Last week, I found a stack of articles that I had collected during The Great Recession that began in December 2007. The jinxed 13-year-old find had clippings from The Chronicle of Philanthropy, the Nonprofit Times, and random notes I had jotted down talking about an imminent end to the world. My younger daughter was 3, she is 15 now and I am still here! Here are some key points that may make sense as we navigate these unchartered waters together.
1. Will people give similar or less? In 2009, the majority of donors who gave to charity said they planned to give a similar amount or less despite their economic woes. Today, the severity of this recession is twice as hard compared to The Great Recession. 70 percent of economic activity in the US comes from consumer spending and this is on a downward trend.
2. Will donors think about giving? Are donors thinking about philanthropy? In 2009, 4 in 10 lost their jobs and investment values fell 60%. However, an imminent economic restructuring was in place and the enemy was visible: the greedy subprime lending market and a financial crisis. Today, we have an invisible enemy, we cannot control the timeline and complete victory is unpredictable.
3. No rampant social media, no influencers and fewer talking heads: We were not holed up in our homes in 2009. Today, we are sensitized by a 24 hour media cycle, influenced by news that comes deadlier than the pandemic, rumors, and our own selfish thirst for immediate gratification. None of us were together with family for weeks thinking about unknown futures in 2009.
4. Online giving was just catching up: In 2009, online giving was just catching up. We are way smarter today with sophisticated ways of asking and receiving. Technology has changed the face of philanthropy. Will people give less or nothing at all now? Sadly, the medium does not dictate when and if someone would feel charitable.
5. Previous recessions had similarities but this one is strange: Data from Giving USA showed that “charitable giving fell by 5.4% in 1974, adjusted for inflation, and 5.7 percent in 2008.” Unemployment was at 7.2% at the end of 1974 and 2008 and it peaked to 9 percent in 1975 and 2009. However, according to the latest data (March 2020) from the Bureau of Labor Statistics “the unemployment rate increased by 0.9% point to 4.4%. This is the largest over-the-month increase in the rate since January 1975, when the increase was also 0.9% point.”
6. Consolidation in the nonprofit sector: In 2009, there was much chatter about consolidating smaller nonprofits, some of which were on the verge of collapse. With more knowledge about social impact, assessment and accountability, will there be more consolidation among healthcare agencies and social service nonprofits?
7. Anonymous givers stepped up: During The Great Recession, anonymous giving saw an uptick from individuals who really wanted to help social service agencies and educational institutions. However, the last decade has seen an increase in big donors seeking publicity for their gifts, especially those naming hospitals and higher education. In 2009, strategic investors would have probably cashed out earlier. We are yet to see an uptick in anonymous gifts.
8. Giving and stock markets: In 2009, research by Indiana University’s Center on Philanthropy estimated that for every 100 point drop in the Standard & Poor’s 500-stock index, giving fell by $1.85 billion. Today, an erratic stock market and the decline in oil markets has added fuel to fire. The only constant is that the wealthy with disposable incomes have personal wealth that can last a few generations. Their businesses may be edging towards bankruptcy but they are fine.
9. Fundraisers stayed longer in their jobs: Fundraisers stayed with their organizations for longer periods and average turnover was 4 years in 2009. This has radically shifted today. According to an August 2019 study by The Chronicle of Philanthropy, “51% of fundraisers said they plan to leave their charities within 2 years and 30% said they plan to leave fundraising altogether.”
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