Building Stand Out Partnerships During a Recessionaccelerist.com/.../07/AcceleristRecessionReport.pdf · a Recession A historical look at how profit-purpose partnerships are impacted

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


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?


STATE OF THE UNION


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

https://www.thebalance.com/u-s-gdp-growth-3306008

https://www.thebalance.com/economic-impact-of-climate-change-3305682

https://www.thebalance.com/subprime-mortgage-crisis-effect-and-timeline-3305745

https://www.thebalance.com/crude-oil-prices-trends-and-impact-on-the-economy-and-you-3305738

https://www.thebalance.com/what-is-inflation-how-it-s-measured-and-managed-3306170

https://www.thebalance.com/inflation-targeting-definition-how-it-works-3305854

https://www.thebalance.com/current-federal-reserve-interest-rates-4770718



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



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



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



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.




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.


BRAND PATTERN: Home Depot BRAND PATTERN: Target BRAND PATTERN: Starbucks


LEARNING FROM HISTORY


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.


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.


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.


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


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


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.


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


WILL HISTORY REPEAT ITSELF?


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:


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


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


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



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.


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.


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

Documents

Building Stand Out Partnerships During a Recessionaccelerist.com/.../07/AcceleristRecessionReport.pdf · a Recession A historical look at how profit-purpose partnerships are impacted