Sunday, January 10, 2010

Strategy Begins With Asking the Right Questions

Heraclitus, somewhere around 500 BC, said, “The only constant is change.” Isaac Asimov, some 25 years ago, embellished on that statement by saying, “The only constant is change, continuing change, inevitable change, that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be.” If something rings true for 2500 years, it’s likely to do so for at least a few more. As we begin a new year, the question is not about the constancy of change but what may have happened in the past year to bring about fundamental or lasting change. What will be the lasting effect, if any, of the Great Recession on philanthropy? While we may not know the answers, it would be eminently wise to keep asking ourselves certain questions as we interact with donors and observe giving patterns in the months ahead.

The questions foremost on my mind include:

Will donors cling to their assets even as the economy recovers? Just as some people continued to lead very frugal lives long after the Great Depression, will some donors continue to guard their assets for fear that they may suddenly contract again?

Will donors be less inclined to give large endowment gifts? Given the sudden drop suffered by many endowments in the past year, will donors view endowments as more fragile and gifts to them as less meaningful? Will they be more inclined to ask that their money be put into something they view as more permanent, including brick and mortar?

If donors prove less inclined to give endowment gifts, will they give smaller current gifts? In the past, the rule of thumb was, the larger the gift, the greater the likelihood it would be for endowment (and designated). If current use seems more appealing to donors, will they still give “endowment size” gifts?

Will donors be more inclined to use gift instruments whereby the principal is given to the institution and the earnings are returned to them? Will they see that as a way for the institution to manage the risk while they can plan on a “guaranteed” return? Will institutions become much more skittish about the gift agreements they enter into and about the size of the revenue streams they offer?

I don’t know the answer to these questions but I know I must keep asking them and keep watching for emerging clues. The word “strategy” is defined as “an adaptation or complex of adaptations that serves an important function in achieving evolutionary success.” As those clues emerge, I know I must look for the way to adapt to inevitable change so our organization continues to evolve.

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