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September 25, 2008

How Is Financial Crisis Affecting Philanthropy?

-- by Dave Johnson

At the Clinton Global Initiative I have been asking around, trying to get a sense of how the Wall Street financial crisis is affecting the funding of non-profits/NGOs attending this conference.

What I am hearing is that the economic crisis -- or at least fear of it -- is affecting funding and in some cases significantly. But here's the hitch: Almost every conversation I have had except one was about how the funders are afraid that the economy is getting worse and that is why they are cutting back. Only once was I told that the an organization's primary funder had cut back because of necessity from actual financial difficulties. So it appears that fear that the economy is turning down is causing many funders to cut back. (Perhaps this is to preserve capital? -- please discuss this in the comments.)

Of course, actual economic stress hits people at the lower end of the ladder or in poorer and less developed regions much harder than it hits the rest of the population. These are the people and organizations that the funding institutions and individuals are committed to serve. And it is the nature of philanthropy that even in the worst of downturns the funders will not suffer to the degree that to poorest will.

Since an economic downturn brings with it a much greater need on the part of the recipients of the world's philanthropy, shouldn't fears that this is coming trigger a greater committment of assistance rather than cutbacks? A metaphor might be helping purchase plywood and tape to cover store windows before a hurricane hits.

Please stop by the Social Edge blog to discuss this.

Posted by Dave Johnson at September 25, 2008 12:27 PM


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