"How to Raise Money in a Recessionary Environment"

Development Office Report
UA Science Board of Advisors Meeting
Friday, October 31, 2008

How to Raise Money in a Declining Economy
Is it time to run for the hills, give up, or just bury
our heads in the sand?

• Review basic historical philanthropic statistical data -- Various charitable causes people support -- Individuals, Corporations, Foundations -- Impact of Recessions on Philanthropy • 40-Year National philanthropy data • Review Impact of Recent Recessions on UA Foundation

How Bad Can it Really Be?
Think about it –
This could be your $200K Ferrari
on the bottom…..

2005 U.S. CONTRIBUTIONS: BY SOURCE OF CONTRIBUTION ($260.28 BILLION) Individuals-76.5% of total giving $199.07 billion Foundations-11.5% $30.00 B Bequests-6.7% $17.44 B Corporations-5.3% of giving $13.77 B

2005 U.S. CONTRIBUTIONS: BY TYPE OF RECIPIENT ORGANIZATION ($260.28 BILLION) Environment and animals $8.86 3.4% Foundations $21.70 8.3% Human services $25.36 9.7% International affairs $6.39 2.5% Arts, culture, and humanities $13.51 5.2% Public-society benefit $14.03 5.4% Unallocated giving $16.15 6.2% Health $22.54 8.7% Religion $93.18 35.8% Education $38.56 14.8%

TOTAL U.S. GIVING BY SOURCE BY FIVE-YEAR PERIODS (Adjusted for inflation, $ in billions) Giving USA uses the CPI to adjust for inflation. Individuals Bequests Foundations Corporations 1966 –70 2001 – 2005 1996 –00 1991 – 95 1986 –90 1981 – 85 1976 –80 1971 – 75 516.39 549.95 569.54 621.38 740.06 781.02 1,081.51 1,270.83

GIVING BY INDIVIDUALS 1965 – 2005 ($ in billions) Current dollars Inflation-adjusted dollars

GIVING BY FOUNDATIONS 1965 – 2005 ($ in billions) Data: The Foundation Center Current dollars Inflation-adjusted dollars

GIVING BY CORPORATIONS 1965 – 2005 ($ in billions) Current dollars Inflation-adjusted dollars

TOTAL U.S. GIVING, 1965–2005 (including recessionary periods) Recession Periods in yellow: 1969–70; 1973–75; 1980; 1981–82; 1990–91; 2001 Inflation-adjusted dollars Current dollars

UA FOUNDATION TOTAL GIVING -- IMPACT OF RECESSION PERIODS, 1978–2005 Recession Period Effect on Giving 1981-1984 - 23% 1992-1994 - 7% 2000-2003 -16% Giving Period Total Giving 1978-1979 $17.2 million 1985-1986 $26.9 1995-1996 $48.4 2004-2005 $121.1

This painter might be reprimanded by his boss later today…..

Is This Economic Crisis Really Much Different Than Crises from the Past? People seem to have short memories…
Remember When?…
1987 – October 19, Black Monday on Wall Street
1990’s – Savings & Loan Crisis
Late 1990’s – Internet/Tech Bubble bursts
1997 – Asian Economy Meltdown
2001 – 9/11 and Terrorism grips the country

Is This Economic Crisis Really Much Different Than Crises from the Past? (cont.) People seem to have short memories…
Remember When?…
2002 – Enron/WorldCom and accounting scandals
2004 – Tsunami in Indonesia
2005 – Hurricane Katrina
Natural disasters spur significant donor initiatives across the world
2007 – Current Economic slowdown begins
2008 – Mortgage crisis and Wall Street Meltdown

This soldier doesn’t look like he will be promoted any time soon…..

How Do Depressed Economies Effect the Actions of Donors?
Affluent Donors are curtailing their giving
80% of donors feel a significant impact
51% of wealthy donors plan on giving less this year
“ Discretionary Philanthropy” is directly affected
Athletic season tickets – individual games
Performing Arts – Select performances
When faced with reduced donor dollars, donors tend to
cut out individual charity recipients, rather than reduce total amount given to their “charity portfolio”

How Do Depressed Economies Effect the Actions of Donors? (cont.)
Timing of this economic crisis could cripple the philanthropic
community in 2008-2009
Majority of charities raise between 40%-50% of their entire annual support in the 4 th quarter
Some raise 40%+ of their annual revenues in DECEMBER alone
General Motors eliminates their corporate matching gift program
Bankrupt Lehman Brothers donated $23M in 2007

Life is just is not fair sometimes…..

What Development Strategies Should Be Employed Right Now?
Don’t Panic -- Remain Calm
Resist the temptation to pull back on development
Realize & accept that development results will suffer in the next year
Advance Year-End appeals
Make sure mention is made of current economic climate
Don’t act as if it does not exist – you will look foolish – must show empathy to donors
Real Estate equity in the past has been a source of donated funds for donors

What Development Strategies Should Be Employed Right Now? (cont.)
Do not apologize about solicitations
Donors know about their own situation, you do not
Donors will tell you whether it is a good time or if later in the year is better
Donors are not “giving” to your organization, they are “investing” – They are supporting excellence, in good times and bad
Focus Specifically on Core Donor Pool
Thank them for their previous support
Have students and board members call them
Let them know how important they are at this critical time

What Development Strategies Should Be Employed Right Now? (cont.)
Take a Long-Term View of Development
Do not get caught up in quarterly or annual results right now
The College of Science will still be here next year
Understand that in the next 20-30+ years, over $41 Billion of wealth will be transferred
Wealthy Can Handle Debt Situation Better Than Middle Class
Debt held by top 1% amounts to only 3.7% of their total wealth
Emphasize Planned Gifts and Estate Gifts
Donors can realize significant guaranteed returns with Gift Annuities

“ You may want to stop and get something for dinner on your way home…..”

Honey, at least I wasn’t parked in a no-parking zone…..

Maybe we should just relax and not take all this so seriously…..

Because it will all be over soon…..

"How to Raise Money in a Recessionary Environment"

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"How to Raise Money in a Recessionary Environment" Presentation Transcript