A Recessionary Economy and Your Nonprofit: Panic or Return to Basics?

The stock market fell dramatically on Friday as more bad news came in from the economy. It's been a harrowing time since the first of the year if you hang on all the economic news and the gyrations of the market.

What does it mean for nonprofits and their fundraising? I did some research and found that, overall, nonprofits needn't panic, although some sectors may indeed suffer more than others. Corporate giving is likely to be down but philanthropists might actually have more money to donate as they shelter their investments from the storm.

Caroline Gallagher, in an article at OnPhilanthropy.com, pointed out that usually plain vanilla recessions don't affect philanthropic giving. The best known retreats in recent history were caused by unusual and unprecedented events such as the OPEC oil embargo in the 1970s and the 9/11 attack in 2001. Gallagher says that there is no correlation between business cycles and a retreat in philanthropy.

The Chronicle of Philanthropy reported in an end-of-year article that fundraisers were experiencing disparate results depending on the nature and size of their nonprofit. Institutions and larger nonprofits, such as colleges, hospitals, arts organizations, and community foundations, seemed fine or even to have experienced increases in giving. Social service organizations, on the other hand, were being squeezed by an increase in demand from their clients and a shortfall in support, not only from contributors, but also from state and city governments that lose tax revenues and cutbacks from the federal coffers.

What to do?

Everyone seems to agree that a return to the basics is important. Check out our suggestions in The Nonprofit Hard Times Survival Guide.

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