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Posted on September 1, 2007 Stock Market Downturn Could Hurt Nonprofits Recent turmoil in the stock market and ongoing problems in the short-term credit markets are beginning to affect nonprofits, and concern is growing that fundraising could suffer if the downturn accelerates, the New York Sun reports. One casualty of the recent volatility on Wall Street is Warren Spector, chairman of the Joseph Papp Public Theater, who was ousted from his job as co-president of Bear Stearns & Co. after the investment bank lost billions of dollars when two of its hedge funds were forced to close in August. "It's hard not to get caught in the downdraft structure," said Irvin Rosenthal, chief financial officer of the UJA-Federation. "August is not going to be pretty." While early solicitations at the federation's Wall Street division are running behind last year's level, UJA officials call them respectable — in part, according to Rosenthal, because its investment strategy is "very conservative, aimed at protecting assets regardless of what's going on in the market." Other nonprofits are hopeful that even if their donors suffer investment losses this year, the unprecedented profits they earned during the recent boom will soften the blow. And still other nonprofits have prepared for a downturn in the market by diversifying their investments and lining up donors who have demonstrated they will step up in times of need. Still, the full extent of Wall Street's recent troubles on the sector will be difficult to gauge until year-end, when the bulk of giving occurs. "It's hard to know after a month or so of volatility what's happening," said Giving USA Foundation chairman Richard Jolly. "But if the current volatility were to continue or if the markets were over the course of the year or end of the year to be in a down position, philanthropic giving is going to react in a similar way. What we're likely to see is an overall decline with some exceptions at organizations where the need is well articulated." Gordon, Amanda. “Nonprofit Sector Could Get Caught in Downdraft.” New York Sun 8/29/07. Primary Subject: Philanthropy and Voluntarism Secondary Subject(s): Public Affairs Location(s): National, New York, New York City FC010903

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