The current economic downturn is a bloated up financial crisis caused by the erroneous banking system. The banks refuse to take measures beyond the so-called ‘light touch regulation’. As their regulatory authority is being constantly challenged, they have begun to aggressively embrace newer methods of funding the failed mortgage lending. These complex financial instruments have been the core reason of the current economic downturn. As the banks all over the world are announcing their losses and the housing bubbles in America, Ireland and Spain are bursting, there has been a simultaneous escalation in the oil prices, more so following the impact of the September 11, attacks. With collapse of the Lehman Brothers, the crunch has manifested itself deeper and wider. The Federal authorities therefore are forced to raise the tax levels in order to meet the increasing costs.
Diversification of the donor base is one of the prime options for the not-for-profit sector. This will enhance their opportunities to leverage their present and future donors. When an economy slows down it results in a natural increase in the number of people who are in need of assistance. They require help for sustenance. The impact is largest on the not-for-profit sector since they are widely apprehended as provider of welfare services.
As the individual donations lessen, the endowments of the foundations that belong to the corporate sector also feel the impact as they cut their profit margins and reduce their degree of corporate social investment. Non-profit sectors who have managed to build a reserve might get through this period but not for long. They need to think of long-term sustainability. The secret lies in maintaining open communication lines and ensuring that those relationships that had helped them to raise funds are assured their due importance and trust.
It has been seen that even during the recessionary periods, the core supporters belonging to the typical Christian donor types do not abruptly pull back during this bumpy phase. They realize the financial challenges faced by the organization. As the organization effectively demonstrates that these donations are indeed making huge difference to the lives of the people, it helps in sealing their fundraising worries.
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