"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…..

Individuals-76.5%of total giving$199.07 billion

Foundations-11.5%Foundations-11.5%$30.00 B$30.00 B

Bequests-6.7%Bequests-6.7%$17.44 B $17.44 B

Corporations-5.3% of givingCorporations-5.3% of giving$13.77 B$13.77 B

2005 U.S. CONTRIBUTIONS: BY SOURCE OF CONTRIBUTION

($260.28 BILLION)

EnvironmentEnvironmentand animalsand animals

$8.86$8.863.4%3.4%

FoundationsFoundations$21.70$21.70 8.3% 8.3%

Human servicesHuman services$25.36$25.36 9.7% 9.7%

InternationalInternationalaffairsaffairs$6.39$6.392.5%2.5%

Arts, culture, Arts, culture, and humanitiesand humanities

$13.51$13.515.2%5.2%Public-society Public-society

benefitbenefit$14.03$14.035.4%5.4%

UnallocatedUnallocatedgivinggiving$16.15$16.156.2%6.2%

Health Health $22.54$22.548.7%8.7%

Religion $93.18 35.8%

Education$38.56 14.8%

2005 U.S. CONTRIBUTIONS: BY TYPE OF RECIPIENT ORGANIZATION($260.28 BILLION)

TOTAL U.S. GIVING BY SOURCE BY FIVE-YEAR PERIODSTOTAL U.S. GIVING BY SOURCE BY FIVE-YEAR PERIODS(Adjusted for inflation, $ in billions)(Adjusted for inflation, $ in billions)

Giving USAGiving USA uses the CPI to adjust for inflation. uses the CPI to adjust for inflation.

IndividualsIndividuals BequestsBequests FoundationsFoundations CorporationsCorporations

1966–701966–70 2001–20052001–20051996–001996–001991–951991–951986–901986–901981–851981–851976–801976–801971–751971–75

516.39516.39 549.95549.95 569.54569.54 621.38621.38740.06740.06 781.02781.02

1,081.511,081.51

1,270.831,270.83

GIVING BY INDIVIDUALSGIVING BY INDIVIDUALS19651965––2005 2005 ($ in billions)($ in billions)

Current dollarsCurrent dollarsInflation-adjusted dollarsInflation-adjusted dollars

GIVING BY FOUNDATIONSGIVING BY FOUNDATIONS19651965––2005 2005 ($ in billions)($ in billions)

Data: The Foundation CenterData: The Foundation Center

Current dollarsCurrent dollarsInflation-adjusted dollarsInflation-adjusted dollars

GIVING BY CORPORATIONSGIVING BY CORPORATIONS19651965––2005 2005 ($ in billions)($ in billions)

Current dollarsCurrent dollarsInflation-adjusted dollarsInflation-adjusted dollars

Recession Periods in yellow: 1969–70; 1973–75; 1980; 1981–82; 1990–91; 2001Recession Periods in yellow: 1969–70; 1973–75; 1980; 1981–82; 1990–91; 2001

Inflation-adjusted dollarsInflation-adjusted dollarsCurrent dollarsCurrent dollars

TOTAL U.S. GIVING, 1965–2005(including recessionary periods)

UA FOUNDATION TOTAL GIVING -- IMPACT OF RECESSION PERIODS, 1978–2005

RecessionPeriod

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

How Bad Can it Really Be?

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

How Bad Can it Really Be?

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 4th 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

How Bad Can it Really Be?

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

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

How Bad Can it Really Be?

“You may want to stop and get something for

dinner on your way home…..”

How Bad Can it Really Be?

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

How Bad Can it Really Be?

Maybe we should just relax and not take all

this so seriously…..

How Bad Can it Really Be?

Because it will all be over soon…..