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This month, Give & Take talks with
Margaret Holman, president of
Holman Consulting in New York,
about what she has learned from
past economic downturns, and how
to approach fund raising in today’s
climate.
Give & Take: As someone who
has worked in fund development
for a number of years, you have
experienced the economic
disclocations of the early 1980s,
the late 1980s, the early 1990s,
the tech bubble burst of 1998,
the aftermath of 9/11, and the
recession of 2001. What did you
learn from these recessions and
other crises of the past?
Holman: Keep focused and move
forward. We can’t luxuriate in
reviewing the past and wishing it
was back. It was very clear in 1987
when the market fell that a lot of
people were adversely affected in
their market portfolios and business
matters in general. The economy
eventually recovered. We did see a
momentary downturn with major
donors who were making big gifts
then and had to stretch out the timing
of the gift or make a smaller
gift with the promise of a larger gift
later.
In any event, spending endless
time wringing one’s hands and saying,
‘Oh, woe is me’ is a fruitless
exercise.
G&T: How do you think this
downturn is the same as before?
How is it different?
Holman: Many of the other downturns
were focused to a large extent
on one particular industry. In the
’90s it was the dot.com explosion and
then the dot.com failure, and Silicon
Valley was inordinately affected.
And now it is primarily the financial
and real estate industries.
Not everybody is affected in the
same way. For instance, I was at
a luncheon the other day and the
head of a major New York-based
organization said he had been told
that 185,000 jobs will be lost in
New York City alone. That has a
big ripple effect.
On the other hand, in talking
with a friend of mine who works
at a university in the Midwest, she said that they were not feeling
the economic downturn as directly
because their area is not a large
financial center like NYC, and it
benefits from a broader economic
base.
A client in Vermont is also
not experiencing the immediate
downturn that we are experiencing
in New York and other financial
centers. So fundraisers in some of
the metropolitan areas feel particular
pressure right now. Fundraisers
in smaller metro areas are going to
face similar challenges, just not to
the same extent.
The key to surviving all of
this—one that has indeed been the
same every time that I have gone
through it—is having a diverse fund-raising program. The same
thing happened after 9/11. Organizations
that relied heavily on
special events were very close to
closing at that time because they
had ‘all their eggs in one basket.’
Organizations with a broader fundraising
base survived and a lot
of them did better because oftentimes
it is a crisis that pulls people
together.
A colleague who works at a
food bank here in New York said,
‘What we are seeing right now is
that our smaller donors—those who
give less than $250—are making
smaller gifts, but we are getting
gifts from more people. More
people are worried that others are
losing their jobs who can’t afford
food.’ So people are also giving to
those organizations where they feel
the need is greatest.
G&T: What kinds of questions
are you getting from your clients
and what advice are you
giving them?
Holman: My clients are very concerned
about capital campaigning
right now. And they are very concerned
about their major donors. I
tell them, much like Barlow Mann
says, to be ‘near, dear, and clear’
to their donors during times like
these.
I have a client in a $16.5 million
capital campaign. They have already
raised $10 million in cash and
pledges. Some people had pledge
payments that were due at the
end of October. So they took a
deep breath, wrote a nice pledge
reminder letter, and sent it out.
They asked one of the donors,
who had pledged $1 million to the
campaign, to fulfill the portion of
his pledge that was due at the end
of the month. The donor called the head of the organization and told
him that he was writing the check
for his campaign gift and sending
it over. When they received the
check, it was written for the entire
$1 million amount. The head of the
organization immediately called
the donor to thank him, and said he
didn’t realize he was going to send
the entire amount. The donor said
that it was better that the organization
have it now than he should lose
it in the market.
Organizations won’t be successful
in this environment if they say,
‘We can’t ask John Doe for money
right now because the market is
bad.’ This is the time to pick up the
phone and thank your most committed
donors, and ask for their advice
and help.
G&T: From past experience,
what gift plans have shown to
be more ‘recession-proof’? Do
you think these same plans
will be attractive to donors in
today’s turbulent times?
Holman: Charitable bequests and
other gifts through estates will
continue to be planned for and
received regardless of economic
fluctuations. During challenging
economic times people may even
pay more attention to updating
their long-term plans, and gifts
that may have been made on an
outright basis by older donors
may instead be included in a will,
remainder of retirement plan, or
other testamentary plan.
I also think that charitable gift
annuities will remain strong. They
have been the #2 planned gift since
the early 1980s when I started in
this field. With interest rates in the
basement, ACGA rates look even
more attractive now. Especially for
those donors who say, ‘I didn’t diversify
my holdings quickly enough
and now I have experienced losses,’ why not suggest that they give
your organization stock that is still
appreciated, or cash proceeds from
the sale of other stock to fund gifts
that will provide them with income
and other benefits? This is the reason
that gift annuities and other
gifts that feature income continue
to be popular in times of economic
downturn.
For older Baby Boomers who
may have just seen their 401(k)s
turn into 201(k)s, you may want
to suggest deferred gift annuities
as a giving option. They can sock
the assets away now at the ACGA
rates, let someone else manage
the assets given, receive a charitable
deduction, get payments in
the future, and still make the kind
of gift they have been wanting to
make but can’t afford to give out of
cash now.
G&T: What would you to say
to fundraisers who may be
especially concerned that
donors may cut back on their
giving this year-end?
Holman: Many are anticipating
that. The thing to remember is
that Giving USA statistics show
inflation-adjusted giving seems to
go down only 1% during times of
recession (see page 1.) Because a
disproportionate amount of giving
is done in the fourth quarter, that
means there can’t be too great an impact on that quarter in relation
to others. Now more than ever,
development officers need to realize
that many donors still have
money to give and those who are
charitably inclined will still give it.
Just as my friend at the food
bank said, you may be getting
smaller gifts, but you could be
receiving gifts from more people
and additional gifts from some
who may have already given
this year but want to give again
in response to what they see as
increased need. Be sure to tell your
story compellingly this year-end.
G&T: Any final words of
wisdom you can offer to those
fundraisers who are experiencing
their first economic
downturn?
Holman: First, take a deep
breath. Second, don’t panic. Third,
realize that for now this is the new
normal and those who do well will
be the ones who adapt the fastest.
Fourth, keep in close touch with
the inner circle of your donors—your board, your top 100 donors,
etc. Really keep them close. Fifth,
be optimistic. If you are dooming
and glooming, people will pick
up on that vibe. Nobody wants
to write a check just to keep the
lights on and the doors open.
Remember that overall giving
doesn’t appear to decline much
during recessionary periods, but
that is the net result of some
increasing—and some decreasing—their gifts.
People want to support those
organizations that are forwardthinking
and positive, and where
they know their gifts will make
a difference. You may also want
to seek out a colleague who has
been through tough economic
times of the past and ask him/her
to share some tips and techniques.
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