Posted on May 26, 2009

As Recession Drags on, Individual Donors Make Tough Decisions

With pleas for funding pouring in from cash-strapped nonprofits around the country, donors — many of whom have seen their investments lose close to half their value — are having to make tough choices about how best to allocate their dwindling philanthropic dollars, the New York Times reports.

With fewer resources to dispose of, many donors are rethinking how their giving can do the most good. According to Peter Frumkin, a professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas, donors tend to operate from either of two "master theories of giving": either provide direct service to individuals or create change through advocacy and public education. "In tough times," said Frumkin, "people tend to gravitate toward direct services because they want something concrete from their giving."

Indeed, some donors who had made multiyear pledges to now cash-strapped organizations are considering whether they should direct this year's installment toward operating funds that the organization can spend immediately. Others are giving smaller gifts than they have in the past or are considering extending their pledges by a few years, while still others are triaging their giving — looking at the groups that will not survive without their support and trying to decide which are the most important to save.

"People are really thinking more carefully about what they will support," said Julie A. Lucas, an assistant dean who raises money for Fordham University Law School, "and while they may have supported a broad range of causes before, many are now giving less to each or giving to fewer organizations."