ZimNotes Vol. 4 # 1
January 8, 2001
THE NEW CONTRACTING ECONOMY:
WHAT DOES IT MEAN FOR FUNDRAISING? (below)

THE NEW CONTRACTING ECONOMY:
WHAT DOES IT MEAN FOR FUNDRAISING?

How quickly things change. The year 2000 dawned with boundless optimism About the stock market in general and the brave new world of high tech in particular. One year later, NASDAQ has lost half its value, high tech is hopeless, and "low expectations" is Wall Street's new mantra.

Far be it from ZimNotes to explain this harrowing scenario. Our purpose instead is to examine what the bearish months to come mean for philanthropy. Here at Zimmerman Lehman, we're worried, but not for the reason you might think.

First, understand this: since the end of the Second World War, whether the economy has been good or bad, whether the political climate has been liberal or conservative, people in the U.S. have given away between 1 1/2 and 2 percent of their discretionary income to charity. This won't change in 2001 and beyond. Even in bad times, charities stand to raise a great deal of money.

Second, even in difficult times, lots of people in this country have a great deal of money. Many of these people are happy to join nonprofit boards of directors and major gift committees and to solicit contributions from their friends and colleagues.

So Zimmerman Lehman isn't worried about the money being there. No, our concern about the contracting economy is this: nonprofits are always looking for reasons to avoid fundraising. Some nonprofit staff and board members see fundraising as difficult and embarrassing. "If the economy is bad," these folks reason, "it's hardly worth our while to ask for money. Let's wait until times are better."

Our worry, then, is that nonprofits will use these lean times as an excuse to cut back on fundraising efforts, creating new fears about asking for the big donations. Or for postponing a new effort or recruitment drive. Or for not conducting fundraising campaigns in an upbeat and optimistic manner.

For those of you with the gumption to ask and ask right, there are certain tactical considerations. In this down market, you might approach a major prospect and get the following response: "I just lost a mint in the stock market! I couldn't possibly help you now." What to do? Give up and say, "Oh I'm so sorry?" No way! Discuss donating stock to the nonprofit (it may not be worth what it was a year ago, but it's still worth something)? Or making a planned gift? Setting up a charitable trust or naming your nonprofit on a life insurance policy? These responses should be brainstormed in advance (and practiced) so that this potential downturn in the economy does not become a justification for not investing in your organization.

FDR was right: the only thing we have to fear is fear itself. Don't mope along the sidelines and wait out the bear market. There are still billions to be raised. Be among the enlightened group of nonprofits who see the contracting economy as an opportunity to succeed where their weak-willed competitors have chosen to despair!

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Copyright 2001 Zimmerman Lehman

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