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12020 Profit-Purpose Partnerships Recession Report
Building Stand Out Partnerships During
a RecessionA historical look at how profit-purpose
partnerships are impacted by recession…and how 2020 is different
22020 Profit-Purpose Partnerships Recession Report
E C O N O M I C A N D P H I L A N T H R O P I C C O R R E L A T I O N
Historically, the state of the economy and the state of philanthropy
are directly correlated. Both typically witness a decline in times of
recession and reap a surge in fundraising in times of economic
recovery.
However, with the extreme rise of corporate citizenship over the past decade and the
unprecedented circumstances of our recent recession, we wanted to answer two questions:
1. What’s the relationship between corporate giving and a recession?
2. What might be different about this recession from previous ones that would ignite different
outcomes for profit-purpose partnerships?
32020 Profit-Purpose Partnerships Recession Report
STATE OF THE UNION
42020 Profit-Purpose Partnerships Recession Report
S T A T E O F T H E U N I O N : T H E E C O N O M Y
OIL & GAS
CLIMATE CHANGE
INTEREST RATES
INFLATIONUNEMPLOYMENT
ECONOMIC GROWTH
U.S. GDP growth will contract by
6.5% in 2020 (declined by 5% in 1st
quarter alone). It will rebound to a
5% growth rate in 2021 and 3.5%
in 2022.Source: Federal Open Market Committee, 06.10.20
Extreme weather caused by climate
change is forcing farms, utilities, and
other companies to declare
bankruptcy. As those loans go under,
it will damage banks' balance sheets
just like subprime mortgages did
during the financial crisis.Source: Federal Reserve, March 2019
Furloughed workers sent the number of unemployed to 23 million in April. As of June, the number of unemployed has declined to 17.8 million.Source: U.S. Department of Labor & Statistics
Worldwide crude oil prices will average $41 a barrel for the second half of 2020 and $50/b in 2021.
Source: U.S. Energy Information Administration (EIA)
Inflation will average 0.8% in 2020.7. It will rise to 1.6% in 2021 and 1.7% in 2022. The core rate well below the Fed's 2% target inflation rate.
Source: The Federal Reserve
It lowered the current fed funds rate to a range between 0.0% and 0.25%. Federal Reserve has restarted its quantitative easing program.
Source: Federal Open Market Committee
52020 Profit-Purpose Partnerships Recession Report
S T A T E O F T H E U N I O N : T H E E C O N O M Y
80% # of airline fliers
11% Total consumer spending in the U.S.
45% Hotel Occupancy
20% Gasoline Consumption
100% Box Office Movie Sales
55% Public Transit
62020 Profit-Purpose Partnerships Recession Report
S T A T E O F T H E U N I O N : T H E E C O N O M Y
As published in The New York Times, 4.11.20
While overall spending is still down (10% compared to last year*), some categories have seen an extreme increase in spending due to the nature of stay-at-home orders and other pandemic effects.
*Source: Tracktherecovery.org
72020 Profit-Purpose Partnerships Recession Report
S T A T E O F T H E U N I O N : T H E E C O N O M Y
General Merchandise
Stores, Counter Service
Restaurants and
Supermarkets are faring
best during the
Pandemic. Since the re-
opening of many states
in mid-May, Hotels are
witnessing a surge in
activity.
Source: Safegraph, COVID-19 Data Consortium
Industry Level Patterns
82020 Profit-Purpose Partnerships Recession Report
S T A T E O F T H E U N I O N : T H E E C O N O M Y
Throughout the U.S., various
state economies are more
effected than others.
Wyoming, South Dakota and
Montana are closest to normal
traffic (when compared to the
same time last year), whereas
California, New York and
Hawaii are the least normal –
with tourism and more
stringent state lockdowns as
contributing factors.
Source: Safegraph, COVID-19 Data Consortium
92020 Profit-Purpose Partnerships Recession Report
S T A T E O F T H E U N I O N : T H E E C O N O M Y
On a brand level, while activity is still lower than the previous year, it is following normal seasonal and spending patterns.
Activity for most brands and industries correlate with stay-at-home orders from March 17 – May 17, with the exception of
home renovation brands – who have seen an increase in activity during the pandemic.
Source: Safegraph, COVID-19 Data Consortium
BRAND PATTERN: Home Depot BRAND PATTERN: Target BRAND PATTERN: Starbucks
102020 Profit-Purpose Partnerships Recession Report
LEARNING FROM HISTORY
112020 Profit-Purpose Partnerships Recession Report
L E A R N I N G F R O M H I S T O R Y : R E C E S S I O N S H A P E S
Z-shaped recovery in which economic activity was merely delayed during the pandemic, and the economy sees a temporary boom above pre-crisis levels
V-shaped recovery that means a quick bounce back to pre-crisis levels
U-shaped recovery where the economic dip lingers before heading back to baseline
W-shaped recovery where a brief recovery period is followed by another recession and recovery; and the worst-case scenario
L-shaped recovery where a dramatic drop is followed by gradual recovery that never reaches pre-crisis levels. This final version is what the Great Recession recovery looked like.
2020Prediction
2008Recession
In order to the answers we’re seeking, it’s important to understand basic recession trends and how they perform.
122020 Profit-Purpose Partnerships Recession Report
L E A R N I N G F R O M H I S T O R Y : I M P A C T O N N O N P R O F I T S
NOT ALL CAUSES ARE CREATED EQUAL
CORRELATION
STOCK MARKET INFLUENCE
GIVING WAS DOWNHARDEST HIT
DEMAND HIGH. RESOURCES LOW.
Charitable giving and government funding closely tracks with the state of the economy and crises.
As the economy dips, nonprofits find themselves short on resources. The paradox of recessions and crises are that they often increase demand for the support, services and programs that nonprofits provide.
In 2008, total giving dropped by 7.2% in 2008 and by an
additional 8% in 2009. As GDP constricted, giving as a
percentage of GDP declined from 2.2% in 2007 to 2% in 2009.
Researchers point to the stock
market, particularly the
Dow Jones Industrial
Average and after-tax income
as two factors that strongly correlate to fundraising
success, albeit with a bit of a
lag.
Crises increase demand for human services. International development and relief charities also
weathered the 2008 recession well enough.
In the Great Recession, by dollars lost, the sectors hit the hardest were education, religious-based charities, and philanthropic foundations.
132020 Profit-Purpose Partnerships Recession Report
L E A R N I N G F R O M H I S T O R Y : I M P A C T O N N O N P R O F I T S
REBOUND OPPORTUNITY
Historically, corporate giving counter-correlates with recessions. While philanthropy directly correlates with economic downturns, aside from the effects of September 11th and the brief recession in 2001, corporate
giving increases during or directly following recessions.
142020 Profit-Purpose Partnerships Recession Report
L E A R N I N G F R O M H I S T O R Y : I M P A C T O N C O R P O R A T E A M E R I C A
NOT ALL COMPANIES ARE CREATED EQUAL
RECESSION-PROOF INDUSTRIES
STOCK MARKET WINNERS
A LITTLE INSULATIONSURVIVAL RISK
LOWER DEMAND
• Consumer Staples• Collection Agencies• Discount Retailers• Fast Food• Healthcare• Home Renovation• Retail Consignment• Service & Repair Services
During economic downturn, companies generally experience a credit squeeze, lower demand, and general uncertainty.
Larger companies with more
access to capital and government
support are better insulated than
smaller companies.
During the 2008
Recession, the
stocks that
performed by
best by total
return included
discount stores,
health care, food,
and other
inelastic
industries.
The impacts of economic crisis on businesses, just like on nonprofits, are inconsistent across
size and sector.
Smaller companies that lack cash reserves and large capital assets have fewer paths to survival than big companies.
• Staffing Firms• Sin Industries (i.e.
cigarettes, booze, chocolate)
• Static Industries (i.e Tax Prep)
• Specialized or Proprietary Products
• Utilities
152020 Profit-Purpose Partnerships Recession Report
L E A R N I N G F R O M H I S T O R Y : I M P A C T O N P R O F I T - P U R P O S E P A R T N E R S H I P S
Source: Candid Foundation Data 2007 – 2017, as reported by the National Committee for Responsive PhilanthropyS&P 500 Total Return 2008 - 2012
Big upswell of corporate philanthropy directly following recession
Big decline once corporate profits and budgets are cut
Slight rebound on signs of hope
Second contraction with stalled recovery
Extreme growth and commitment to support social issues once recovery takes hold
The M-Shaped Profit-Purpose Partnership Trend
-37%
26.46%
15%
16%
S&P 500 Total Return
162020 Profit-Purpose Partnerships Recession Report
L E A R N I N G F R O M H I S T O R Y : O P P O R T U N I T I E S T H A T A R I S E
Raises $122M/year from 60
different retailers over 30 days
to end childhood cancer
Awarded $20M in grants to
individuals, businesses and non-
profits that promote a new idea that
has a positive impact on their
community, state, or the nation
Over the last 12 years, through the Share the Love Event, Subaru of America and its participating
retailers have donated more than $176 million to charity, with customers choosing between four
national and over 1,220 hometown charities
Macy’s pledges $1 for each letter to
Santa into placed into Believe letter
boxes in Macy’s stores, up to $1
million each year, to support the
Make-A-Wish Foundation
For every pound Americans pledged to lose through The Biggest Loser, the Pound For
Pound Challenge donated money to Feeding America,
up to a maximum donation of $1,040,000.
Some of the most iconic profit-purpose partnerships were founded during and on the heels of the 2008 recession. In times of crisis, opportunities for innovation and iteration are often uncovered.
172020 Profit-Purpose Partnerships Recession Report
L E A R N I N G F R O M H I S T O R Y : K E Y L E A R N I N G S
1. Focus on established businesses that can ride out the bad times. (e.g.
Dairy Queen, Jiffy Lube, etc.)
2. Focus on company-led fundraisers that link consumerism with
philanthropy and relieves consumers of giving more. (i.e. buy-to-give vs
buy-and-give)
3. Use holidays, especially Christmas, to give your program an additional
boost. Ride the wave! (e.g. Macy's Believe, FedEx's Trees for Troops, even
IHOP's National Pancake Day!)
4. Never stop building your brand so you can lean into opportunities
during challenging times. (e.g. Share Our Strength)
Contributed by
Joe Waters
Founder, Selfish Giving
182020 Profit-Purpose Partnerships Recession Report
WILL HISTORY REPEAT ITSELF?
192020 Profit-Purpose Partnerships Recession Report
H O W T H I S R E C E S S I O N I S D I F F E R E N T : E C O N O M I S T P R E D I C T I O N S
Global Stimulus Packages are expected to be in the multi-trillions
Low inflation Environment: oil + gas is low, interest rates are low
Price of Assets are High: High housing pricing, high stock market = discretionary spending
Corporate Stock Buy-Backs Aren’t Happening: The stock market is high. Companies are hoarding cash. This combination presents an opportunity to funnel money to social issues that can prove good ROI to corporate investors
UEconomic decline by 38%
3rd quarter expected to improve, but not enough to make up for earlier losses
Effects will linger until the fourth quarter 2021, with slightly lower economic output and higher
unemployment
The Congressional Budget Office Prediction:
202020 Profit-Purpose Partnerships Recession Report
H O W T H I S R E C E S S I O N I S D I F F E R E N T : N O N P R O F I T E X P E R I E N C E S
BRACING FOR A LOSS
CORPORATE DIVERSIFICATION
SEEKING NEW OPPORTUNITIES
NEED IS HIGH. USAGE LOW.DECLINE IN INDIVIDUAL FUNDRAISING
CURRENT DONORS STEPPING UP
2/3 of charities plan to diversify their corporate funding sources and types of industries they partner with
Source: Accelerist & The Partnership Conference, COVID-19 Impact on Canadian Charities
68% of nonprofits say their current donors and stakeholders are theirprimary supporters
Source: CCS Fundraising Philanthropic Climate Survey – May 2020
60% of nonprofits report a
significant decrease in clients
using their services, and by April
expressed destabilizing
conditions and threats to long-
term stability
60% of Canadian
charities are
continuing to
pursue new
corporate
partnership
opportunities
Source: Accelerist & The Partnership
Conference, COVID-19 Impact on
Canadian Charities
Over ½ of Canadian charities have decreased their corporate revenue projections by 20% or
more for the remainder of 2020Source: Accelerist & The Partnership Conference, COVID-19 Impact on Canadian Charities
63% of responding nonprofits cite a decline in fundraising since the start of the pandemic
Source: CCS Fundraising Philanthropic Climate Survey – May 2020
212020 Profit-Purpose Partnerships Recession Report
H O W T H I S R E C E S S I O N I S D I F F E R E N T : C O R P O R A T E C S R E X P E R I E N C E
BUDGET AVAILABLE
NEW ISSUE IDENTIFICATION
NEW DEMANDS FROM
LEADERSHIP
RE-EVALUATING PARTNERSHIPSSTAFFED UP
LITTLE CSR BUDGET CUTS
60% of companies report that they are looking at new issues to support in their fiscal year.
Food Insecurity and Education top the list
Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020
Nearly 80% of companies report no change or increase in current CSR contributions due to COVID-19
Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020
68% of companies report that
they have funded new nonprofits
to address urgent needs.
Over 1/3 report a reduction or
ending some partnerships.Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020
Nearly 75% of
companies
report an
increase in
leadership CSR
expectations or
demands
Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May
2020
62% of companies anticipate no change or an increase in their contributions budget for
next fiscal yearSource: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020
82% of companies report no staffing changes in their department due to COVID-19
Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020
222020 Profit-Purpose Partnerships Recession Report
H O W T H I S R E C E S S I O N I S D I F F E R E N T : P R O F I T - P U R P O S E P A R T N E R S H I P P R E D I C T I O N S
TRANSACTIONAL
THE NEW TRAJECTORY FOR PROFIT-PURPOSE PARTNERSHIPS
TRANSFORMATIONAL TRAILBLAZING
Buy-to-give models, or typical Cause marketing partnerships, ruled the
early 2000s.
The proliferation of Benefit Corporations (B-Corps) and the buy-
one-give-one model changed the perception on how purpose can
influence profit.
We anticipate more social enterprise and solution-based partnerships in
2020 and beyond, as companies realize their infrastructure,
technology and expertise can change the world – not just their
pocketbook.
232020 Profit-Purpose Partnerships Recession Report
H O W T H I S R E C E S S I O N I S D I F F E R E N T : A R E A S O F F O C U S F O R P O S T - P A N D E M I C P A R T N E R S H I P S
1 DIVERSIFY TYPES OF PARTNERSHIP REVENUE
2 HYPER-TARGET RIPE INDUSTRIES
3
4
INVEST IN INNOVATION TO READY FOR GROWTH
5
IDENTIFY SOCIAL ENTERPRISE OPPORTUNITIES
EDUCATE AND TRAIN TEAMS ON EVOLUTION OF (TRAILBLAZING) PARTNERSHIPS
To help alleviate tightening consumer purse strings and redirected corporate budgets, look to incorporate various sourcesfor fundraising in the majority of your corporate partnerships.
Consider industries like gaming, e-commerce, telecommunications, cyber security and other inelastic recession-resistant industries to focus your business development on.
Ready your organization for the recession rebound and recovery. Work across teams to development programmatic innovation, aswell as innovative ways to activate your partnerships for greater success in the Post-Pandemic Partnership world.
Determine your greatest mission-focused needs, and target companies and industries that can help you accomplish those mission goals – not just write a check.
The world is changing fast, and we’ve got to change with it. Seek out consistent training opportunities for your team that elevates their understanding of the industries they are building partnerships with, where their pain points are, and how you can continue to differentiate from your own competitors.
242020 Profit-Purpose Partnerships Recession Report
Accelerist is the industry’s only partnership intelligence platform that helps companies and causes create or improve partnerships with one another.
Our customizable and flexible platform supports corporate partnership and event fundraising teams, account management, and leadership in sustaining and growing their partner and event portfolios.
Some of the industry’s most prolific brands and nonprofit organizations rely on our innovative solutions to inform strategy, activate audiences, identify right-fit prospects, price opportunities, and prove ROI for their corporate supporters.
[email protected] | www.Accelerist.com