GG+A Letter to the Philanthropic Community

From: John Glier

Date: October 30, 2008

Re: Philanthropy and the Economy

The domestic and international economic situation continues to fluctuate and many indicators suggest that a recessionary environment is likely to continue for some time.  The tightening of credit markets has further compounded the levels at which organizations are absorbing the volatility.  The philanthropic sector has successfully weathered significant financial downturns in the last fifty years, yet trustees, institutional leaders, and fundraisers today are questioning whether or not this time is “different” as so many financial and political issues collide around the globe. 

While we do not dismiss the current downturn nor the obvious and apparent impact it is having today on institutions and their constituents, our long-term outlook remains positive and forward-thinking.  Part of our optimism is rooted in historical fact; over the last 40 years, philanthropy in the aggregate shows consistent year over year growth and is not correlated to movements in the stock market.  

                                                            Source: Giving USA Foundation

Still, the current volatility may cause some to feel a lack of control and question whether short-term or long-term plans should be adjusted.  We have no way to predict the length or depth of this financial turmoil, but we are convinced that the best course for the nonprofit sector is to focus on the activities that have always served it well:  ensuring a compelling case for support, leading in ways that generate trust in institutional leadership, building and sustaining relationships, inviting philanthropic support, and stewarding the donors who have made gifts in the past.  We offer the following reminders:

*       While we recognize that volatility in the capital markets may slow down or stop many philanthropic decisions, organizations should maintain focus on their long-term objectives.

*       It is critical to know your donors and be sensitive to their personal timing.  Stay close to those who have supported you in the past and increase your stewardship activities.  Some donors will continue to give, and most will re-engage when they are feeling more comfortable.  It is particularly important at this time to assure donors that their past support continues to have impact and is appreciated.

*       Well-managed fundraising programs prevail among and across many different economic and political landscapes.  Strong institutions are maintaining their philanthropic activities, albeit with sensitivity and a recognition that some donors will defer a gift decision or delay a pledge payment. 

*       Organizations planning major campaigns should continue their strategic planning in order to have ready a persuasive case for support to test with potential donors in the future. 

*       Institutions planning a public announcement of a campaign in the near term should look carefully at the gifts and pledges in hand, and consider the availability and potential timing of the gift support that will be needed to reach the goal.   

*       Institutions engaged in the public phase of their campaigns should continue to ensure that the featured objectives of those campaigns remain urgent and important to the quality of the organization and relevant to the greater good.

*       Annual giving programs should take care to monitor gifts from loyal donors and be certain that those donors are asked to continue their support.  Annual fund officers should look carefully at previous donors who have made leadership gifts of stock or from donor-advised funds, and should consider direct conversations with those donors about how they will make their gifts this year.

The partnership between nonprofit organizations and their donors is never more important than during times of uncertainty.  Organizations that provide an educated citizenry, groundbreaking research, medical advances and health care, cultural renewal and social services are the bedrock of our global society.  We at GG+A remain resolute in our commitment to advancing the missions of our client institutions, and of nonprofit institutions overall, through philanthropy.  We are certain that donors will continue to be as generous as their circumstances allow in responding to the needs of those organizations that continue to communicate their case for support.

Links to additional articles and resources:

Advancement and the Economy (Council for Advancement and Support of Education) Resources to help educational institutions maximize the effectiveness of their advancement initiatives during challenging economic times.

IRA Rollover Extended (Association of Fundraising Professionals website). The recent “bailout” package includes a two-year extension of the IRA Rollover provision, making it retroactive to January 1, 2008 and applying to gifts made through December 31, 2009. 

Giving During Recessions And Economic Slowdowns (Giving USA Spotlight, 2008)

Resilient Philanthropy (Advancing Philanthropy September-October 2008)

Economic Cycles and Charitable Giving (White Paper from Association for Healthcare Philanthropy September, 2008) [Free for members]

 Endowment Managers Consider How to Handle Downturn (Chronicle of Philanthropy October 2, 2008)

How Bad Is It? (Chronicle of Philanthropy October 2, 2008)

 A Survival Kit for Fundraising in a Bad Economy (AFP Resource Center)