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J David Ford

Economist Urges Charities to Get Ready

Fund raisers ought to prepare now to take advantage of the economy's slow recovery, Susan Raymond, an economist and one of the founders of the consulting group Changing Our World, told an audience this morning at the annual conference here of the Association of Fundraising Professionals.

Urging fund raisers to look outside their own circumstances and pay more attention to economic trends, Ms. Raymond described some factors that will shape the economy over the next few years.

The high unemployment rate. The Department of Commerce doesn't anticipate the unemployment rate to drop to 5 to 6 percent, where it was in 2007, until 2013, Ms. Raymond said. That's worrisome for fund raisers because the unemployment rate has a bigger influence on individual giving than other economic factors, she said.

A global recovery. America's recovery will depend in large part on its ability to export products, which forces it to rely on the strength of foreign economies, she said. Ms. Raymond told fund raisers to pay attention to whether Greece defaults. "Watch Europe carefully," she said. "If Greece defaults, you will see the Dow plummet."

State governments. In December 2009, 39 states expected new budget deficits this year, Ms. Raymond said. That spells disaster for charities that rely heavily on government support. She urged foundations, in particular, to help educate local lawmakers about their roles and "what they can and can't do."

Despite all the gloom, Ms. Raymond said the "nonprofit sector has the opportunity of a generation." Bad economies often breed innovation, and charity officials have a chance to develop a new strategy and diversify their revenue, she said.

Ms. Raymond advised fund raisers to pay attention to several trends as they try to put their organizations in a position to guarantee a bright 2015. Among them:

Female donors. Women haven't been hit as hard by the recession as men, Ms. Raymond said. Fund raisers need to think hard about how to engage female donors, who tend to be more conservative financially and philanthropically than do men.

Corporate giving. "Pure philanthropy is going to be in decline," Ms. Raymond said. "You're going to see more and more cause-related marketing."

A "depression-memory of a recession." Ms. Raymond said the biggest challenge that nonprofit groups face is the psychological impact of the downturn on donors. Even though the downturn wasn't a depression, it felt like it to many people, she said. "That's a communications problem for you," she told fund raisers. "It's a fund-raising problem. It's a trust issue."

Ms. Raymond urged fund raisers to take steps now to plan for the economic recovery. She said that nonprofit groups ought to honestly assess their situation and how they got there; put in place a system to understand changes in the economic environment; embrace change; plan concretely for the future and don't be lulled into thinking that simply drawing up a strategic plan is enough; and diversify their revenue.

Gone are the days when nonprofit groups could rely simply on donations, she said. The future also includes money from areas like cause-related marketing, program-related investments, social enterprises, and even royalties and donations from things like patent agreements, Ms. Raymond said.

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