1. T H E
martin L E T T E R
Published by MGI / Services and Counsel in fund-raising and communications
It’s the Economy Stupid
An Interview with John A. Martin, CFRE
This issue of The Martin Letter is the second in a series of interviews with practitioners
in the field of philanthropy. This commentary is from an interview between our Editor
and John Martin, President and CEO, MGI Fund Raising Consulting, Inc., on the econo-
my and the effects on fund raising.
he domestic and international econom- ed to rethink the way they operate. Some are donations failed to keep pace with the growth in
T ic situation continues to fluctuate and
many indicators suggest that a reces-
increasing their reliance on philanthropic sources
while other agencies are forced to seek support
inflation for three years. Giving also declined
after the 1987 stock market collapse. It’s clear
sionary environment is likely to contin- for the first time to augment the budget shortfalls. that when Americans are not feeling buoyed by the
ue for some time. The tightening of credit mar- The relationship between philanthropy and eco- economy, charitable giving is adversely affected.
kets has further compounded the levels at which nomic circumstances has always been a close
organizations are absorbing the volatility. The one. In the 1975 recession, for example, founda- Q. Are your clients receiving less charitable
philanthropic sector has successfully weathered tion giving dropped 28%, and it did not recover revenue this year because of the economy?
significant financial downturns in the last fifty for a decade. Consumer confidence has been
years, yet trustees, institutional leaders, and volatile this year, with rising interest rates, high A. Donations to our clients annual fund cam-
fundraisers today are questioning whether or not energy prices and conflict in the Middle East paigns have shown slight growth for some, but
this time is “different” as so many financial and weighing on the American consumer’s view of most have seen some decline from the 2008
political issues collide around the globe. how the U.S. economy is doing. All of these vari- levels. Our capital campaign projects continue to
ables must be monitored and taken into account move forward – though at a slower pace – than
While we do not dismiss the current downturn as charities plan their fund raising campaigns. planned or projected at the outset of the project.
nor the obvious and apparent impact it is having While official government source have officially We have seen some fall-off on pledge fulfillment.
today on organizations and their constituents, our declared the U.S and Canada are in a recession,
long-term outlook remains positive and forward- our giving totals might say that charitable giving The overall slip in philanthropic support can be
thinking. Part of our optimism is rooted in his- had not been negatively affected in 2008. We will credited to the tribulations and volatility of both
torical fact; over the last 40 years, philanthropy in have to wait to find out for sure, but I do antici- the stock and housing market in 2009. Other cul-
the aggregate shows consistent year over year pate that we will see some fall off in giving but prits that contributed to the decline include world
growth and is not correlated to movements in the believe that donors will support causes they are events, terrorism, declining state budgets and the
stock market. passionate about – but perhaps not at the same nation’s political atmosphere.
level as in years past.
Q. How is the economy affecting philanthro- Yet, there is some good news: individuals are con-
py in North America? Q. What can we learn from history that will tinuing to give even though they are not feeling as
help us through this economic down turn? wealthy as they have in the past. Cautious opti-
A. It’s tough out there, no doubt about it. Non- mism means they are taking longer to make deci-
profit organizations have been hit hard by an eco- A. The research suggests that charitable giving sions about where to direct their money and are
nomic downturn, housing market crash, turbulent slows slightly during recessions. In the five reces- opting for a longer pledge period.
world political climate, and state funding short- sions since the one lasting from 1973-1975, char-
falls. Those charged with fundraising for non- itable giving fell an average of 1.3 percent adjust- We are seeing donors choosing between one or
profits in such uncertain times are facing a test of ed for inflation. In non-recession years from 1966 two charities that matter to them most, rather than
mettle, creativity and skills like never before. through 2006, giving has increased an inflation considering and supporting their top three or
adjusted average of 4.3 percent. four. The important question is how your cause
With state budgets anticipating deficits and severe can be number one in your donor’s minds and
belt-tightening, many charities have been prompt- In two economic slumps, in 1973 and 2001, hearts – thus topping their charitable giving list.

2. MGI / Services and Counsel in fund-raising and communications
While overall giving typically slows down during a adjusted. We have no way to predict the length or
recession, not all types of recipients of charitable depth of this financial turmoil, but we are con- About the author…
gifts show the same trends. Underlying shifts in vinced that the best course for the nonprofit sec- John Martin has more than 30 years experi-
the nature of charitable giving – such as increas- tor is to focus on the activities that have always ence in the not-for profit field, on both the orga-
es or decreases in visible need as seen during dis- served it well: ensuring a compelling case for nizational and consulting sides. Through his con-
asters; awareness of government funding for a support, leading in ways that generate trust in sulting work with clients seeking counsel for
major capital and endowment campaigns,
purpose such as health care; or increased fund institutional leadership, building and sustaining Mr. Martin has earned a reputation as one of North
raising efforts among a large number of charities relationships, inviting philanthropic support, and America's top strategists for the not-for-profit
– can all have an impact larger than the impact of stewarding the donors who have made gifts in sector. His brash mix of social concern and
the overall economy. the past. aggressive business smarts has helped raised hun-
dreds of millions of dollars for colleges, hospitals,
human service organizations and arts and cultural
Q. What are you and your clients doing to Here are some positive steps, to consider: groups throughout North America. John Martin
counteract the effects of the sagging economy? was awarded the Association of Fund Raising
• While we recognize that volatility in the capital Professionals (Minnesota Chapter), Outstanding
A. Savvy organizations focus on making donors markets may slow down or stop many philan- Professional Fund Raiser for 2007. He can be
reached via email: martinmgi@cs.com
feel extraordinarily special, a strategy it hopes will thropic decisions, organizations should main-
put its cause at the top of the list. tain focus on their long-term objectives. MGI is a full service fund-raising and communica-
• It is critical to know your donors and be sensi- tions consulting firm operating across North America.
We consult throughout the United States and Canada
We have found that most organizations with solid tive to their personal timing. Stay close to those for a wide range of not-for-profit clients:
development offices and strong financial develop- who have supported you in the past and
ment projects are going ahead with plans for cap- increase your stewardship activities. Some • Hospitals and Health Care Organizations
• Social Service Organizations
ital projects. But, planning for a campaign today donors will continue to give, and most will re- • Private Schools, Colleges, Universities and Post-
has changed even in the last few years. We believe engage when they are feeling more comfortable. Graduate Schools
• Cultural and Arts Organizations
that an organization, no matter the size of the cap- It is particularly important at this time to assure • Churches, Synagogues and Religious Organizations
ital campaign goal must anticipate a longer plan- donors that their past support continues to have
The experience and resources of the firm have been
ning phase and be prepared – as funding sources impact and is appreciated. used by a variety of clients from well-established
need more time for decision-making – to extend • Well-managed fundraising programs prevail national not-for-profit organizations looking to pre-
the pledge period an additional year. among and across many different economic and pare themselves for the 21st century to first time start-
up capital campaigns.
political landscapes. Strong institutions are
The bottom line is that campaigns must move for- maintaining their philanthropic activities, albeit For more information about readiness studies, audits
ward, while taking into account the indecisive with sensitivity and a recognition that some and feasibility consultancy, please contact John at:
martinmgi@cs.com or call our Toll Free Number:
mindset gripping both individuals and philan- donors will defer a gift decision or delay a 1-800-387-9840.
thropic organizations. We must plan better, be pledge payment.
more patient, and extend both the pre-campaign • Organizations planning major campaigns
phase and pledge redemption periods. Capital should continue their strategic planning in
campaigns are always a challenge, but the chance order to have ready a persuasive case for sup- T H E
of success increases dramatically when they are
built on a foundation of structured planning and
take current economics into account.
Q. How important is the case statement and
port to test with potential donors in the future.
• Organizations planning a public announcement
of a campaign in the near term should look
carefully at the gifts and pledges in hand, and
consider the availability and potential timing of
martin L E T T E R
communications during these tumultuous the gift support that will be needed to reach the
times? goal. Publisher: John A. Martin, CFRE
• Organizations engaged in the public phase of Editor: Pamela Capriotti, CFRE
A. A powerful worthiness based case is even more their campaigns should continue to ensure that Contributing Editors:
important than ever. Organizations must be pre- the featured objectives of those campaigns Elizabeth Hamrick
John Schwietz
pared to address three critical case questions: remain urgent and important to the quality of Published by:
Why this organization? Why these projects? and the organization and relevant to the greater MGI Fund Raising
Why now? With these message clearly articulated good. Consulting, Inc.
– communicating the importance of the mission, • Annual giving programs should take care to 2925 Dean Parkway - Suite 300
Minneapolis, Minnesota 55416
and the campaign to the donor community monitor gifts from loyal donors and be certain
becomes the primary task. that those donors are asked to continue their For information on our services,
call toll-free 1.800.387.9840
support. Annual fund officers should look care- (U.S. or Canada)
Q. What advice do you have for local non- fully at previous donors who have made leader- Visit our website:
profits during this economic downturn? ship gifts of stock or from donor-advised funds, www.mgifundraising.com
How do you survive the tough times? and should consider direct conversations with Reproduction without permission is
those donors about how they will make their prohibited. Brief extracts may be
made with due acknowledgment.
A.There are no easy answers, no magic wand, and gifts this year. Additional copies are available free
no special prayer to the funding gods. Whining • Amid the clutter and noise and the bombard- of charge by contacting The Editor at
does not help! Still, the current volatility may ment of images and messages smart fund rais- our South East office.
cause some to feel a lack of control and question ing strategies and effective communications
whether short-term or long-term plans should be becomes even more important.