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When Wall Street Catches a Cold...

January 22, 2008

Money_treeAfter five months of speculation, the news this morning suggests we are in or headed for a recession. Last week, in fact, Steven Cochrane, a senior managing director at Moody's Economy.com, noted that California, Michigan, and Florida already were in recession -- and the likelihood the rest of the country will soon join them is roiling financial markets from Wall Street to Hong Kong.

It would seem the only remaining question is how severe the recession will be. For U.S. foundations and nonprofit organizations, that question is far from academic.

Nonprofits could feel the impact in a variety of ways:

  • Individual companies, especially in the financial sector, are already reporting major hits to their profits. When profits are down, corporate charitable giving declines.
  • When markets decline, returns on foundation endowments -- and, eventually, grantmaking budgets -- follow suit.
  • When unemployment and economic insecurity rise, individuals cut back on their charitable contributions.
  • As economic activity slows and tax receipts fall, local and state governments are forced to cut social services and expenditures on health and education.

Stock market volatility is nothing new. Many of us recall October 19, 1987 -- "Black Monday" -- when the Dow Jones Industrial Average plunged 508 points, or 22.6 percent, in a single session.

Nonprofits are survivors, however. We're accustomed to wearing our belts snugly -- and tightening them when the economy takes a turn for the worse. During the early 1980s, many nonprofit organizations were forced to adjust to the Reagan administration's "trickle-down" approach to social problems. In fact, I wrote my book, Securing Your Organization's Future (firstpublished by the Foundation Center in 1987), to help nonprofit organizations successfully navigate changes in the economic landscape that characterized those years.

What lessons can we learn from the recent past in dealing with economic downturns? In the '80s, many nonprofits jump-started new earned-income enterprises, even as they found additional ways to cut expenses. In addition, many professionals from the world of business -- so-called "sector-jumpers" — left the private sector (either by choice or involuntarily) to seek the rewards of nonprofit work and were able to adapt their skill sets to a nonprofit environment. Planned giving efforts also took on greater significance, as an increasing number of wary donors became drawn to that form of giving.

Is that a prescription for nonprofit survival in the current economic climate? Are we better situated to weather the turmoil this time around? We'd love to hear your thoughts about what nonprofits and funders alike can and should do to help the charitable sector ride out the gathering economic storm.

-- Michael Seltzer

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Posted by Charles Bernard Maclean  |   January 28, 2008 at 05:13 PM

submitted for cross posting

Putting Presidential Candidates On The Path To Disclosing Their Philanthropic Positions

Here are jump-start questions for Presidential Candidate Debate organizers, the media and individual citizens to ask.

"Candidate X, tell us, in this time of economic uncertainty . . .

1. Who is your role model for good giving and why?

2. What's the most satisfying gift you've given . . . and what did you get by giving it?

3 What do you care about, give to now and why?

4. America is the most giving country in world. What will you do to continue and expand that ethic?

5. What's your stance on encouraging volunteering and dollar donation by all Americans?

6. What stops people from giving and what national policies and legislation will you champion to dissolve that?"

For strategies to quiz candidates and advocacy news, visit the Nonprofit Congress http://www.nonprofitcongress.org/?q=Election08 for resources and view a video interview on the their project at http://www.nonprofitcongress.org/?q=primaryprojectvideo Also visit the New Hampshire Center for Nonprofits, http://www.nhnonprofits.org/primaryproject.cfm Chronicle of Philanthropy story at "Nonprofit Primary Pursuits : New effort seeks to get candidates to focus on the charitable world" by Suzanne Perry http://philanthropy.com/free/articles/v20/i07/07004901.htm

Submitted by:

Charles Bernard Maclean

Donor Advocate & Committed Listener


Author of the series, "Financial Advisors As Philanthropy Door Openers To Good Giving"

Wisdom from India: "On the day you die you will not be judged on how much you gave . . . but rather on how much you held back."

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  • "[L]et me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance...."

    — Franklin D. Roosevelt, 32nd president of the United States

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