1 The Global Crisis and Fundraising-What we need to know and what we need to doMoses Chege
2 Causes of the Global CrisisThe reasons proposed for this crisis are varied and complex. The role of housing & credit markets. The inability to make their mortgage Payments. Poor judgment by borrowers and/or lenders, Speculation and overbuilding during the boom period, Risky mortgage products, High personal and corporate debt levels. Financial products that concealed the risk of mortgage default.
3 So What Happened Low interest rates/ large capital inflows - easy credit conditions Housing prices increased refinancing houses and acquiring second mortgage. Credit boom and speculation led to building more houses & surplus of unsold houses Unsold houses attracted sub prime borrowers in the belief that market will continue to appreciate. Initial mortgage rates for sub prime were below market price, payments only on interest not principal. Unsold houses led to reduction in home owners equity and default on loans became higher-America’s homeowners non recourse loans. Decline in mortgage payments also reduced mortgage backed securities which erode the net worth and financial health of banks and with banks unable to sell the houses repossessed this created a vicious circle.
4 Impact Financial sector downturn Indirect economic effectsMarket weakness and downturns Examples Over 65,400 jobs lost in financial sector the USA as of September 2008. One in five USA car dealerships are expected to close in Fall of 2008. Financial firms around the globe have written down their holdings of subprime related securities by US$501 billion. Profits at the 8533 USA depository institutions to declined from $35.2 billion in 2006 Q4 to $646 million in the same quarter a year later, a decline of 98%. HSBC, the world's largest (2008) bank, wrote down its holdings of subprime-related MBS by $10.5 billion, the first major subprime related loss to be reported.
5 Impact IRIN reported that Programme growth in the 3 World's top NGOs - Oxfam GB, Save the Children and World Vision USA will slow in 2009 as a result of the squeeze. The three have an annual income of US$3.1 billion Director of Finance and Information systems at Oxfam GB- Oxfam had envisaged five to six percent growth over , but has now revised this to zero. Supporter Relations and Fundraising Director for Save the Children indicated that the financial services and investment banking sector have been very generous in the past but funding from them will be flat or potentially decline going into 2009. World Vision's Director of Advocacy and Government Relations at World Vision-Growth from corporations won't be as much so we won't be scaling up our programmes as we'd want to do.
6 Impact Chronic crises might loose out, i.e. southern SudanRecipients of micro-credit programmes might loose out Major institutional donors such as the DFID,USAID,EC constant trends as of now.
7 Impact Corporate sector employees could be volunteer for non-profits in the North. Drops in television advertising costs in the North creates advert opp for non profits.
8 RA Study A list of the top 100 most influential and informed people in global fundraising. This grouping included Directors of Fundraising for national and international NGOs (Non-Governmental Organisations), as well as some donors and consultants. The 100 included individuals from North America, Asia, Europe, Africa, Australasia and the Middle East.
9 RA Study-How serious the financial crisis is- and the broad strategy fundraisers should adopt in response to this global phenomenon? Almost 40% of respondents believe that the best response is to fight for market share now- expansion to secure market share is the only option. Almost as many favoured another strong proactive action though the specific responses varied- from downsizing to using reserves to weather the storm European and North American fundraisers are more optimistic than their African or Asian counterparts
10 RA Study-Where in terms of ‘cause’- children, environment, faith etc- these international experts think the financial crisis will impact most? Globally respondents believe that the three areas most likely to lose out are arts and culture, international development and animal welfare. Respondents also agreed that children’s’ causes, emergency relief, medical and faith-based causes would be least affected. North America disagrees most strongly on the effect of the funding crisis on Disability, Education, the Environment, and Faith based causes. Europeans are more concerned than others about the impact on Disability, Human Rights, and Elders.
11 RA Study -What action our experts thought fundraising directors should take to prepare for the emerging changes? Developing scripts/messaging around why we need our donors now more than ever Be well informed about how your donors might be affected and have alternative giving scenarios prepared. Get more donors Make sure that those donors who do withdraw their support for economic reasons are still communicated with and kept being shown appreciation. The will return IF ASKED when times get better Engage the public in other "non financial" ways with your organisation via advocacy, signing up to newsletters etc so that you have an enormous pool of warm prospects after the crisis. Diversify the fundraising portfolio. Be more creative while asking for money (every crisis hides an opportunity))
12 What then do fundraisers in Africa need to doCollaboration/partnerships through consortiums and coalitions look out for more opportunities to collaborate/partner rather than compete with other non profits. Fundraising in Africa: need to look at strategies which will enable non profits tap onto the African market for fundraising. Generating own income: move from being donor minded to being entrepreneurial minded. Tap into endowment funds they could support part of our costs in future Evidence based research to support our cases ie the effect of malnutrition on the cognitive ability of adults, need more and stronger evidence to demonstrate the need. Need to also link up our work with country strategies and global initiatives like MDG’s Don’t give up-The fact is that during times of economic doom and gloom donors are more aware of how others are suffering and, as sarcastic as this sounds, it might work to our benefit. Review the financial institutions where we are putting our money ensure that we ask the donor for their preferred institution to prevent a blame game incase of collapse of multinational banks in Africa.
13 Cont Research into new fundraising markets ie Non profits need to look into the opportunities for fundraising in China and Middle East, there has been overemphasis in the North and this might provide an opportunity to think otherwise. Be confident when approaching donors. Don't let the general depression throughout the economy affect you. If you do, you will look unprofessional and you will face some tough times.-The credit crunch was at it’s peak when Obama doubled his fundraising target in Sep 08 Be open and realistic about the income for the coming years-Don’t panic. Raising money for the important work of NGO’s has always been challenging and groups have gotten more and more creative and sophisticated in meeting that challenge. So take a deep breath and plunge in-with eyes wide open.
14 Cont Get an attractive and up to date website and look for new opportunities to fundraise and communicate with the public about your work and make sure your donors see your recognition. Now is the time to be even more strategic and consistent in your communications. Thank your past donors for their support with official personalized letters and direct phone calls that reinforce the importance of what you do and how their support enables you to keep at it. Reach out to your donors immediately. Donors and foundations are all over the place in terms of how they’re dealing with the financial crisis. So just ask them. find out from the program officers you work with how the crisis may impact the donor’s giving; what sort of funding cycle the donor is on; whether giving is likely to tighten up next year or in five years. You’re not trying to get firm commitments or nail down donation amounts for the next budget or grant cycle. Realize that your program officer might not know yet herself, so keep in touch regularly but not annoyingly!
15 Cont Expand your donor base-Don't abuse loyalties. If you have repeat donors, don't abuse them. Is it okay to approach them? Yes. Is it okay to nag them? Never, not even in good economic times. You need to and this activity is even more necessary than ever in bad economic times because each donor may give less.
16 Cont Look at our cost structures for any saving opportunities and also be more creative about our asking. Innovate !
17 Thank You !