Fund raising in a recession: how fast, how soon.

Recovery from the current recession is about as predictable as the weather. Forecasts for an end to these hard times range anywhere from two months to two years. But, like the weather, we know things will get better. What then are the implications for fund raising? Are people still willing to give? Should fund-raising campaigns go on hold? Or should you proceed, but with much more modest goals?

The better question to ask is: Can you afford to put your needs on hold? Most executive directors and development officers I know would answer an unequivocal "no." In fact, some non-profit organizations, especially social service agencies, report that their funding requirements are even greater in this soft economy because more and more people need help. And many non-profits are also feeling the pinch of cutbacks from federal, state and local governments, which are dealing with their own financial crises. Actually, a case can be made that the third sector is even more important during a recession because of the inability of government to respond expeditiously and effectively to rising social and health problems.

Recession In Perspective

Rather than be daunted by the recession, it is important to put it in perspective. If the stock market is any indicator, this recession is not that severe. The Dow Jones Index only went down 4 percent from January I to December 31, 1990. And, as of this writing, the Dow passed an all-time high of 3,000, with some predictions of a Dow of 4,000 ! The two categories of individuals who are hurting the most from the recession are those who depended on a salary and have lost their jobs and those who are highly leveraged. The first group, while large in number, does not include people who, even in the best of times, can make the gifts large enough to "make or break" a campaign. The second group is, in many ways, related to the tremendous problems in the savings and loan industry. Many real estate developers, for example, are in serious financial trouble. This in turn has hurt the construction industry and, subsequently, the thrifts and banks. The only good news for the non-profit sector is that highly-leveraged individuals are not typically inclined toward philanthropy, even when doing well.

Traditional Philanthropists

Let's look instead at some traits typically shared by the individuals who do make substantial gifts. Philandiropists, in general, value stability over the long term and therefore invest their money cautiously. Consequently, they are usually cash rich, not dangerously leveraged and highly speculative. With ready cash and marketable assets, these individuals may actually prosper during a recession. They can take advantage of bargain prices on real estate, stocks and other distressed properties. They also continue to support many charitable causes.