Thursday, September 18, 2008

Fund Raising in Falling Markets

There are two issues here. Should you continue to raise money in falling markets and, if so, how do you raise money when so many people are on edge?

The answer to the first is “yes,” but only for your most critical needs and opportunities. The fact is that Americans continue to give, no matter what – through recessions and even the Great Depression. Indeed, when you look at the impact of recessions on philanthropic giving over the past forty years, it is surprisingly light. But, when the economy contracts, Americans give much more selectively. In such an environment, it would be a mistake to ask for too much, or for too many things, or anything that isn’t patently and palpably critical to your institution and those it serves.

So, how do you raise money when so many financial institutions seem imperiled? The key is to remember that this crisis is financial. While finance can affect many businesses, it does not retard or stop all means of production and wealth creation. In other words, don’t assume that falling markets mean no one is making money. Figure out who is and focus your primary fund-raising on them. Some hedge fund managers, for instance, have been doing just fine lately. Continue to probe the interests of all prospects but be most sensitive toward those whose wealth seems most dependent on highly leveraged or credit-driven enterprises. Be sensitive but persist.

Also, remember that we will still see a massive transfer of generational wealth in the next year and beyond. Those who were planning to give a certain percentage of their estate for philanthropic purposes will, most likely, still designate the same percentage even as the size of their estates decrease. And, even with the contraction of many estates, the overall transfer of wealth will still be enormous.

Finally, never stop building common cause. Continue to engage would-be donors and speak to the higher purposes of your institution while proceeding with greater patience in the pursuit of pledges and gifts. If you pull back too much during a recession, you may sacrifice the sense of community that is so important to the long-term health of a philanthropy-dependent organization. Some donors may interpret your lack of presence not as sensitivity but as a loss of interest in them. Indeed, a difficult economy provides a great opportunity for philanthropies to build and deepen their relationships with those that have and might support them. When the economy recovers, your organization will be positioned to secure higher levels of support from those who have learned that your interest in them is not always tied to short-term giving expectations.

Persist not because you expect more but because you expect to continue to serve. Persist because so many Americans will continue to feel the need to give to others even as their fortunes decline. Persist because philanthropy must never lose sight of the future.

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