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How nonprofits can navigate the global supply chain crisis

Brace yourself for a hard truth: The next few months are going to be a bumpy ride for nonprofit direct marketers.

This isn’t about the Delta variant of the coronavirus or the generosity of donors. We still expect elevated charitable giving well into 2022.

No, this is about the global supply chain. For a host of reasons that are all coming together at once, reaching donors and prospective donors through the mail between now and year-end 2021 will be more challenging than ever. But—you can overcome these challenges if you act now.

If your marketing partner hasn’t already addressed this with you, you might ask. If it’s not impacting them now—it will in the weeks and months ahead.  

What’s going on with the supply chain?

Anyone who has walked around the grocery store lately has probably noticed a few empty shelves. From canned goods to snacks to meat, some items just can’t seem to stay in stock.

Like so many things in our lives, these issues all started with the COVID-19 pandemic.

Let me explain.

We all felt the immediate impact of the economic shutdown in March and April of 2020—remember the great toilet paper panic of 2020? Now, we’re beginning to see the pandemic’s long-term effect on the global supply chain. Natural disasters like the winter storm in Texas, wildfires out west and hurricanes across the southern U.S. have further complicated these issues.

At the same time, consumer demand has surged as people are beginning to return to their daily lives. People are spending more money and getting out to do more. Plus, the sharp rise of online shopping means more cardboard boxes for deliveries, which puts more demand on paper mills.

Whenever demand rises and supply can’t keep up, the result is quite simple. Retail items out of stock. Huge delays on deliveries. Rising costs and inflation.

This is affecting industries across the globe. Every. Single. One.

How does this affect direct mail?

This impacts nonprofit direct mail fundraising. Without diving too deeply into the details, here’s a quick list of what’s going on:

You don’t need a master’s degree in economics to figure out how this all adds up. As year-end giving season arrives, and print/mail vendors are reporting paper shortages, price increases and production delays.

I’m sure you’ve seen some of the mainstream media stories, like these:

Beth Kumm, our Vice President of Operations, notes that paper prices have increased at least six times so far in 2021. The costs of adhesives, envelopes and other materials have also gone up. On top of that, materials are simply becoming scarcer. As soon as a shipment of paper comes in, companies are scooping it up and reserving it.

A recent webinar held by Avery Dennison, the global leader in adhesive materials, including mailing labels of the type used by the tens of millions in direct mail fundraising campaigns, shared that:

  • All transportation modes (shipping, rail, trucking, etc.) continue to be problematic with limited relief expected
  • Inflation pressure is continuing longer than economic experts anticipated
  • Strong consumer demand with no relief will continue to be a factor as we enter the holiday season

Even when they can get enough paper, some letter-shop facilities are having trouble finding enough qualified labor to maximize their production capabilities. Most are running at 75-80% capacity and are having to turn away new business. In order to offset labor shortages, manufacturers are upgrading their equipment to improve efficiencies.

Finally, the postal service has just increased its prices and plans to slow down its delivery rate.

What can nonprofits do to react now?

This might all seem scary, but you can manage through it.

First, I’ll tell you the same thing I’m telling our team: Overcommunicate. That’s one of the best things you can do with your team, partners and vendors so everyone knows what’s happening with project timelines, vendor capacity, and potential paper and envelope shortages.

Second, avoid last-minute changes to your fundraising campaigns. I hope your marketing partners are talking with you about production queues and the need to stay on time in pre-production.

Third, it’s probably worth looking at the makeup of your mail packages. Can you simplify them? I’m not advocating that you abandon controls—rather—that you strategically consider what you can and need to do to make sure your mail can be produced with the materials that your production partners have.

What can nonprofits do to prepare for the coming months?

Again, let’s recall the start of the pandemic. Remember that feeling of uncertainty as we entered the unknown? None of us had been through a global pandemic, but we adapted. We pivoted. We adjusted.

Successful organizations didn’t retreat. They also didn’t just hope things would improve. They planned a path forward.

There are several tangible steps nonprofits can take to prepare for the coming months:

  • Talk to your leadership. Start by setting expectations with your leadership now to avoid any overreactions or pauses in your direct marketing. Be open and honest about any increasing costs or mailing delays, as well as the reasons behind them. Remind them that your revenue stream may be delayed or stretched out. The last thing you want is a rash decision to cut acquisition efforts—it’s a terrible idea. Don't forget what happened during COVID. Direct mail donors responded to those who didn't vacate the space. Stay the course.
  • Be flexible. Plan well ahead. If it’s too late to adjust your year-end mailing strategy, you can review your Q1 and Q2 plans now. For example, you may look to change mailing dates, choose alternate packaging or avoid specialty stocks and sizes to secure the materials you need.
  • Adjust your channel mix. Expect higher costs and budget accordingly. For some nonprofits, the solution may be shifting budget to digital channels, or consider new approaches in telemarketing, DRTV and other mediums. Others may want to invest more in direct mail now to grab market share from competitors for the long-term future. Make the choice that fits your needs.

Conditions in direct mail will be challenging for the next few months—possibly well into 2022—while the supply chain adjusts. We’ve all seen price fluctuations over the years, and organizations that are prepared always emerge in a stronger position.

Be aware—and be confident. Stay in the market and in front of donors and prospects by every means possible: pivot and pivot again if you need to. There may be paper, labor and transportation shortages, but there’s no shortage of needs that nonprofits exist to solve.

Commit yourself to seeing the present challenge as an opportunity to innovate. You can do it, and your organization will come out ahead when you do.

Tim Kersten

Widely regarded as one of the nation’s top direct response fundraising, strategic and creative talents, Tim Kersten brings more than 40 years of experience to his role as Chairman of RKD Group. Prior to joining RKD, he served as Chief Creative Officer and Executive Creative Director at two national advertising agencies and ran his own successful direct response fundraising consultancy for nearly 25 years.

Some of the nation’s largest and most respected nonprofit organizations that have benefited from Tim’s insightful and persuasive communication strategies include the Smithsonian Institution, American Red Cross, The Salvation Army, National Park Foundation, Covenant House, and dozens of others. Tim’s work has been recognized by his receipt of four Direct Marketing Association Echo Awards (gold, leader and two silver from 1986 to 2010) and a prestigious International Caples Award (2010).

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