The Recession in a Fundraising Letter

Posted by Menachem Lubinsky on December 27, 2009 under Recession | View Comments

The letter to donors of a well-known yeshiva began with a reference to the recession: “As you know, our yeshiva was severely impacted by the recession, forcing the administration to make some difficult choices.” The body of the letter spoke about the yeshiva’s excellent program, its faculty and so forth. It wasn’t until the last paragraph, perhaps what you might call “the punch line,” that the letter again invoked the recession.

“We are once again appealing to your generosity to help us cope with this recession which threatens to force us to make further cuts that will no doubt affect our educational excellence. We are hoping that you could increase your pledge of 2008 to avoid such a dreadful possibility.”

The administrator who shared the letter with me wanted my opinion as to why the letter had not generated any appreciable response. He thought that the letter was an honest and straightforward appeal for help in difficult times. His immediate reaction was that “people just don’t read letters,” an argument I have frequently heard from others defending poor grammar, structure, and content of a letter.

I am totally opposed to the theory that “no one will read the letter anyways,” whether it is for a yeshiva or a marketing letter. I have written on numerous occasions that to adopt such an attitude is to look down at your target audience and to insult their intelligence. Besides, whether people express it or not, they do respond to well-written letters.

Perhaps the yeshiva letter quoted above could have acknowledged that they weren’t the only ones that were victims of the recession. A letter I received from a prominent Jewish social service agency did just that: “I know that like most Americans you are facing the challenges of these difficult economic times. But while you are doing the best you can to address these challenges, you are also eager to help others avoid being crushed by this economic downturn.”

The social service agency letter went on to cite several cases of people who were devastated by the recession, ending with a very moving sentence: “When this recession is over we will look back at our strength and resilience to have survived some difficult days, but we will be even more fulfilled with the thought of how we helped people less fortunate than us pull through.” The agency reported that it managed to match last year’s revenues, which is no small feat in a deep recession.

Perhaps the yeshiva letter was correct in volunteering the fact that the yeshiva was not waiting for outside help to cope with the recession. It spoke of having made some “difficult choices,” which could be construed as trimming their budget. But the letter was short on specifics and did not give the reader the comfort that it was doing everything to avoid falling into a deeper financial bind. While the opening and close dealt with the effects of the recession, the middle paragraphs appeared to be business as usual. Indeed, the administrator admitted that he had used “cut and paste” to construct the letter.

On the other hand, the social service agency used a professional writer to construct the letter from scratch and used many current cases that made the letter believable. It certainly did not adopt the attitude that the letter would not be read.

A letter I obtained from a friend that he had received from another yeshiva on the eve of Chanukah was perhaps a classic example of a letter that should not have been written. The introductory paragraph was more or less a greeting about Chanukah, but the second paragraph was totally written with poor judgment.

“Our board has asked that you consider adding at least $200 to last year’s pledge, which will add up to the $150,000 the yeshiva needs immediately to pay vendors. If you cannot pay this sum at once, please indicate on the above form your intention to pay out this money over a year or two.”

The rest of the letter was no better, but I wondered why the letter was ever sent. My fried had no connection to that yeshiva other than receiving occasional fundraising letters from them. Even if it were addressed to parents, it would be a poorly written and perhaps totally insensitive letter.

So is this marketing? Of course it is. If you want a potential customer (or donor) to respond, you have to be extremely sensitive to their current situation. Phrases like “we recognize your…” or “We know how difficult…” go a long way in connecting with the reader of the letter, just as the social service agency did in acknowledging that the reader was also coping with difficult times.

I know that many not-for-profits are looking for ways to deal with the shortfalls of this recession. There are many creative ways to address the ongoing crisis in fundraising. Perhaps a good way to start is with the letters sent to donors.

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Eye on the Recession: A Test of Wills

Posted by Menachem Lubinsky on December 20, 2009 under Recession | View Comments

So who will blink first? As the holiday season was drawing near there appeared to be a test of wills of who will blink first, retailers or customers. A week before the calendar deadline, some 20% of Americans said that they had not as yet commenced with their shopping. An additional percentage admitted to only having completed the task “minimally.” So what were they waiting for?

Sure, we are all aware of last minute people, in almost every aspect of life and they certainly exist when it comes to shopping, but was there an underlying reason and how does it relate to the ongoing recession? The answer seems to lie in the fact that customers believe that retailers are more desperate than ever and as a result will be forced to do some deep discounting. They read all of the earning reports and pronouncements by company executives and are convinced that the retailers will come around. If they wait it out, the prevailing feeling is, they will be able to afford items that they might not be willing to pay for today.

Retailers, however, sense that despite the continuing recession and relatively high unemployment, customers in general are feeling better about the future. They really are prepared to spend more, is the reasoning here, so why loose money on someone who will pay the full price. They are always watching the cash registers and know exactly when to press the panic button.

For better or worse, the customer ultimately wins. A leading retailer played the game a bit by offering deep discounts on some items but keeping the lid on high prices for luxury items. The prevailing thought was that they could probably buy the less expensive items at a discount house, so why not compete with those discounters on the cheaper goods. The discount stores on the other hand were also fully cognizant of this idea but they were perhaps even a step ahead by still offering the discounts on the non-luxury items and even slashing prices for the more expensive items.

The success of stores like Target was precisely because the conventional retailers were hedging their bets and coaxing consumers into paying regular holiday prices. Target probably concluded that even losses from discounts on more expensive items could be made up through volume. The popularity of the discount stores is largely due to their mode of operation, which is buying in bulk at extremely low prices, relying on volume, and making do with smaller margins due to volume.

For the small retailer caught in the middle of all this, it poses enormous challenges. For one, they do not have an option of drastic reductions lest they jeopardize their own profits. Their selling points are what small retailers always bring to the table: personal service and a focused design and layout of the store. In a recession, it becomes more difficult to hold onto the customer but by carrying unique and different items, a certain class of consumers will come forward.

Business is trying to figure out just where consumers stand on the recession. The frame of mind of the customer is critical to business. As Detroit marches on towards recovery, the psyche of the consumer is paramount. Is the customer ready to buy a new car? Do they feel that the recession has bottomed out and are they more confident about the future? In Detroit’s case, getting a good buy on a car may not be nearly enough. Customers are concerned about the stability of the manufacturer and whether they will be able to get service and parts.

It is interesting that we may be in a period when it may difficult to answer some of those questions. There is a sense that things have improved somewhat, but then you read about how shaky Citicorp is. You hear that people are more confident about the future; yet the unemployment figures are still high at about 10%. You know that housing is picking up somewhat; yet many people cannot get a mortgage. The banks still seem to keep a tight grip on lending.

One Manhattan department store opted to stay away from heavy discounting, but did offer favorable credit terms for those with the store’s credit card. They invited cardholders to make purchases now while not being obligated to pay until February 15th without any interest penalties. At least one bank voluntarily postponed foreclosure procedures for a month. The object there was to demonstrate compassion and social responsibility in the face of the continuing recession.

My own observation is that the worst of the recession is over but that the recovery will be a lot slower than the optimists think. I believe that retailers did not discount earlier because they noticed an appreciable increase in consumer spending and because they always have time to lower the prices. The customer will still win because when the discounts do come, they will be deeper than anticipated. The reason: the retailers are trying to goad that 20% to spend their money.


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