Q&A – DOW Disaster – What Does This Mean for Philanthropy?

In recent weeks the economic… let’s call it “uncertainty”… has kept my mouse poised over the “refresh” button of the CNN.com homepage. However, like many of you I’m not exactly heavily invested in the market. In other words, the DJIA could lose 20% and unless I read about it, I doubt it would affect my day-to-day life very much. Or will it? As I was watching the DJIA crater and rise (mostly crater), I started to think – okay, but what does this mean for us? Actually, what does this mean for Philanthropy? Are all of my donors losing their year-end gift as we speak?

As I was pondering this economic mystery, my bosses at Changing Our World were finishing up an FAQ about the relationship between the economy and the philanthropic sector. It’s not all good news, but I found the contents both reassuring and helpful.

Questions are asked such as:

What is the Worst Case for Philanthropy?

Answer: In the last 40 years the worst one-year (inflation adjusted) decline in philanthropy was in 1973-74, and it was a decline of 5.4%. If this crisis matches that one, giving in 2008 will be approximately $289.5 billion – or exactly what it was in 2005. In other words a decline may be real, but the only rational reaction is to press forward. After a down year, philanthropic giving always roars back to new record gains within two years.

Has the current market taken away all of the wealth this country has built?

Answer: Try and remember back to 1993 (just 15 years ago) when the Dow’s all-time high was 3700. Times are rough, but there is still plenty of wealth out there. The key to stabilizing your annual fundraising total is invest in diversifying your sources of gifts – rather than relying on a small group of individuals or companys all in one industry, try and get a balance to insulate against an economic rough patch.

Should we postpone our campaign or move forward?

Answer: Obviously this is a case-by-case question, but it almost every case you shouldn’t stop. Slow down? Maybe, but don’t stop. This economic crisis is deep, but it’s not the end of wealth in this country.

Since construction is slow, this could be a good time for capital bids. Also, it’s definitely a good time to do some cultivation and let your donors know they are family in good times and bad times alike.

There are 900,000 public charities in this country. Those who stop will be at a disadvantage next year compared to their competitors who continued to cultivate and solicit.

There are dozens of questions and answers available on the Changing Our World website: http://www.changingourworld.com/site/News2?abbr=abt_&page=NewsArticle&id=6573

Also on the Changing Our World website you can find a letter from our CEO, Michael Hoffman, about the current state of philanthropy. http://www.changingourworld.com/site/News2?abbr=abt_&page=NewsArticle&id=6569

I hope you find this post as helpful as I did. Happy Columbus Day, everyone!

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