The JEHT Foundation is one of the total casualties. I attended this event in my capacity as president of the board of Women's Prison Association a JEHT grantee:
A memorial service for the JEHT Foundation was held in New York on January 22nd. The death was announced December 12th immediately following the highly publicized arrest of Bernard (Ponzi) Madoff. The cause of death was traumatic exsanguination – i.e., the foundation’s money bled out suddenly and acutely.JEHT was six years old, wiped out like so many others by imprudent investment with Mr. Madoff. JEHT is survived by its board (the donors and a few outside directors) and by its staff which has been let go effective January 31st.
As expected wonderful things were said about the corpse – but nothing about the corpus: pretty much everyone present knew JEHT’s funding came through Norman Levy the father of the founder Jeanne-LevyChurch. He had long invested with Mr. Madoff. A board of presumably financially sophisticated people was snookered like so many others. At the time of its death notice CEO Robert Crane said “the returns had been steady and strong for all these years. It was shocking.”Like observations, and even stronger remarks, have been made by many others similarly affected.
Painful, moving and emotional remarks were made by Ms. Levy-Church the foundation’s driving force whose devotion to progressive causes was described by one onlooker as “rare and remarkable.” Eulogists included the head of Atlantic Philanthropies, a representative of Pew Charitable Trusts and several grantees cut off more or less in the prime of their JEHT support. Mourners were drawn to the foundation’s edgy SoHo offices for the service and they came from the grantee community, public service and other family foundations. Words like “cautionary,” “sad” and “nice wine” were uttered by some. Encomia were reproduced on large posters and a memorial book was available for mourners to record their names and whatever comments they might have cared to make.
It is believed that Mr. Madoff was especially attracted to foundations because the 5% payout they were required to draw down annually was a manageable amount for him to pay back each year, leaving the “principal” at rest- principal that turns out not to have existed, having gone out to pay the other investors who came along later, the essence of the Ponzi investment model as taught in most business schools.
JEHT Foundation, despite its youth, became one of the most effective small foundations in the country partnering with other much larger foundations like Pew and George Soros’s Open Society Institute to fulfill a mission and supporting good work virtually ignored by traditional philanthropy.
The Foundation was established in 2000. “JEHT” is an acronym for Justice, Equality, Human dignity and Tolerance. Its mission was to support programs that promoted reform of the criminal and juvenile justice systems; to ensure that the United States adhered to the international rule of law; and it worked to improve the voting process by enhancing fair representation, competitive elections and government transparency.
A recent posting to its web page said that “the JEHT Foundation Board deeply regrets that the important work that the Foundation has undertaken over the years is ending so abruptly. The issues the Foundation addressed received very limited philanthropic support and the loss of the foundation’s funding and leadership will cause significant pain and disruption of the work for many dedicated people and organizations. The Foundation’s programs have met with significant success in recent years – promoting change in these critical areas in partnership with government and the non-profit sector. Hopefully others will look closely at this work and consider supporting it going forward.”
In its brief life JEHT gave away more than $75 million in aid of what one of the eulogists described as “orphan causes.” In the world of philanthropy – on whichever side of the table one sits - experienced non-profiteers long ago learned that questioning the provenance of money is seldom a good idea. As one observer commented “you wouldn’t want to know.”
It is possible, perhaps even likely, that some of JEHT’s good works came from bad money and that grants to deserving progressive nonprofits were based on ill-gotten gains. Who would ask? No grants are likely to be returned.
A few days ago The New York Times published an Op-Ed piece by the head of Yale's endowment fund arguing that the way to save newspapers in print was to convert them into nonprofit organizations. I responded with this letter and thought I would share it with you, because the Times passed. As always comments welcome.
“News You Can Endow” is ingenious but as a solution to the plight of newspapers in print it falls short from the public interest perspective for four reasons. First, the purpose of granting nonprofit status to an entity is based on the idea that its underlying mission and intent relates to charitable purpose. This taxpayer subsidized privilege is widely abused by far too many organizations able to ride on tax-exempt, tax deductible status but provide little practical charity in their operations in relation to their huge endowments. The focus here is clearly on building a sustainable business model. I don’t see any philanthropic motive. Therefore affording newspapers nonprofit status is inappropriate.
Second assembling a corpus of $5 billion forthwith can be done only through large gifts from a small number of individual and foundation donors. In its essence this is fundamentally undemocratic; in practice my experience is big donors do not stand to the side. They expect a voice and a seat at the table.
Next to equate “incremental income” from hard-copy sales and on-line subscriptions with tuition payments is a bit misleading. For most institutions tuition is anything but incremental. It is the revenue driver.
Finally who is to identify the”nation’s premier newsgathering organizations?” Those big donors will. That is scary.
Remarks presented this morning to the board of directors of the Association of Fund Raising Professionals (AFP) - New York chapter.
Good morning everyone. Good bye to 2008. And welcome to 2009. May it be better. I will keep this as short as I can so we can enjoy some discussion. In the current AFP national e-newsletter Paulette wrote in part as follows:
We now have the opportunity to show just how critical the nonprofit sector is to our communities and our world. But as we do so, let’s be sure not to forget about the important role of ethics and trust. People give because they trust they can make a difference. Let’s continue to be keepers of that trust with every interaction we have with donors.
On that note of inspiration I thank the Society for Cupidity and Malfeasance – SCAM - for making today’s presentation possible. Their man of the year is alleged con man Bernie Madoff. Madoff says he “made off” with $50 billion over nearly 40 years while honoring his muse Charles Ponzi, he of the 1920s stamp scandal. Sixteen separate SEC and other investigations could not prove Madoff was running a fraud.
The relevance of Madoff to this discussion is obvious. An unknown amount of what he stole once belonged to grant-making foundations like JEHT and Picower. These and so many other foundations and generous, caring individuals supported the charities you and I serve; in several cases charities lost serious money. It is also clear that some of the institutions that lost out with Madoff didn’t even know he was holding some or all of their money. However I find our Bernie a compulsive braggart; my personal view is that actual losses will be far less than $50 billion.
Much apparently represents paper loss – as well as paper profit that never existed. That may offer high net worth taxpayers a shot at refunds on taxes paid on mythical gains. On the other hand I doubt that anyone who realized ill-gotten profit over time is now going to step forward to admit it given all the talk about “claw backs” that theoretically at least could be gone after by IRS. Even now your organizations or clients may be getting conscience money. You may have been getting it right along. How would you know?
Meanwhile like me most of you have been touched indirectly by the recession –personally and professionally, not necessarily by Madoff but by the general downturn in the markets. Madoff is but a pimple on the great Wall Street butt. BB – beyond and before Bernie - an estimated ten trillion dollars of wealth went bye-bye last year - maybe more. Though there is unrealized paper loss here too - make no mistake: real people lost real money.
The collapse of the housing markets, the commercial banks and the investment houses got us where we are today. It was all caused fundamentally by rapacity: Wall Street’s obsession with quick profit over prudence. Even before the Madoff story broke on December 11th most investment portfolios were down 20-40%. The Dow was down 33% for the year. When you think about it the root differences between Madoff and Wall Street in general are not readily discernible: Greed trumps judgment and experience. It sucks in people and entities that assuredly know better.
What does this mean for philanthropy in our New York metro market? That of course assumes I know. But we have to begin somewhere.
Let’s start with the huge wealth transfer coming by 2015 - trillions of dollars passing to succeeding generations, at least some of which would have made its way to charity. You’ve all heard about the wealth transfer just not recently. The data came from a landmark study conducted some years ago by Paul Schervish and John J. Havens at BostonUniversity.
In preparing this talk I e-mailed Paul and asked him if the Schervish-Havens wealth model would have to be revised. He gave me permission to quote his response and said that:
“From 1950-2006 the annual real rate of growth in wealth was 3.3%+.That covered a period of 9 recessions.Our estimate is based on only a 2% real annual rate of wealth growth. More importantly, there is no such thing as certain prediction that involves complex and diverse human agency.People can view the great growth in wealth from 1990 through 2006 (with 2000-2002 interruption) and then become greedy and dishonest and carry out risky behavior.In the end it is hard to be more prescient than Greenspan, Democrats and Republicans, derivative makers and brokers, and home buyers.The bigger question, I think, is how to achieve all the government spending without undercutting economic growth and taxing our children to death.”
He also added that they are doing a piece that will appear shortly in Trust and Estates Magazine. In any case real wealth growth is now in a minus mode. As for Greenspan he was horrendously wrong and admitted it in sworn Congressional testimony!
The local story is a huge sucking sound: hundreds of thousands of gasping New Yorkers, maybe even a million or more, who lack good economic options. An estimated 150,000 of them used to work in the financial markets – or are on their way out in the next few months. Poor New Yorkers have long depended on a fragile economic structure dressed in the trappings of affluence if not real wealth. But now the nonprofit economy is serving people who have never before had to avail themselves of the frail social net our private health welfare and social service agencies provide. They are now consumers of a shrinking product: the ability of our charity network to meet the demand. One example you’re all aware of is food banks. But human services in general have been clobbered.
Giving USA reported last July that US charitable giving in 2007 was $306.3 billion. That would make the estimated New York philanthropy handle $76-92 billion. How much of New York philanthropy was exposed in Madoff’s claimed $50 billion steal is obviously an unknown number and maybe never will be known.
My close friend and colleague Nancy Raybin (who is the new chair of Giving Institute) - and I - estimate that the New York metro area philanthropy market may account for 25-30% of all US charitable contributions. However this has never been systematically studied as far as I know. A few years ago as chair of Giving USA Foundation I tried to interest NYRAG in having its members sponsor such a study New York is still the largest concentration of wealth in the world - at least until good hard data refutes it. I got nowhere. But this work should be done. Perhaps AFP-NY can take up the cudgel.
Market forecasting is of course a fool’s game. As an investor I long ago learned nobody knows anything until after the fact but even a broken clock is right twice a day. So I’ll jump right in! What will philanthropy’s near term look like? In an address to AFP-NY’s luncheon meeting in December consultant Ted Hart prophesied that individual giving would drop 3-5% this year, foundation giving 5-7% and corporate giving 6-10%. I asked Ted in an e-mail where this provocative data came from and he e-mailed back that it came from his company; in other words he guessed. But it is clear that he looked back at the actual recession data over several years as published by Giving USA. So he could be right. Or not.
Our data covers roughly 40-45 years. Boiled down we see percentage losses nationally that are not far off from Ted’s estimates. But my reading of the data also shows that philanthropy is a trailing edge in declining: i.e., we feel the effects of recession somewhat later than the general economy. Foundation lags for example are not felt for up to a year or more. Drops in individual and corporate giving are more sensitive and are felt more quickly. However the data also seem to show that philanthropy is a leading edge in recovery, meaning we come back faster than other sectors of the economy.
For a very rough approximation of what we might be facing as we march bravely into 2009 let’s for the moment make three assumptions: first, Ted is right; second his projections do indeed extrapolate to the New York market; and third New York philanthropy comports to the national data model on foundation, corporate and individual giving. Living individuals account for 75% of the money, bequests 7%, foundations 13% and corporations 5%.
Applying and rounding to the New York estimate of $76-92 billion in charitable gifts for 2007:
Living individuals now account for $57-69 billion. At a 3% drop the numbers are $55.3-66.9; at 5% $54.65.5. The other numbers are billions as well:
Bequests - now at $5.3-6.4 decline to $5.1-6.2 at 3% and $5-6.1 at 5%.
Foundations now show $9.8-12.9. A 3% drop takes them to 11.6-9.3; a 5% slide goes to $9.5-11.4.
Corporations would be $3.8-4.6 under our model but with a 3% fall go to $3.7-4.4 and at 5% to $3.6-4.3
This may not be pretty. Yet if this were all giving was about it still would not be the end of the world as we know it though the hit to New York City’s nonprofit economy is likely to be higher for several reasons. In addition to the increased demand for social services Wall Street earnings and profits have accounted for about 20% of City tax revenues that are already way down and may decline further as unemployment continues to rise. That has to include some of your smaller and mid-market donors.
Second a substantial majority of the City’s 20,000 nonprofits are human service agencies most of which rely heavily on government funds to meet their budgets. Human services are where demand is the greatest. As those government grants and contracts shrink human service agencies will have to shrink as well. The place to make meaningful cuts is in labor - typically 70% or more of an agency budget. Though these workers are not for the most part highly paid many will have to be laid off thereby contributing to an already dismal scenario. For example at Women’s Prison Association, of which I am to become president next Tuesday, we have already cut our budget 20% and laid off about 20% of the staff.
One important problem affecting human service agencies in particular is that though legally private they are de facto public, essentially functioning as conduits for government money. Unhappily many have developed a dependency culture; private fund raising is weak. Most lack technical know-how, they lack boards with clout and they do not have a broad base of individual givers – though many once did. Where they have penetrated philanthropy most is with foundations that as we know are - or will be staggering. It is a little late and not the best time to tune up for private fund raising but they have little choice.
Nonprofit organizations depend on their boards of trustees for leadership, stewardship and action. I speak to this as a consultant serving boards as well as a trustee of three estimable nonprofits – one national, two local. That said by definition a board is a long, thin, wooden object. We all know one, few board members like asking for money in the best of times; and two, it doesn’t take much to discourage them. Depending on your organization the CEO usually reflects the board mood. Once in a while a good CEO sets the board mood.
In the last several months, and especially the last several weeks I have seen a deer-in-the-headlights look in boardrooms. Beyond the 1000 yard stare decision making is on hold. Organizations are having difficulty figuring out what to do next given that economically we are in the loo or at least circling the drain. In my long career I have been through war, fire, flood, recession, high hem lines and low; Nixon who presided over the most severe inflationary spiral since World War II, and Bush the Younger of whom there is nothing more to be said.
So here we are. Despite the bad news there are indeed positives and opportunities for the near term; I have some thoughts to leave you with for the long term and I’ll get to them soon.
But for now repeat after me:
PLAN FOR THE TURNAROUND!
Go ahead say it.
PLAN FOR THE TURNAROUND!
·Even if the data cannot be pinned down for lack of academic inquiry I believe we can agree that in this market, despite the worst, we are still sitting on a huge pile of money. Much of it is discretionary. For example if we go back to the level of philanthropy in 2000 we would be talking about $275 billion in inflation-adjusted dollars of which the New York market would have been nearly $68.7 to $82.5 billion dollars! At that time this was the largest amount of money ever reported raised. What is different now is less the money and more the mood!
·Who’s got it? The biggest challenge we face as consultants and staffers is to comb our donor files. Not to be brutal but who’s really wiped out and not a prospect this year regardless of their previous giving history? Who has been “Madoff-ed?” Who’s left? That’s where your time goes. Because for the most part you will be cutting back on acquiring new donors this is an opportune time to concentrate on exploring the existing data base – especially that vast dark space between $10,000-100,000 that no one ever seems to have time to examine in sufficient depth.
·Despite Madoff and the tanking markets high net worth donors are mostly still high net worth donors and they need to be asked. Most may be complaining but thy will still give especially if they are already wedded to your cause. Signing them up as new donors to your organization may not work as well as it has before. From what I can see or report anecdotally most charities held up fairly well in all categories last year: major gifts, planned gifts, mail and events. This year may be harder and expectations may have to be readjusted as I have already said. But I am a great believer in keeping at it.
·Planned giving is an opportunity. An estate’s worth may decline but many of your donors will still have significant net assets posthumously. They must either will them away or give them to Sam. Most of the time we are not as assertive as we should be in going after planned gifts because cash now takes priority. This may be the year to re-think how we concentrate our time.
·Despite the well publicized and humongous money losses and large number of layoffs huge bonuses were paid out on Wall Street and elsewhere at the end of the year; maybe less than in other years, and maybe not to 20 or 30 alpha dogs at the very top.
·Corporate giving may be hurting but keep in mind that none of the reported data measure cause-related marketing. CRM is the fastest growing area of corporate “philanthropy” and often represents considerable unmeasured goods and services output for charity’s benefit.
·Many huge fortunes are not related to the stock markets. There are people who actually make things and people who actually deliver services. Often these people are not significant stock market investors. They retain money in their businesses instead. Like the Yankees!
·This is stuff you folks know very well. But I have been reminding my clients that their mission trumps all else. Beyond that I admonish them to … :
-Stick to basics; there are no magic fixes
-Face up to budgeting reality
-Cover the money you’ve got; only then go after the new donors
-Collect good intelligence
-Research thoroughly: most files are much richer than anyone knows
-Alower gift is better than no gift
-Ask for more. You may be pleasantly surprised.
McCain was right: the fundamentals are sound. Just not at the moment. Planning for the turnaround is important because things do evolve. When will the recession end? It will end when it ends.
For the longer term I have a five-point “philanthropy platform.” Time won’t permit as much discussion of this as I would like but perhaps we can to get to some of it later.
1.A White House Conference on Philanthropy during the second year of the Obama administration. (It will take a year of planning). The last such was in 1975 when the Filer Commission a Rockefeller funded endeavor issued a signal report on American philanthropy. Much is the same. Much has changed. Though I can thinkof major philanthropists like Gates or Buffett I really can’t think of a truly national leader, a person who stands out as a spokesperson for private philanthropy -as a process, as an aspiration, as a promise. Ted Turner came close some years ago when he excoriated his fellow billionaires for their stinginess relative to their wealth. I call it the “myth of philanthropy.” We need to talk about it in a national context.
2.Require foundations to increase their payout rate from 5% to 7%. This is not an enormously popular idea among the major foundations of course. Grassley has mumbled about it; it has gone nowhere though it has been talked about for years. The foundation lobby is very strong. The nonprofit community has done an absolutely crappy job of advocacy. It is scared to death of offending foundations for obvious reasons and hides behind the idea that by law they are not allowed to advocate – which is simply not true. Activist Robert Egger has written about what I would call the “Nice-Nervous-Nelliness” of US charity. His remarks – published in Financial Times in April of 2008 should be required reading in every nonprofit boardroom, every executive office and every development office. In a word, writes Egger, “charity must harness the power of politics.” Go to www.robertegger.org to access this ground-breaking essay. Read it yourself and pass it around.
3.No private foundation can exist for more than two generations. Gates for example is doing just that. But this is entirely voluntary and should be law. At the end of 50 years the assets must be distributed to charities or transferred to an independently governed community foundation. Based on 2007 datafoundation giving was $38.5 billion. Assuming a 5% payout this is an aggregate caucus of $770 billion in idle capital. The debate is whether the use of nearly a trillion dollars can be better optimized.
4.Institute a sliding charitable deduction or tax credit. I am no economist and I may be getting at this incorrectly. What I intend is to differentiate between real charities - like human service agencies - and others that though equally worthy: arts, education, environment, et. al. – may not fit a definition of “true” charity. Perhaps this could be related to budget size ion the likely sloppy reasoning that larger organizations have an easier time raising money. An example would behospitals afforded 501-c-3 status that provide minimum real charity care often less than one per-cent of a $500 million or even a billion dollar budget. When I brought this up at a conference on food, hunger and democracy held at Baruch last December Bob Egger said from the podium “we don’t know each other but we have the same mother!” I liked that.
5.Federalize charity registration requirements. Don’t emulate the SEC but do get the states out of this business. They have screwed it up royally. The regulations are a hodge-podge of regulations with huge loopholes. Virtually nothing has been done to eliminate the bad guys and the rest of us are stuck with multi-state registrations, high cost and so on. It would not be much to extend the IRS’ responsibility given its 990 responsibilities.
Thanks so much for sharing your time with me. I look forward to our Q and A.
So far one good friend has lost virtually her entire net worth. Two active clients have been hit: one by the collapse of a billion dollar foundation that had been giving this charity a million dollars a year in unrestricted money. A second has likely sustained significant losses in donor gifts of as yet undetermined severity.
Flash back to Philadelphia,1995: I was representing three charities at the same time: the public library foundation and two museums when something too good to be true (and it was) came to the attention of first one board and then the other two. It was my first direct professional exposure to a Ponzi scheme. It was called the Foundation for New Era Philanthropy and was started by an area businessman with an interest in Christian causes. His name was John G. (Jack) Bennett Jr. The Wikipedia entry details his activities but on a smaller scale it worked the same way as the Madoff scam.
Bennett first created an aura of mystery by inviting ten "anonymous" business leaders to invest initially and of course the next round of investors paid off the first, and the third, the second and so on until much more money was going out than coming in and the whole thing imploded. When I heard about this "unbelievable man with a genius for investing" for the first time - from the VP for development and a trustee of one of the three institutions my bullshit detector immediately went off. By then I was an investor of sorts and I actually had some money. I was careful. I managed half my portfolio myself, had a financial advisor for the other half, invested only in mutual funds and then far and wide, and I kept about 75-80% in equity funds the rest in bonds. I was a moderate risk-taker.
I mention this only to say that I had some sense of investing; I certainly sensed that the "fabulous" returns Jack Bennett was delivering to the first round of business leaders "allowed in" would and could not last. I those I could that this guy came out of nowhere and had no track record with which anyone was familiar. Where was the due diligence and who had done it? In a nice way I was more or less told to stick to the consulting I was hired for and so I did.
When New Era sank the institutions involved lost some money from their reserves. The sophisticated early investors on the boards who pushed the institutions into investing with Bennett and New Era lost tons more. The idea that nobody knows anything - especially about the stock market and actually much else - has stayed with me ever since.
I think you will find Michael Lewis's (Liar's Poker)essay called "The End" brilliant. Check out Conde-Nast's portfolio.com, December 08. Enjoy.
How does President-elect Barack Obama view the role of private philanthropy in the civic life of the nation, especially now?
There is not much of a record and little is known of his giving proclivities. We know the plight of the economy is his first order of business as it must be and with government funds and energies diverted to bailouts and massive public spending there is and will be far less for all kinds of private charities. The prognosis for private giving in the near term - at least a year and maybe longer - is uniformly gloomy. We can expect President Obama to urge on private giving and we can expect him to encouurage all of us to donate to the charities of our choice. But is that enough?
Like FDR Obama understands the presidency is a bully pulpit and I hope he might use it to convene a “White House Summit Conference on Philanthropy” next year or the following at the latest. (The last one was held in 1975). I would bring the best and the brightest together. Here are just a few examples to get the dialog moving …
The gross product of American philanthropy has been stuck at around 2% of GDP for as long as giving trends have been measured. Why hasn’t the needle moved in a country of such wealth? Why aren’t more people giving more money to US and international charity? What can the government do through tax policy or otherwise to encourage greater public involvement?
Private foundations are sitting on almost a trillion dollars worth of assets. They claim the income that collective corpus generates makes possible their annual grant making. First, where is it written that private foundations should exist in perpetuity (aside from their charters)? Second, after a generation or two why shouldn’t they be required to transfer their assets to a community foundation or to spend them down and liquidate? Third, why isn’t there a sliding payout scalewith the wealthiest having to spend far more than 5% a year on grant making (when most of them earn in the double digits on their portfolios) and maybe the smaller, newer ones be given say ten years of lower payouts maybe 3.5-4% of assets?
If the SEC’s oversight of Wall Street (which is let’s face it famously de minimus) was as lax as the IRS’ oversight of charities, anyone of the presidential candidates would likely be pounding a shoe (or a pump) on the table. Is there a reasonable regulatory standard possible at the federal level? And could it to some degree supersede the crazy quilt of state regulation that ranges from the ridiculous to the outmoded?
So-called “faith based” philanthropy – an extension of President Bush’s view of the cosmos – has been directed mostly at human service agencies. Yet this grouping has shown the greatest decline in private support of any category of charity (according to Giving USA Foundation data). And they have also suffered the deepest cuts in federal aid. Why?
The Giving Institute of which the Oram firm is a member is going to associate with others to develop the convening power necessary to bring this off. Our new chairman Nancy Raybin has asked me to take this on;I will do all I can to move the idea along. There is already considerable interest among charity leaders in helping the President create an agenda for phianthropy as the November 13th Special Report in the Chronicle of Philanthropy makes clear.
This morning's Wall Street Journal page one story on the decline in charitable gifts caught everyone's attention and generally depressed the holiday mood. Charitable gifts - especially from sinking corporations - are way down. But this is not exactly news. Most charities in New York, where the stock market exerts an inordinate and irrational influence over behavior, have felt the pinch some more than others as is always the case. Human service organizations have suffered more than any other category. Most of us have been living this downturn-turned-recession-now-depression for a year or more. But seeing the cold type is jarring, no question.
By the way it is interesting to note that the New York Times has stopped reporting the dollars raised at the charity events ("gala" may not be the word these days) they cover in the one-page photo spread in each Sunday Styles section.
So let's review:
Bonuses are being paid on Wall Street this year. Yes. They may be less and they may not show at the very top. But there is a large pool of upper management people who will see year-end rewards. Are they your donors? Why not?
Those of us who have been through this before are well aware that gifts go down in hard times. But giving always bounces back and usually faster than the rest of the economy. This would not be the time to give up no matter how discouraged you may be feeling.
Money is being made. Those who are making it may not be your usual donors. The job is to find out who they are and then to ask them. Bankruptcy lawyers for example or the shakeout experts who are feeding on the corporate meltdowns.
As a whole charities are not very well managed. There is unnecessary duplication. Of course this doesn't apply to you but to the other guy. Nevertheless there will be a shakeout. But here again nonprofits tend to be a lot more resilient than other economic sectors. Many of them run lean because they must. Lack of resources - usually a bad thing - may not be so terrible in a situation like this.
If our government can come up with a trillion dollars of our (your) money in just six weeks we are obviously a very rich nation. Lots of people are hurting and they deserve our help through the organizations we serve. But far more of us are feeling it just around the edges; their losses are on paper and unrealized. I myself am down 30-40% for the year - on paper. Just as you are. But I have not stopped giving. Either have you. And either will your donors - if you ask them!
"Economists say the downturn may develop into the worst recession since 1981-82."
-- New York Times November 13th,page one.
Today is National Philanthropy Day. A "celebration" marked the occasion here in New York which generates an estimated 25-30% of the country's annual giving "handle." How 2008 will turn out philanthropically won't be known for a few months. But many believe a sharp drop is possible if not likely.
We are hearing that the rich "feel" poor. The Sunday Times styles page that photographs the wealthy and the wannabes at charity events around town have for the most part stopped reporting the amounts of money raised at them.
Unlike many who work as consultants or development officers today I was around for that recession plus two or three before it, and of course for the bubble that burst in 1990. I have little recollection of the 1981-82 recession. So I went back and took a look. Adjusting for inflation in 1982 Giving USA reported about $127 billion contributed to US charities; there was good growth through 1987 ($150 billion). Then came the dot.com collapse and in 1992 - following two flat years at around $150 billion- there was a leap to $165 billion. And there has been strong growth since - up to $306 billion plus in 2007.
What I like about history is the arc of perspective it provides. Long term philanthropic trends - from 1967 forward have always been growth oriented with a few flat years now and then, and modest growth other years. But steady growth. It also seems to me that the swings are less for nonprofits than for the economy overall. That may be because charities over-all are more risk averse than the economy in general. Perhaps because of that and because they are mission and service driven most charities attract people who are less motivated by greed and self interest.
Whatever the environment and whatever 2008 brings by way of total giving in the US charities have no choice but to press on. Shoulder top the wheel, nose to the grindstone, the usual. The bad news is this is rough. The good news is that the story history tells is a hopeful one.
Thanks for visiting Oram Matters. On this page you can find commentary on current events of broad interest to the nonprofit community and other observations.
