As we start a new year (and a new decade for that matter), I look back in amazement at what the past year wrought with regard to the economy, money, and philanthropy. Last March, as the Dow Jones industrial average fell to a low of around 6,500 points, I remember hearing colleagues around the country talk about suspending current fund-raising campaigns and delaying new ones. When the dollar slipped even further in exchange with other currencies, we heard news of a fund-raising crisis in America.
However, as stock markets have rebounded (the Dow is back up over 10,000 points) so, too, have peoples' interests in charitable contributions. The end of 2009 showed improvement in charitable giving—not necessarily in dollars raised but in terms of encouraging increases in donor participation.
In a tough economy, an increase in participation rates is a terrific sign of philanthropic confidence. It gives us the opportunity to steward those donors and keep them with us as we move into better times. A broader base of participation should lead, eventually, to a higher level of donations. I am certainly looking forward to that point. Wouldn't it be nice to have a larger donor pool and not need to rely solely on the same close friends year after year to make our goals?
So what do the trends mean for us as fund raisers? And what are we thinking during these uneasy times? Here's what's on my mind.
"Flexibility" is the key word I keep hearing from donors. They want flexibility in making new commitments, and in paying off existing pledges.
With that in mind, I continue to think about different options for donors, as I visit with them or sit in strategy sessions. Yes, I have had several conversations in the past year with donors who want to extend their pledge period or just plain skip payment for a year. And that may be the only option for some.
However, using some ideas put forth by gift-planning experts, I've also come to understand that several other options are available. For example, I have begun to focus more discussion with donors on their estate plans and considerations of a bequest to our institution. Those donors tend to be over 65 years old and have demonstrated a significant inclination to support our cause. Yet when their investment portfolios took a hit over the past year, many seemed more willing to think about and plan for the future. So we're continuing to talk about that.
Gift annuities still offer better rates, in many circumstances, than do other investment opportunities like certificates of deposit, savings accounts, and even some stocks and bonds. Because gift annuities are guaranteed income for the donor, I see them as a major opportunity for some in the coming year. It is increasingly important for us, as fund-raising professionals, to come prepared to discuss all the options with donors during every conversation. Even if donors say they don't need to have the conversation with you—because they have a financial planner for example—you need to make them aware of options like a gift annuity. Many financial planners don't consider that option or will not mention it because it doesn't make money for them.
As we all know, the Charitable IRA Rollover gift law expired at the end of 2009. If Congress does not repeat what it did last year and extend the law for 2010, it could be history. However, an IRA gift naming a nonprofit as beneficiary continues to be a sound option. The most compelling reason for that—aside from feeling good about the philanthropy—is because beneficiaries of an IRA (those who are not nonprofits) must pay taxes when taking withdrawals from the account. That often creates a serious tax burden on the very people whom the IRA gift was intended to help. As nonprofit organizations, we can take the IRA gift in its entirety to assist our worthy cause. Knowing the institution will get the full amount has caused some donors to give serious thought to using their IRA for philanthropic purposes.
Also, we should not forget about gifts of securities (stock). Yes, that's right. It still happens. Don't forget, we have seen the Dow fall to near 6,500 and rebound to over 10,000 points. Plenty of donors have appreciated stock, and some feel financially secure because they played their cards right during the economic downturn.
I work with a terrific donor who, during the boom times of 2006-7, continued to tell me as we visited that the markets were inflated and he wasn't "going to get involved" in investing. As major gifts poured in to us from his peers, he told me it wasn't the right time for him to make a commitment. Well, wouldn't you know it, in early 2009, when most of the markets were hitting rock bottom, we received his major commitment. When I asked him why now, during the worst of financial times, he replied: "Remember I said I wasn't getting involved? Well, I didn't. and I'm doing just fine."
The moral of that story? People handle their investments and finances differently; not every donor is up or down at the same time. So there are people out there willing to support our institutions right now. It is up to us to identify and cultivate them.
My focus now is on being there with our donors in these uncertain times. But I am also talking to people across the university who control budget decisions for their departments, to encourage them not to cut back on fund-raising efforts now. The need for substantial travel budgets and money to continue to make contact with past donors and new prospects is critical.
Lastly, I am going to focus on what people are saying to me when I visit, and try to discover what makes my donors passionate about their philanthropy. I'm hoping that some of those conversations will not only hold us over until better economic times, but also strengthen our relationships with these important philanthropists.
So that's what I am thinking about, as we start the new year. How about you? Let me know what's on your mind as a fund raiser. You can send your thoughts and comments to careers@chronicle.com. Over the next few weeks I will look at what is sent and compile some favorites to share in a future column. Until then, best wishes for a great start to the year.
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