A girlfriend of mine, a gemologist, has been asked by a major university's geology professor to give a presentation to his class, something she has never done before. While she will be fantastic, this will take her out of her comfort zone, something we humans are so loathe to do. Right now the economic situation is taking nearly everyone out of their comfort zone. Like countless investors, many non-profit executives are hunkering down, leaving fundraising positions unfilled, cutting back on publications and mailings. One local group is considering a merger.
McKinsey & Company, advisor and counselor to many of the most influential businesses and institutions in the world, suggests that rough economic periods can create opportunity as well as danger. An archived copy of The McKinsey Quarterly has an article that is pertinent today: Learning to Love Recessions.
To see how economically troubled times can be used to advantage, McKinsey studied the performance of 1,000 mainly industrial companies in the United States during an 18-year period (1982–99) that included the recession of 1990 to 1991.
Companies that retained or gained market leadership during the 1990–91 recession, their study found, were not afraid to spend their cash reserves on strategic acquisitions. Also, those companies refocused their spending in line with competitive opportunities instead of tightening their belts on operating expenses. McKinsey reports a counterintuitive strategy—investing for future growth—often makes more sense than pulling in your horns to cut losses.
In the non-profit arena John Glier, President and Chief Executive Officer of Chicago fundraising consultants Grenzebach, Glier & Associates, examined the past fundraising performance of 20 to 50 large colleges and universities during each of four previous recessions.
Institutions whose contributions dropped during one or more recessions were those that failed to hire a sufficient number of fundraisers, lagged in their efforts to recruit donors, or failed to promptly fill a key fundraising or other leadership job, Mr. Glier said.
Colleges and universities where fundraising continued to flourish during hard times, he says, tended to be those that expected the economic downturn as well as those that were sensitive to the need to take special action and took a long view of their fundraising operations.
He points to one university he is working with now that exemplifies the type of institution likely to keep contributions growing throughout the current turbulent economy and beyond. Mr. Glier says the institution, which he declines to name, but which I believe is the University of Chicago for reasons below, “has one of the highest compound annual growth rates in higher education” and is already spending $40 million annually on fund raising. Just recently, he says, it decided to put another $21 million into its development operations, $9 million in the 2008-2009 academic year alone. The decision, Mr. Glier says, has nothing to do with an impending campaign; the university has just completed its biggest fund-raising drive yet.
To survive a recession, says Mr. Glier, “Take the long view. High performance makes the difference.”
Consider this: Since the Foundation Center began collecting data on private and community foundations in 1975, the United States has experienced several recessions. “During most of these recessionary periods -- 1980, 1981-82, and 1990-91 -- U.S. foundation giving in inflation-adjusted dollars did not decline -- and, in fact, increased slightly.”
According to data from the Center on Philanthropy at Indiana University, as of June 2008, 13 gifts of $100 million or more and 214 gifts of between $10 million and $100 million have been reported, suggesting that market oscillations of the first half of 2008 have not stopped the pipeline of significant charitable contributions.
To remain financially strong in this rocky economy, non-profit organizations need fundraising and fundraising professionals even more than ever. Heed Mr. Glier’s advice … it’s prescient AND it’s free.