M E M O

From: David E. Edell, President

Date: October 2008

DRG is a national Executive Recruitment Firm working exclusively within the Nonprofit sector. Learn about Dig's services, resources, recruitment strategies and current search assignments at our website www.drgnyc.com

 

The Economy and Philanthropy: SOME FACTS

As we struggle in these 'uncharted waters" of the global economy, much has already been written about the potential impact on philanthropy. Nonprofit boards, development committees and budget offices have appropriately adjusted fundraising expectations and budgets that reflect this new assessment.

HOWEVER, a research study conducted by the Center on Philanthropy at Indiana University suggests that:

• "total philanthropy appears to weather storms in the stock market with greater resiliency and less dramatic fluctuation."
  
• "There has been only one year (1987) in the past 27 in which philanthropy has dropped from one year to the next, even during years in which the market has dropped."
  
• "Even during the (last) worst decline in the stock market (in 2002 when the Dow Jones Average decreased 17% and the S&P 500 Index dropped 23%), philanthropy increased by 1 %."

The study, commissioned after September 11, 2001, examined what happened to the economy after 13 events of terrorism, war and political and economic crises. It charts events such as the Gulf War, World Trade Center and Oklahoma City bombings, Arab Oil Embargo and the Financial Panic of 1987. It then studied total philanthropy in the years before, during and after the events. The charts accompanying this article show that philanthropy is impressively resilient, even in times of crisis.

Resilient Philanthropy by Bradford Wm. Voigt
Read article (requires Adobe Acrobat)

Clearly between the November election and economic crisis, all fund sources including, individual, corporate, foundation and events will all be affected. This article provides a context for viewing recent events that suggests that even a worst case scenario may not be quite so dramatic or long lasting for philanthropy. The author of this article concludes stating "While it is clear that the stock market provides donors with a greater ease and sense of confidence in making gifts to nonprofit organizations, the opposite is not true. Down markets do not always foretell decreased philanthropy." While the article and research predate the October 2008 crises, that perspective may be helpful as you chart the course for your organization's response to these events.

# # #