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Why economists need to do a bit of fundraising

Fundraising | Michael Naidu | 2 Mar 2009

As the initial panic subsides, the fundraising sector seems to have got to grips with the challenges we face. Budgets are being revised, strategies tweaked and justification of investment honed to the sharpness of a scalpel. As the stock market and house prices are readjusting, so are charities and the fundraising departments are at the sharp end (“when haven’t we been there?” you may ask).

Expectations of fundraising growth or decline are showing a distinct parallel with the UK economy and the similarities don’t end there. The impact of falling share values and house prices on businesses is mirrored by the expected drop in legacy income. The credit crunch hits hardest on businesses and charities that rely on short and long term loans to implement their strategies.

The reaction of the private sector is in full swing, unemployment is rising quickly and more mergers and takeovers are inevitable. Maybe this is where the parallels end. While a few leading charities have been quick to make redundancies public, many, many more have yet to comment. I suspect that the market leaders publicising their redundancies have the best understanding of the effectiveness of their work and are showing a commitment to openness and transparency.

At the Institute of Fundraising conference “fundraising in a downturn”, I was reminded why I love fundraising. Crunch the numbers, SWOT and PESTLE till your blue in the face and segment till you are dizzy, if you are in any way like me, when you sign off the digis you will say a prayer to the Goddess of Fundraising, asking her to gaze down on your supporters and make them believe. (Apologies to any people of religious persuasion who may find this offensive. As a life long humanist my grandmother taught me three things: treat other people as you would like to be treated, live and let live and look after your feet.)

Back to the conference. After a rousing Institute welcome we were treated to back to back presentations from economists, the first was Jonathan Ashworth from Barclays Wealth. He gave us a comprehensive overview of the financial crisis with graphical representations showing the current crash in comparison with previous recessions.

Apparently, this recession is going to be “brutal” (stay calm, that wasn’t the bleakest of projections). However, he sounded surprisingly Darling-esque in his prediction for the future. Thanks to low inflation and low oil costs we should be seeing some green shoots in mid to late 2010. Call me a conspiracist, but I can’t see oil producing countries being overly happy with that situation for long.

Paul Swinney from PriceWaterhouseCoopers gave a comprehensive overview, this time of how each income stream is/will be affected. And the last summed up my intrinsic issue with capitalism in one succinct sentence.

“Economists don’t understand why people give to charity”.

The flip side of this statement is the underlying presumption of capitalism, that we are all motivated by greed. They won’t say greed, they say “maximising your personal utility”.

Capitalism expect everyone of us to act in a way that will be of maximum benefit to ourselves and the action of giving money away with nothing in return makes an economists eyes water. Some might say that this is a self fulfilling presumption and the reason why we are in such a mess, other say boom and bust is inevitable.

Do we, humble fundraisers have the essence of a new approach to economics? Finding a motivation greater than just greed could change our approach absolutely everything. And there are examples out there, fishing quotas, carbon trading, but the drive to consume outweighs the spirit of society.

The biggest risk we face as a society is not to use this crisis as an opportunity to change. If we stick plasters on capitalism, then the next crash will be “catastrophic”.

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