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January 09, 2009

Stick to the Mission in Tough Times

Ray Fisman
Lambert Family Professor of Social Enterprise
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A friend of mine recently donated storm windows to his daughter’s school. Not exactly a splashy gift, but that was entirely by design: he wanted to make a statement about giving according to the school’s needs instead of tying his donation to getting his name on a building.

This perspective on philanthropy is particularly welcomed by non-profits that are struggling to make ends meet during the current financial downturn. However, it is but one piece of a larger need to apply sensible economics in informing giving decisions.

I am a strong proponent of outcomes-based philanthropy — donors can and should demand to see that organizations use their dollars wisely. Yet if everyone demands that every dollar translate into incremental programs or services, grantees are left trying to figure out how to cover the overhead costs that are part of running any organization (or fudging the numbers they present to donors). Organizations may need to pare back services in response to hard times, and if they’re to avoid going into a downward spiral, donors will need to show a willingness to provide bridge funding to weather the financial storm.

As always, groups will be tempted to compromise mission in exchange for donor dollars. This is part of life in a non-profit, and as the going gets tougher, these temptations will multiply. This only reinforces the importance of having a clear sense of purpose and mission, so as to not lose sight of why you’re in this business in the first place.

Alumni are invited to attend “Squeeze Play: Philanthropy in a Recession”, an event with Professor Fisman and other guests on Tuesday, January 13th 2009 at 6:30pm. Register here.

Photo credit: Anna Vignet


by Osifo A. | January 12, 2009 at 2:14 PM

If an individual donates to a non-profit and starts to dictate what they should or should not do with his/her funds, is it not better for that individual to go and start up his/her own organization since he/she has so much spare time? If you do no trust the judgment of those running the organization, then why donate in the first place? I think donations should be donations not investments. Being a large donor to a cause should not be the equivalent of being a majority shareholder - involved in every decision. One should give without hope of receving anything in return [except of course, the corresponding tax deductible amount ;-) ].

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