August 08, 2011

Fund Raisers Mull Effects of a Double-Dip Recession

With the drumbeat of bad economic news in the United States and around the world threatening the nation's fragile recovery, fund raisers are wearily bracing themselves for a possible double-dip recession and the likelihood of a slowdown in giving in coming months.

Many charities have yet to raise as much as they did before the recession started in December 2007. And now, just as some organizations thought the fund-raising climate was getting better, the stock market has just fallen by its steepest drop since the crash of 2008.

The threat of another recession "will probably not make a difference in moving forward with a campaign, but it could take a long time" to raise the money, said Bruce Flessner, a Minneapolis fund-raising consultant who helps plan big fund-raising drives. "Anyone with a big ask out now will see a pause."

Mr. Flessner also speculated that, particularly among colleges and universities, "maybe the obsession with international fund raising will fade," with so many countries facing budget shortfalls and stock-market declines.

But charities should not get too distracted by the national or global economy, says Robert F. Sharpe, a Memphis planned-giving consultant, and his colleague, Barlow Mann, both of whom I interviewed in a joint conversation.

Fund raisers should pay just as much, if not more, attention to other factors such as where they are geographically, the age of their donors, and the assets they hold, they advised.

The two men said that a food bank in Memphis, for example, is receiving plenty of donations because the region is dominated by companies such as AutoZone and Federal Express, which have held up well through the recession. But, they added, that's probably not the case with a comparable charity in New Jersey, where some people who worked in New York's financial world have been out of work since 2008.

Mr. Mann and Mr. Sharpe said they recently helped a fund raiser at a Memphis private elementary school assess the giving climate by looking at the 52-week highs and lows of publicly traded companies in the metropolitan area. Because the school's donors are parents or grandparents who are employed by those companies or own stock in them, those figures helped the fund raiser better understand the finances of potential donors, they said.

Donors to the school who are affiliated with companies like Federal Express are doing fine, while others who are or were employed by certain regional banks, or who own stock in those companies, are hurting, said Mr. Sharpe. "A donor who may have been a $5-million prospect before, now they are fighting bankruptcy."

Knowing such facts is helping the elementary-school fund raiser decide which donors to approach now and which ones to hold off on, said Mr. Mann.

No matter how bad things are in the overall economy, some donors will continue to have enough wealth to be generous, said Mr. Sharpe. "Your theme should be not to get distracted by the macro economy."