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Check-Up Clinic: Advice

Posted: 4/16/2020

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Lessons about philanthropy, the economy, and fundraising amid the pandemic

The coronavirus (COVID-19) has affected many aspects of society so far. How will it affect philanthropy? Our scholars and experts discuss the economy and stock market, and share advice for fundraisers during this uncertain time.

The Economy

It is established knowledge that the stock market affects giving now, and has impacted it in in the past. So, is it important to follow day-to-day trends in the stock market, or to study it long term?

Dr. Patrick Rooney, executive associate dean for academic programs and professor of economics and philanthropic studies, explained that both matter.

"It's easier to follow day-to-day news about the economy," he said. "It's also beneficial to understand current economic trends when you're discussing giving with your donors, as the stock market can affect their lives.

"However, our research has found that the day-to-day variation in the stock market really doesn't predict changes in household giving. It's more year-end to year-end.

"Longer-term trends matter. If donors, especially high-net worth donors, do gain money through the stock market in one year and then lose it the next, they may be less comfortable making big philanthropic investments. However, even if they decrease their giving from their stock assets, they may give more aggressively out of their income."

Nonprofits and fundraisers should keep in mind that different types of donors, which include individuals, foundations, and corporations, may give differently. During the 2008 recession, the Lilly Family School of Philanthropy found that foundation giving can be counter-cyclical. In other words, foundations may actually give more during more challenging economic times. Corporate giving may vary by industry and sector. Individual giving is the most susceptible to changes in the overall economy.

In other words, donors can give out of multiple different channels. While the economy, GDP, the stock market, and tax policy play an important role in giving, they aren't the only reasons why people give.

Advice for fundraisers

Don't stop fundraising.

"People don't give unless they are asked, for the most part. So continue to ask for those donations," Dr. Rooney explained.

In addition, our Philanthropy Panel Study data from 2000-2016 demonstrated that while the percentage of households who gave declined during the Great Recession, households who continued to give, gave consistently during difficult economic conditions.

"Even though the Great Recession was the biggest economic downturn since the Great Depression, many people didn't stop giving," explained Dr. Chelsea Clark, research associate at the Lilly Family School of Philanthropy. "The dollar amount they gave may have changed, if income decreased, but most people gave a consistent percent of their income, even during hard times. Giving can become a habit. Even if the economy is hit hard, some people will not change their giving behaviors dramatically."

Maintain communications with your donors.

"During times of economic slowdown or insecurity, nonprofits need to increase communications with their donors, who might be open to the possibility of special (additional) donations during this particular economic season," said Bill Stanczykiewicz, assistant dean for external relations and director of The Fund Raising School.

Giving may decline at the moment, but continue to make your case.

Nonprofits may be concerned that donations from households may shift toward combating COVID-19. However, the report U.S. Household Disaster Giving in 2017 and 2018 states the majority (78 percent) of disaster aid donor households reported that their disaster giving did not affect their giving to other causes. Twelve percent reported an increase in their giving to other causes.

Stanczykiewicz noted that during times of uncertainty, philanthropic associations can provide a point of connection, a place to be known, a place to gather (within a certain distance), a place to share information, and a place to commiserate.

"The other two sectors can't provide these opportunities for association; what Robert Payton referred to as 'the gift of human presence,' " he said. "Nonprofits provide places to build social capital and to work together toward a better world."

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