|
|
| Economy's Impact on Philanthropy | The Current Economic Turmoil and its
Affect on Philanthropy
and Fundraising
An Open Letter to donors and institutions in the philanthropic community, from the Partners and consulting staff of Dini Partners
The turbulent economic environment of the last several months and the weekly market instability have given rise to predictions and prognostications running from “economic meltdown” to a “modest recession.” In the banking and financial sector, the $850 billion recovery package have elevated the hopes of some even while there are rumors of further troubles not yet disclosed. Home sales are falling, equities and mutual funds are losing value, and unemployment is rising as the economy slows.
The philanthropic community is now faced with the same questions now troubling every investor and consumer: What will be the impact on fundraising? What will this mean for the value of investments? Will fundraisers have access to the credit needed to serve clients?
These complex challenges, for which there is no paradigm, call for calm, courage, prudence and a commitment to the repositioning of our institutions to adjust to the challenges of the moment. The savings and loan failures of the 1980s involved a relatively small sector of financial institutions when compared with the global relationships which are entwined in the current economic troubles. The Great Depression, Pearl Harbor, and 9/11 have all been used to provide insights, but none of these events involved the breadth and depth of unknown, and perhaps unknowable, components and variables.
We can listen to pundits, economic sages, fear mongers and promoters and hear that there is little agreement about what the current situation holds for us except change.
Yes, these waters into which we all now sail are uncharted. But, for thousands of years, men and women have sailed upon uncharted waters.
We at Dini Partners believe that during these circumstances, our community is owed transparency, an honest assessment of what is known and no claims about what cannot be and is not known. It would be display a lack of honesty to say simply “fear not” or “all will be well” or worse, “giving has always gone up in difficult times.” Both donors and the non-profit institutions that seek their support are owed what are known to be the facts and truth of the moment – that there is no crystal ball and that the past in this case is not a predictor of future behavior.
As such, the following are what we can say:
•
Endowment and investment management may have
a greater impact on
institutional operations than any immediate reduction in annual
giving. Already, many institutions have been adversely impacted by the
loss in value of their investments.
• If patterns of major
giving behavior mirror past events, major donors may tend to focus on
those institutions which are closest to their core values.
|
|
| Economy's Impact on Philanthropy | • Some
number of donors who have been making significant annual and campaign
gifts out of annual bonus income may reconsider continuing to make
these kinds of gifts.
• For those institutions in campaigns with multi-year pledges, some percentage of pledges may be at risk.
•
Donors may begin to react negatively to anything that they perceive
to be aggressive institution-centered fundraising at the cost of
sensitivity to the realities being faced by donors.
• Many foundations and corporations may have fewer dollars to distribute.
• Some donors may not be adversely affected by these economic woes.
These circumstances raise questions about what institutions should do in the weeks and months ahead.
•
Sail clearly into uncharted waters with the best maps you can find –
seek the advice of sage advisors, independent financial advisors, and
consultants while studying the signs of the times.
• While
forging ahead, do so with prudence, judgment and courage, which means
acknowledging the risks and planning for adversity.
• Continue
fundraising as one of the best methods of off-setting endowment and
investment losses and increasing annual operating support – but do so
with a sensitivity to individual donors’ personal circumstances.
•
Continue capital campaigns, but be prepared for longer timetables.
What might have been an 18-month campaign may become a three-year
campaign.
• Be donor-centric – listen to your donors, hear their
stories, and stay by them through their ups and downs. Negotiate and
renegotiate gifts as needed.
• Remain cautious and yet hopeful.
Remain committed to building a bright future for your institution as
the economy eventually recovers.
• Be prepared for paradigm
shifts. Ultimately, we do not know how this will impact philanthropy
and fundraising, but we do know that things will be different in the
future.
Most importantly, we encourage institutions to be
transparent, honest and clear about their circumstances. Let’s adopt
and live the virtue that made Socrates a name synonymous with
“wisdom.” When asked what wisdom is, Socrates explained that it is “to
know what one does know and to know what one does not know.” In the
end, it will take all of us – institutions, their staffs, donors,
leaders and consultants – to get to a new safe harbor and continue to
fulfill our missions of service to the common good. |
|
|
|
|
|
Through our exceptional staff, we provide clients innovative solutions with dynamic results, a team of catalysts with whom they enjoy working and the integrity of a partner committed to greatness.
For 40 years, Dini Partners has worked with some of the nation’s premier institutions to transform their vision into a basis for strong, sustaining philanthropic partnerships. Discover how we can help you.
Dini Partners is a national firm headquartered in Houston, Texas, with additional offices in Dallas, Austin and Denver, Colorado.
|
|