How advancement leaders can prepare for a potential downturn: 3 lessons from the Great Recession

Expert Insight

How advancement leaders can prepare for a potential downturn: 3 lessons from the Great Recession

As advancement leaders look to FY 2021 and beyond, they find themselves planning for a number of scenarios including an economic downturn, a v shaped recovery, and a prolonged recession similar to what was experienced in 2008. To synthesize lessons learned from previous periods of economic turmoil, EAB conducted a literature review and identified three imperatives for advancement leaders in the coming months.

Imperative #1: Improve internal and operational efficiencies

Administrators discussion

It can be tempting to continue business-as-usual during times of uncertainty.  However, HBR research has shown that companies who reexamined how they were organized to find opportunities for improved efficiency were able to reduce their operating costs permanently, not just in response to the slowdown. For example, Staples took this approach during the 2000 downturn, allowing them to double their sales and become 30% more profitable coming out of the recession.[1]

For advancement leaders, prioritizing efficiency will soon become a necessity, not a luxury. Questions to consider include: What events have you continued to hold out of tradition but have little impact on improving engagement, donor acquisitions, or retention? Where have you been spending a substantial amount of effort without any return? Are there parts of your shop that are structured in such a way that causes bottlenecks or roadblocks to innovation? Are there internal barriers, such as unnecessary administrative burdens, that are impeding MGO productivity?  Now is the time to start thinking through which parts of your shop are operating inefficiently and identify strategies to improve their performance.

Imperative #2: Focus on staying connected to key constituents

Companies that stayed “closely connected to customer needs” and used them as a filter “through which to make investment decisions” were able to continue to provide value to their constituents. In 2008 for example Target saw that customers shifted spending away from “wants” to “needs”, like food. As a result, Target shifted their store format, operations, and marketing to strengthen their position in the key “needs” segment of food, leading to increased sales. 1

In the uncertain days ahead, advancement will need to return to the basics of prioritizing engagement and demonstrating tangible impact. Donor-centric fundraising is no longer just be a buzzword, it will need to be the driving motivation for all advancement efforts. Engagement opportunities need to be clear, convenient, and provide benefits that make it a worthwhile experience for participants. By staying connected to constituent needs, institutions can better compete for already limited mindshare.

Imperative #3 Prioritize transformative projects with a near-term ROI  

According to this HBR articleprioritizing transformations, especially digital ones, ahead of a downturn can improve analytics, agility, and cut costs, equipping companies to better handle the rapid changes that come with a recession.

The current crisis is already challenging the status quo and transforming the way we approach advancement work.  For example, EAB’s recent virtual working groups revealed that many institutions are exploring how to incorporate virtual interactions into MGO metrics and are considering hiring digital gift officers. Similarly, many alumni relations offices are hosting virtual book clubs, Netflix party viewing events, and even virtual coloring page contests.  As shops experiment with new projects in the coming months, advancement leaders should carefully assess which innovations are successful and should continue, even after we return to “normal”.

Despite the uncertainty about what lies ahead, these three imperatives are things that advancement leaders can do now better position their teams for the coming days and months

Sources: “Roaring Out of Recession”, Ranjay Gulati, Nitin Nohria and Franz Wohlgezogen, HBR March 2020, “How to Survive a Recession and Thrive Afterward”, Walter Frick, HBR May 2019, “Preparing for the next downturn”, Richard Dobbs, Tomas Karakolev, and Rishi Raj, Mickinsey & Company, April 2007, “Using the next recession to change the game”, Migque Simoes e Melo, Thomas Kwasniok, and James Hadley, Bain & Company, October 22 2018

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