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Recession and Non-Profits

11/10/08 5:55PM By Olin Robison
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(HOST) Commentator Olin Robison has been thinking about charitable giving - and the likely consequences of hard economic times.    

(ROBISON) It is just nutty to think that the current economic downturn will not have an impact on colleges, universities and other non-profit organizations.  Of course it will.  Big time.

Many non-profits do generate some income, such as tuition and hospital fees.  But most depend on fundraising to make up the difference between income and real operating expenses.

Most people of course know that retailers depend heavily on sales between Thanksgiving and New Year's.  It is also true that it is the "make it or break it" time of year for most non-profits.   Just as merchants depend on sales at the end of the calendar year, most non-profit organizations depend on serious giving during the same period.

Merchants, we are told, are getting ready for a slow season.  Non-profits, alas, must now do the same.

Most people employed in fundraising know that giving is basically a psychological act.  If a person feels safe and prosperous, they are much more likely to give and to do so generously.  It is also true that feeling "poor" isn't really tied to how much money a person has.  So, when a person thinks they are poor, they will inevitably be more reluctant to give - and especially reluctant to give generously.

If, for instance, someone had $10 million and the market rose so that they had $30 million; and then there was a market correction or downturn so that they now have "only" $20 million; then usually they think they are "poor."  So, this is NOT the time to ask that person for a big gift.

Non-profits are more dependent on the markets than they usually think.

We have heard often, especially in recent years, that "a rising tide raises all boats."  We have recently found out that this is not always true.  The rising tide over the last several years raised the yachts but not the small boats.

It is true, however, that a receding tide will definitely lower all boats: yachts and small boats alike.

It is also true that most fundraising campaigns are a combination of small and large gifts.  A large number of smaller gifts provide the base, while a small number of big gifts are required to put the campaign over the top.

Some non-profit organizations will actually go out of existence during this recession because they already operate so close to the edge.  This is going to include non-profits small and large and is likely to include even a few colleges and universities.

Administering a non-profit during good times is hard enough.  Doing so during a financial downturn will prove too much for some.

This is serious stuff.  Non-profits currently account for between 10 and 12% of all jobs in the United States.  That number will shrink.

It is my profound hope that, in spite of hard times, we will not forget the importance of charitable giving - that we will do what we can. Now. While there is still time.
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