How to Forecast and Reforecast During Coronavirus

Before you begin reforecasting or budgeting for the next fiscal year, make sure your plan is as comprehensive and detailed as possible. A budget by donor type, program, campaign, and channel is an essential tool to help manage unpredictability and provide a framework when revenue or expenses need to change. 

Note that cost per dollar raised (CPDR) and return on investment (ROI) are probably not your best metrics to
use right now. Those metrics are too restrictive when planning in an unstable environment and can lead to eliminating some of your most loyal constituents or reducing your file size.

A few areas to consider when reviewing your revenue and response rates:

1. Acquisition. Your acquisition response rates are most likely falling (in all channels). Assume this decreased response will last at least several more months. Your average gift is most likely flat or
   even increasing. If you’re seeing an increase in your digital CPA – especially on social – it is likely
   you will continue to experience an increased CPA for several months.
2. Retention. Don’t cut back on your solicitation schedule; just be more targeted in who you mail or
   email. Put the most emphasis and money behind programs designed to retain donors before they
   lapse. If offline engagement and cultivation opportunities ultimately get cut, move them to online.
3. Sustainers. Declines and cancellations are expected to remain higher than normal. 
4. Lapsed donors. Lapsed response rates are likely to fall as donors either reduce or reprioritize their charitable giving budgets or reprioritize their giving.
5. Long-term and mid-level donors. These donor cohorts are likely to see increases in their response and average gift. Donors who consider you a priority will continue to support you – and you can make the case for additional and upgraded giving.
6. Email. Inboxes are full right now. That means you will probably need to increase your email frequency
   in order to get noticed. Just expect lower revenue per email, but more revenue due to the increased number of sends.
7. DIY and Crowdfunding. DIY and Crowdfunding are poised to grow and are great fundraising tools for your most committed supporters, especially those that don’t have the charitable resources right now.
8. Donor Advised Funds. DAFs are one of the most recession-proof giving vehicles. With increased promotion, you can expect an increased number of DAF gifts. You may see a lowered grant amount because portfolios are down, but make sure you’re asking for a larger grant amount and for donors to divest more of their portfolio.
9. Telemarketing. With everyone at home, many campaigns are seeing increased contact rates and longer call times. 
10. Texting. This is another channel that’s seeing strong growth – and continues to grow during COVID-19. If you have an established program, expect this channel to generate more revenue. If you’re just starting out, then the revenue will be incremental. 

What about budget? Many fundraisers are being asked to cut budgets – either to make up for losses within the direct marketing program or in other areas. Cutting budget is never easy. Take some time to go through each line item individually, using a scalpel and not a hatchet. Here are some areas to consider when cutting budget and a few places where you may want to invest:

1. Cut expensive testing. Now is not the time to test new premiums, expensive formats, etc. Most of your testing now will need to be retested once the fundraising environment has stabilized. 
2. Reduce creative costs. Review past campaigns for potential reuses – in all programs and channels. Slight copy adjustments to reflect today’s environment are a lot less expensive than creating packages from scratch.
3. Reduce production costs by eliminating expensive stocks, formats, finding ways to personalize without creating an additional match. Downgrade mid-level package specifications.
4. Reduce direct mail costs by keeping your list as clean as possible and eliminating all business addresses (for now).
5. Lower digital development fees or reduce time by creating more simple emails, forms, and landing pages. Right now, load times are longer than normal, so straightforward is best.
6. Invest in modeling. Modeling is a great way to find your best acquisition targets, refine your house file segmentation, and optimize your acquisition campaign post-merge.
7. Invest time into refining your digital advertising campaigns. Increase the number you have so each can be targeted to the right audience and a specific message. This also allows you to have more control over the budget.
8. Invest in call center training. Whether inhouse or outsourced, your donor services team needs to be prepared to give options to encourage people to remain sustainers or continue their pledge payments. Consider outsourcing your inbound calls to ensure that you’re not losing revenue.
9. Invest in analytics. Projections, budgeting, forecasting are just gut instinct. Use past and current data to make better decisions and predictions.

When reforecasting, don’t assume the worst. Your long-term, loyal donors will stay with you if you continue to properly steward and cultivate them. The CARES act also has some tax-incentives for all donors, including a charitable deduction for those who don’t itemize.

Also, remember that this is a new frontier for everyone. Stay informed about what’s happening now, review past trends for guidance, make the best plan you can, and remain dynamic and be ready to pivot.

 

Jessica Harrington, President, The Harrington Agency