Inflation is rising – what you can do now to stay ahead?

The cost of living is set to rise – that’s out of our hands – so as fundraisers, we have a critical role in limiting its impact on our important work.

While our finance and mission colleagues are planning for the financial hit, we need to make sure that the real value of the gifts we bring in keeps pace;

We need to talk to donors about inflation.

A brilliant piece of research from the Behavioural Insights Team showed that people setting up monthly gifts are highly likely to say yes (49%) [1]to having their gift rise incrementally, annually in line with inflation, when you make it easy and explain that otherwise their impact will reduce over time. We know that the alternative; calling donors to ask them to increase their gift, is far more costly and does not have a 49% success rate.

Building in inflation from the start of any multi-year gift is a conversation we need to start having with donors, from regular to major gifts. But what can you do right now if you have multi-year gifts that aren’t designed to increase year-on-year? It’s not too late; here’s how to have that conversation with your major donors.

Context: “I wanted to update you on the impact of your gift so far and talk to you about plans for your impact next year. I’m sure you’ve been following the news about the expected hikes in inflation in 2022, so I wanted to explain what we are doing and the impact it might have.”

Way forward: “We don’t know exactly how it will affect us, but we are already seeing rises in fuel costs having a knock-on effect. To reassure you, the charity is taking the following measures [add more information] and the trustees will [release emergency funds to] ensure that we don’t shrink services. But it does feel important to have this open and honest conversation with you; one of our closest, leading supporters, so that you understand the impact.”

Ask: “In speaking to others like you, many have said they would like their gift to keep track with inflation for at least the next couple of years so that we can have the full impact that they envisaged. Is that something that you would like to do too?”

Objection handling:

-          You’re changing the goalposts/renegotiating my gift and trying to hike it.

I’m really sorry that it feels like I’m trying to squeeze yet more money out of you. You are one of a critical small group of people who make our work possible and I hope you know how much we value that. This is my fault; what I’m realising, as we scramble to make sure we can withstand this next shock, is that this is something that I should be anticipating in all my conversations about longer gifts.

-          The hike in prices is going to make me less able to give – prices are rising and interest rates are rock bottom.

Yes, this is going to affect us all. Some lucky people have their salaries pegged to inflation, but obviously savings and investments won’t increase in line. Is making incremental increases in line with inflation something that you do think it is possible? [pause!] If not, I will keep you regularly updated on how it affects the impact of your giving and hopefully inflation will not be as extreme as is forecast and this will be an unnecessary concern.

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I hope this blog helps you with 2 key things:

-          Taking action to protect the value of your largest pledged gifts in the short term

-          Thinking about future-proofing the value of long-term gifts across all the donor conversations in your organisation

Good luck with your urgent conversations and, as for the longer term, I recommend bringing together fundraisers and others from within your organisation to think about how you can shift your donors towards incremental rises across your Patrons’ schemes, regular donor programmes and other long-term giving.

As always, I’d love to hear your comments and stories on how you’ve done this with your donors. I’m continuing to offer free half-hour clinic sessions and would welcome a conversation on this, or any other topic that is posing a challenge to your fundraising.

[1] Applying behavioural insights to charitable giving, BIT 2011