Building Stand Out During a

A historical look at how -purpose partnerships are impacted by recession…and how 2020 is different

2020 Profit-Purpose Partnerships Recession Report 1 ECONOMIC AND PHILANTHROPIC CORRELATION

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 .

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?

2020 Profit-Purpose Partnerships Recession Report 2 STATE OF THE UNION

2020 Profit-Purpose Partnerships Recession Report 3 STATE OF THE UNION: THE ECONOMY

ECONOMIC U.S. GDP growth will contract by RATES OIL & GAS Worldwide crude oil prices will GROWTH average $41 a barrel for the second 6.5% in 2020 (declined by 5% in 1st half of 2020 and $50/b in 2021. quarter alone). It will rebound to a Source: U.S. Energy Information Administration (EIA) 5% growth rate in 2021 and 3.5% It lowered in 2022. the current fed CLIMATE CHANGE Source: Federal Open Market Committee, 06.10.20 funds rate to a range between Extreme weather caused by climate UNEMPLOYMENT 0.0% and change is forcing farms, utilities, and 0.25%. Federal other companies to declare Reserve has Inflation will average 0.8% in restarted its bankruptcy. As those loans go under, Furloughed workers 7. sent the number of 2020. It will rise to 1.6% in quantitative it will damage banks' balance sheets unemployed to 23 2021 and 1.7% in 2022. The easing million in April. As of just like subprime mortgages did June, the number of core rate well below the Fed's program. unemployed has 2% target inflation rate. during the financial crisis. declined to 17.8 Source: Federal Open million. Market Committee Source: , March 2019 Source: U.S. Department of Labor & Statistics Source: The Federal Reserve

2020 Profit-Purpose Partnerships Recession Report 4 STATE OF THE UNION: THE ECONOMY

11% Total consumer spending in the U.S.

80% # of airline fliers

45% Hotel Occupancy

20% Gasoline Consumption

100% Box Office Movie

55% Public Transit

2020 Profit-Purpose Partnerships Recession Report 5 STATE OF THE UNION: THE ECONOMY

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 As published in The New York Times, 4.11.20

2020 Profit-Purpose Partnerships Recession Report 6 STATE OF THE UNION: THE ECONOMY

General Merchandise Industry Level Patterns 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

2020 Profit-Purpose Partnerships Recession Report 7 STATE OF THE UNION: THE ECONOMY

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

2020 Profit-Purpose Partnerships Recession Report 8 STATE OF THE UNION: THE ECONOMY

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

Source: Safegraph, COVID-19 Data Consortium 2020 Profit-Purpose Partnerships Recession Report 9 LEARNING FROM HISTORY

2020 Profit-Purpose Partnerships Recession Report 10 LEARNING FROM HISTORY: RECESSION SHAPES

In order to the answers we’re seeking, it’s important to understand basic recession trends and how they perform.

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 2020 Prediction U-shaped recovery where the economic dip lingers before heading back to baseline 2008 Recession 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 recovery looked like.

2020 Profit-Purpose Partnerships Recession Report 11 LEARNING FROM HISTORY: IMPACT ON NONPROFITS

STOCK MARKET NOT ALL CAUSES ARE CREATED EQUAL DEMAND HIGH. RESOURCES LOW. INFLUENCE Crises increase demand for human services. As the economy dips, nonprofits find themselves short International development and relief charities also on resources. The paradox of and crises are weathered the 2008 recession well enough. that they often increase demand for the support, services and programs that nonprofits provide. Researchers point to the stock CORRELATION market, particularly the Dow Jones HARDEST HIT GIVING WAS DOWN Industrial Average and In the Great after-tax income Recession, by dollars as two factors Charitable giving and lost, the sectors hit that strongly the hardest were In 2008, total giving dropped by correlate to government funding education, religious- 7.2% in 2008 and by an based charities, and additional 8% in 2009. As GDP fundraising closely tracks with the philanthropic constricted, giving as a success, albeit state of the economy foundations. percentage of GDP declined from with a bit of a and crises. 2.2% in 2007 to 2% in 2009. lag.

2020 Profit-Purpose Partnerships Recession Report 12 LEARNING FROM HISTORY: IMPACT ON NONPROFITS

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.

REBOUND OPPORTUNITY

2020 Profit-Purpose Partnerships Recession Report 13 LEARNING FROM HISTORY: IMPACT ON CORPORATE AMERICA

STOCK MARKET NOT ALL COMPANIES ARE CREATED EQUAL LOWER DEMAND WINNERS The impacts of economic crisis on , During economic downturn, companies just like on nonprofits, are inconsistent across generally experience a credit squeeze, size and sector. lower demand, and general uncertainty. During the 2008 Recession, the RECESSION-PROOF INDUSTRIES stocks that • Consumer Staples • Staffing Firms performed by SURVIVAL RISK A LITTLE INSULATION • Collection Agencies • Sin Industries (i.e. best by total • Discount Retailers cigarettes, booze, Smaller companies return included • Fast Food chocolate) that lack cash • Healthcare • Static Industries discount stores, reserves and large Larger companies with more • Home Renovation (i.e Tax Prep) capital have health care, food, fewer paths to access to capital and government • Retail Consignment • Specialized or survival than big support are better insulated than and other • Service & Repair Services Proprietary companies. inelastic Products smaller companies. • Utilities industries.

2020 Profit-Purpose Partnerships Recession Report 14 LEARNING FROM HISTORY: IMPACT ON PROFIT- PURPOSE PARTNERSHIPS

The M-Shaped Profit-Purpose Trend

Big decline once corporate profits and budgets are cut

Big upswell of corporate philanthropy directly following -37% recession 26.46%

15% Slight rebound on signs of hope

Second contraction with stalled recovery 16%

S&P 500 Total Return

Extreme growth and commitment to support social issues once recovery takes

Source: Candid Foundation Data 2007 – 2017, as reported by the National Committee for Responsive Philanthropy hold S&P 500 Total Return 2008 - 2012

2020 Profit-Purpose Partnerships Recession Report 15 LEARNING FROM HISTORY: OPPORTUNITIES THAT ARISE

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.

Awarded $20M in grants to individuals, businesses and non- Raises $122M/year from 60 profits that promote a new idea that different retailers over 30 days has a positive impact on their to end childhood cancer community, state, or the nation For every pound Americans pledged to lose through The Macy’s pledges $1 for each letter to Biggest Loser, the Pound For Santa into placed into Believe letter Pound Challenge donated Over the last 12 years, through the Share the Love money to Feeding America, Event, Subaru of America and its participating boxes in Macy’s stores, up to $1 up to a maximum donation of retailers have donated more than $176 million to million each year, to support the $1,040,000. charity, with customers choosing between four national and over 1,220 hometown charities Make-A-Wish Foundation

2020 Profit-Purpose Partnerships Recession Report 16 LEARNING FROM HISTORY: KEY LEARNINGS

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!)

Contributed by 4. Never stop building your brand so you can lean into opportunities Joe Waters during challenging times. (e.g. Share Our Strength) Founder, Selfish Giving

2020 Profit-Purpose Partnerships Recession Report 17 WILL HISTORY REPEAT ITSELF?

2020 Profit-Purpose Partnerships Recession Report 18 HOW THIS RECESSION IS DIFFERENT: ECONOMIST PREDICTIONS

The Congressional Budget Office Global Stimulus Packages are expected to be in the multi- Prediction: 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

EconomicU decline by 38% Corporate Stock Buy-Backs Aren’t Happening: The stock 3rd quarter expected to improve, but not enough to market is high. Companies are hoarding cash. This make up for earlier losses combination presents an opportunity to funnel money to Effects will linger until the fourth quarter 2021, with slightly lower economic output and higher social issues that can prove good ROI to corporate unemployment investors

2020 Profit-Purpose Partnerships Recession Report 19 HOW THIS RECESSION IS DIFFERENT: NONPROFIT EXPERIENCES

SEEKING NEW BRACING FOR A LOSS CURRENT DONORS STEPPING UP OPPORTUNITIES Over ½ of Canadian charities have decreased their corporate projections by 20% or 68% of nonprofits say their current more for the remainder of 2020 donors and stakeholders are their Source: Accelerist & The Partnership Conference, COVID-19 Impact on Canadian Charities primary supporters 60% of Canadian Source: CCS Fundraising Philanthropic Climate Survey – May 2020 CORPORATE DIVERSIFICATION charities are continuing to DECLINE IN NEED IS HIGH. USAGE LOW. pursue new INDIVIDUAL 2/3 of charities plan to FUNDRAISING 60% of nonprofits report a corporate diversify their corporate funding 63% of responding significant decrease in clients partnership sources and types of industries nonprofits cite a they partner with decline in fundraising using their services, and by April opportunities since the start of the pandemic expressed destabilizing Source: Accelerist & The Partnership conditions and threats to long- Conference, COVID-19 Impact on Source: CCS Fundraising Philanthropic Source: Accelerist & The Partnership Conference, COVID-19 Impact Climate Survey – May 2020 Canadian Charities term stability on Canadian Charities

2020 Profit-Purpose Partnerships Recession Report 20 HOW THIS RECESSION IS DIFFERENT: CORPORATE CSR EXPERIENCE

NEW DEMANDS BUDGET AVAILABLE LITTLE CSR BUDGET CUTS FROM LEADERSHIP 62% of companies anticipate no change or Nearly 80% of companies report no an increase in their contributions budget for change or increase in current CSR next fiscal year contributions due to COVID-19 Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020

Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020 Nearly 75% of NEW ISSUE IDENTIFICATION companies report an STAFFED UP RE-EVALUATING PARTNERSHIPS increase in 60% of companies report 68% of companies report that leadership CSR that they are looking at new issues to support in their 82% of companies they have funded new nonprofits expectations or report no staffing fiscal year. changes in their to address urgent needs. demands department due to Over 1/3 report a reduction or Food Insecurity and COVID-19 Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May Education top the list ending some partnerships. 2020 Source: COVID-19 Impact on CSR, Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020 Rocket Social Impact, ACCP – May 2020 Source: COVID-19 Impact on CSR, Rocket Social Impact, ACCP – May 2020

2020 Profit-Purpose Partnerships Recession Report 21 HOW THIS RECESSION IS DIFFERENT: PROFIT- PURPOSE PARTNERSHIP PREDICTIONS

THE NEW TRAJECTORY FOR PROFIT-PURPOSE PARTNERSHIPS

TRANSACTIONAL TRANSFORMATIONAL TRAILBLAZING

Buy-to-give models, or typical Cause The proliferation of Benefit We anticipate more social enterprise marketing partnerships, ruled the (B-Corps) and the buy- and solution-based partnerships in early 2000s. one-give-one model changed the 2020 and beyond, as companies perception on how purpose can realize their infrastructure, influence profit. technology and expertise can change the world – not just their pocketbook.

2020 Profit-Purpose Partnerships Recession Report 22 HOW THIS RECESSION IS DIFFERENT: AREAS OF FOCUS FOR POST- PANDEMIC PARTNERSHIPS

1 DIVERSIFY TYPES OF PARTNERSHIP REVENUE To help alleviate tightening consumer purse strings and redirected corporate budgets, look to incorporate various sources for fundraising in the majority of your corporate partnerships. 2 HYPER-TARGET RIPE INDUSTRIES Consider industries like gaming, e-commerce, telecommunications, cyber security and other inelastic recession-resistant industries to focus your development on. 3 INVEST IN INNOVATION TO READY FOR GROWTH Ready your organization for the recession rebound and recovery. Work across teams to development programmatic innovation, as well as innovative ways to activate your partnerships for greater success in the Post-Pandemic Partnership world. 4 IDENTIFY SOCIAL ENTERPRISE OPPORTUNITIES Determine your greatest mission-focused needs, and target companies and industries that can help you accomplish those mission goals – not just write a check. 5 EDUCATE AND TRAIN TEAMS ON EVOLUTION OF (TRAILBLAZING) PARTNERSHIPS 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. 2020 Profit-Purpose Partnerships Recession Report 23 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

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