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Step 1 for Dealing with a Tough Economy – Don’t Panic

There is no question that the current financial crisis is serious and that economic downturns and declining stock markets create a tougher environment for fundraising. It’s hard not to worry when the press is filled with articles like this one from the NY Times Economy Expected to Take a Toll on Charitable Giving. So why do I say don’t panic? Three reasons:

It doesn’t help – Worrying just takes energy that could be used far more productively by finding solutions and taking action.

The economy is not as bad as the media portrays it – Most of the current crisis relates to over-leveraged financial institutions who are suffering from the effects of bad loans. The result has been a severe contraction in banks willingness to lend money. Though credit is an essential component to a healthy economy, no donor or foundation is borrowing money to make a gift to your nonprofit. The most significant factors related to giving capacity are wealth and income. Despite the recent decline in the stock market and real estate values, both are still at close to historic highs. Similarly unemployment is up, but still at a level that is close to “full-employment.”

I’m not trying to minimize the issues that do exist — confidence in the economy does matter, but it is easy to forget that there is still tremendous wealth in the U.S. — as well as compassion for worthwhile causes.

Adapting under Adversity can make your organization stronger – Adversity often forces us to review what we’re doing and how we’re doing it and look for better methods. The solutions might involve more effective use of technology or eliminating less productive fundraising methods. Any improvements in efficiency will not only allow you to do more with less in the short-term, but will continue to pay dividends as the economic outlook strengthens.

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