4 Rs’:
- Reimagine…your programs. Think about how you can adjust your fundraising programs and pivot your approach. Can you quickly create new programs that generate revenue? Can you initiate a monthly giving campaign to migrate donors to this type of giving? Can you convert some sponsorships into tax receipted donations? This is the time to think creatively about how you can raise money…and also time to push yourself to question some of the ‘sacred cows’ you have in your fundraising mix.
- Redeploy…your resources. In response to the shifts in your fundraising programs, now is also the time to be flexible in your deployment of resources. You may need to shift staff resources from their current focus to a new fundraising program. This is also a time to engage the board and volunteers in your fundraising efforts.
- Refine…your case. Assess your case through the lens of its relevance in a current and post-COVID-19 world. Make your case about why you matter in the context of the situation today and demonstrate how you are meeting needs. Find creative and honest ways to show how this crisis shines a light on the importance of your organization and its mission…but avoid anything that could be construed as self-serving.
- Reduce…your expenses. While this likely goes without saying, examine all the ways you can reduce your expenses. But, as much as possible, make broad staff layoffs a last resort. We know from previous downturns that if programs reach too quickly to reduce staff, they end up running from the back of the pack when things stabilize. And remember, charities are included in the Government of Canada’s Emergency Wage Subsidy program, so factor that into your decision making as well.
- Involve the board. Be sure to involve the board in this process. Consider striking a task force to undertake the entire process with you and have the task force report back to the full board on results and conclusions.
- Resilience of philanthropy. Take comfort in the fact that previous crises and economic downturns have shown us that giving is resilient. While we can expect there will be a downturn in giving for a period of time, it will bounce back. How deep the impact and how quick the recovery will likely depend on the strength of the stock market rebound and how quickly Canadians get back to work.
- Even stronger sense of community. While we can’t be sure of the impact that this crisis will have on the attitudes and behaviours of Canadians long term, there is a good possibility that the relevance and importance of the charitable sector will be more strongly felt as a result of this crisis…and that Canadians will feel more connected to each other and their communities. Both of which could result in more charitable giving over time.
- Don’t waste this opportunity. “A crisis is a terrible thing to waste,” at least according to economist Paul Romer (words famously echoed during the 2009 recession by Rahm Emanuel, then an adviser to President Obama). Tough times are catalyst for review, reflection and assessment that commonly lead to positive change, so take this opportunity to identify weaknesses and strengthen programs.
And don’t forget these overall reminders…
- Prepare and respond…but don’t panic. Do what you can do. Much will be out of our control, so important to focus thought, effort and energy on what we can influence.
- Stay focused, positive and confident. Convey stability, confidence and capability in all your activities and communications, both internally and externally.
- No singular strategy. While steered by guidelines and best practice, the best strategies will be customized to individual institutions and their constituencies.
- We’ve been here before. Apply the learnings from previous emergencies and disasters. We’ve made it through times of crisis before and we will make it through.
- Don’t shut everything down. Maintain the course while making prudent adjustments to strategy and budget. We know from previous experience that those who do will emerge more strongly.
- Communicate. While not inundating stakeholders with unnecessary communication, now is not the time to go silent. Keep your constituents, both internal and external, engaged and informed.
We look forward to supporting you through these next few weeks and months, and our next bulletin will focus on building your case for during the COVID-19 crisis and beyond.