Economic Downturn Effect on Fundraising


Published on

Published in: Education
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Economic Downturn Effect on Fundraising

  1. 1. Kettles 1Kamela KettlesMrs. LesterAdv. Gr/Comp9 October 2012 Economic Downturn Effect on Fundraising The past few years have caused tremendous stress and setbacks for many organizations.Countless businesses have been affected by the economy including non-profit organizations.Several of these non-profits help people during hard times, but if no one is willing to give theseorganizations donations they cannot give back as they have in the past. In order to tackle the hardtimes in the economy, the non-profits will have to figure out a solution to and outlook for theeconomy in the upcoming years. Since the economy has been in a recession, many donations to non-profits have gonedown. Kevin McCoy and Oren Dorell from the USA Today say, “The economic crisis threateningthe nation with the worst recession in decades has set off tremors among non-profits andcharities large and small that rely on donations from Wall Street, industry and averageAmericans.” Many people have the same opinion as stated in this article. That opinion is that thisnation is experiencing the “worst recession” in many years. People are beginning to see the effectof the recession, because they cannot find aid or financial relief that these non-profits wouldrelieve them from. In an article it states that, “U.S. charities looking under the Christmas treelikely will be disappointed, as they can expect to see a drop in donations from businesses as wellas individuals” (Gurchiek). The average American family receives their commission checksduring the holiday season. However, the economy is decreasing their average income. Thedecrease in peoples income makes it harder for people to donate to their causes because they
  2. 2. Kettles 2only have enough to give gifts to their family and not help other people outside of their family.In the Society Human Resource Management it states that, “Giving can take a variety of forms,such as donations of tangible goods, but we’re certainly taking money, first and foremost”(Gurchiek). Americans will see that more organizations would rather have money then a tangibleitem. If people are not willing to donate money than why would they want to buy a raffle ticket?The answer is that they want to, but are not financially set to do so. Therefore, non-profits aredelayed because of these mind sets. The economy has set back many non-profit organizationsand the owners and employees are trying to seek help they are not able to receive during thesehard times. Organizations have been hit hard by the recession, and are doing everything they can tostay on top of tasks. One reporter found that, “One-third to one-half of all charitable givingoccurs between Thanksgiving and the end of the year, according to Berger, whose nonprofitgroup also relies on charitable donations” (Gurchiek). Just like the quote stated before, manyfamilies earn more money during the holiday season. Organizations will see a drop in their mostcharitable times because of the income. The drop in their donations shows that manyorganizations will be struggling to get help for the needy during the worst times of the year. Inthe USA Today a reporter said, “The Red Cross is suffering as much as a 30% drop in responsesand contributions from new donors, and corporate donations are ‘coming in at lower amounts’ atthe halfway point of a campaign to raise $100 million by Dec. 31” (McCoy and Dorell). Thisstatistic is very eye-opening. During any natural disasters the Red Cross relieves Americans themost. If organizations like these only raise half of the money they normally do, they will not beable to help everyone being affected. This impact will only worsen the economy and cause moreneedy people. In Guidestar it reveals that, “More than half (52 percent) of the organizations have
  3. 3. Kettles 3experienced a decrease in contributions” (McLean and Brouwer). This fact is what makesorganizations get frustrated the most. Having more than half of donations being brought inmeans that businesses can only help half of the people they have before. These facts are makepeople cringe and many non-profits hope to see an improvement in the future. If the donationamounts received do not begin to go up, there will be many consequences to be faced. In order for organizations to improve their donation levels, they will have to step up theirgame and think outside of the box. George Head says that, “During economic downturns,nonprofits tend to lose staff, particularly as organizations reduce their payrolls in response tofunding losses. Those employees and volunteers who remain with a nonprofit are placed undergreater stress due to increased responsibilities and longer hours.” Since the economy has been soharsh on people, you will see many facts like this one. Orgnaizaitons cannot afford to give letalone have more staff than they can afford. In return, lay-offs cause more anxiety becausemultiple tasks are put on one person. Non-profits need to keep as much staff as they can somultiple people can help with assigned tasks. In addition Clara Miller states, “If they offerservices (e.g., job retraining, food kitchens and housing services) that will lessen the negativeimpact of an economic downturn, nonprofits should approach government funders moreaggressively.” Having a non-profit that will give the American people service is more likely toget more donations. A service non-profit is more likely to help people approve their way ofliving. Organizations should expand their charity and help the people that have been affected bythe economy. In response to this solution, the economy will begin to bounce back a little justwith non-profits helping the American people. Clara Miller also implies that, “Nonprofitsheading into recession need to avoid ‘strong, silent behavior" and sustained spending.’Organizations need to speak up about what they need. Speaking up allows not only the public,
  4. 4. Kettles 4but also the employees within the company to know what is going on. Every Organization needsto follow this solution, and it will help them receive more donations. If every non-profit willkeep a few of these solutions in mind, their business will be able to run more smoothly and willreceive more donations. Many opinions have been reported on the outlook for the economic downturn and aprojection for when giving will return to pre-recession levels. Caroline Preston predicts aneconomic turnaround in two to three years: “The largest share of respondents (39 percent) saidthey thought it would be at least three years before the economy recovered, while 23.4 percentfelt the economy would rebound in less than two years.” This fact is good, being that somepeople think the economy will improve. Having this statistic makes organizations hopeful for thefuture and positive in their donation outlook. The statistic shows that the economy may beimpproving since the American attitude has begun to become more positive. A study says that,“Fundraisers for U.S. non-profits paint a dark funding picture for their organizations, and thenext six months are expected to bring only slight clearing” (Werosh). This statistic is verycontradicting. There is a negative outlook for fundraising, but they will see a very minimumprofit. This shows that organizations will not see a major increase in their donations and will stillbe facing many difficulties. Caroline Preston also found that, “Most people said the recessionwould not affect their previous charitable commitments. Of those who were committed to amultiyear gift, 87 percent said they would pay the donations on time. That compares to about 95percent in good times.” The statistic is a very good outlook. Most American people believe thattheir life is better off than the person they would be giving a contribution to. Furthermore,organizations will begin to see a positive number in their amount of donations. Whether the
  5. 5. Kettles 5people are pessimistic or cynical, no one can really tell at this time how well their donations willbe five years from now. The economy is showing signs of a few improvements. However, it will takearound 10 years to have it growing at a rapid pace again. With this in mind, non-profits will seean increase in donations each year. As long as they use the money wisely their business will stillbe stable. An alternative to a non-profit job would be working at a foundation. Foundationsdecide how to give out money rather than relying on donations. A great foundations examplewould be the Bill and Melinda Gates Foundation. With this in mind an article stated, “Thatfoundation gives more multiyear grants than any other philanthropy, awarding $2.6-billion inmultiyear grants” (Hall). Their money source will always be plentiful, and their employees donot have the stress of trying to find donations. Also, people working for foundations still get tofeel the benefit of giving money. Either way, non-profits will be in business for long timebecause there will always be a cry for help from needy people.
  6. 6. Kettles 6 Works CitedGurchiek, Kathy. "Economy Affecting Businesses Charitable Donations ." Economy Affecting Businesses Charitable Donations. Society for Human Resource Management, 14 Nov. 2008. Web. 12 Sept. 2012. < >.Hall, Holly. "Correction: The Downturn and Multiyear Foundation Grants." The Chronicle of Philanthropy. Ed. Holly Hall. N.p., 5 Sept. 2012. Web. 12 Sept. 2012. < foundation-grants/34786>.Head, George L., Ph.D. "Sustaining Nonprofits During Economic Downturns." Sustaining Nonprofits During Economic Downturns. Non-Profit Risk Management Center, n.d. Web. 12 Sept. 2012. <>.McCoy, Kevin, and Oren Dorell. "Its a Hard Time to Be a Charity." USA Today. Gannett, 27 Oct. 2008. Web. 12 Sept. 2012. < donations-charities_N.htm>.McLean, Chuck, and Carol Brouwer. "The Effect of the Economy." GuideStar USA, 2009. Web. 12 Sept. 2012. <>.Miller, Clara Non Profit Finance Fund. As the Nonprofit Sector Faces Recession, NFF Outlines 5 Recommendations to Prepare for Economic Downturn. Nonprofit Finance Fund. Clara
  7. 7. Kettles 7 Miller, n.d. Web. 12 Sept. 2012. < event-nonprofit-sector-faces-recession-nff-outlines-5-recommendations-prepare-ec>.Preston, Caroline. "Majority of Donors Say Economic Woes Wont Affect Their Giving." Chronicle of Philanthropy 21.11 (2009): 4. A9h. Web. 13 Sept. 2012. <http://proxygsu- 9h&AN=37330014&site=ehost-live>.Werosh, Leslie C. "Fundraising Strategies and Challenges." San Fransisco State University, n.d. Web. 12 Sept. 2012. < .pdf>.