Philanthropy & Wall Street

I apologize for the limited blog posts over the last week. As most of you know, my firm provides wealth management services for philanthropists. The turmoil in the financial markets over the last week has been our primary focus as we help our clients navigate this storm. Regulatory guidelines prevent me from commenting on our investment performance, but I’m happy to report that our clients are all sticking with us and we’ve been bringing in some new clients who aren’t so happy with their existing wealth managers.

I spent part of last week in New York meeting with philanthropy reporters at the Wall Street Journal and New York Times. I also attended a party for the launch of the New York offices of The Philanthropy Workshop The Institute for Philanthropy (of which The Philanthropy Workshop is a program). The question that was posed to me over and over was, “what will all this mean for charitable giving?” It seems to me that New York charities will face some real problems. We’re not just talking about a rough economy, we’re seeing the collapse of extremely wealthy institutions that have been headquartered in NY for a long time. Washington DC will definitely feel the impact of any changes in the charitable giving at Fannie Mae and Freddie Mac.

But for most of America, I don’t see any reason that charitable giving will be impacted anymore than it always is when the economy sours and the stock market goes down. We are witnessing an economic slow down and a decline in stock prices that (at least to date) is no worse than the cyclical busts that hit developed economies every 5-10 years. What’s actually amazing to me is how American charitable giving actually tends to hold up even in the face of bad times. Charitable giving rarely declines.

However, all that is just theory if you’re a nonprofit with a history of gifts from the financial service industry. It will be interesting to see how the Robin Hood Foundation does with its next big fundraising event.


  1. foundationwriter says:

    Seriously? Only the evil people in NY and DC will suffer? You don’t think the credit crunch will have an impact on corporations, businesses, and people all over the country? And that it won’t affect their giving?

  2. No, that wasn’t my point at all. I said charitable giving won’t be, “impacted anymore than it always is when the economy sours and the stock market goes down.” Everyone is impacted when the economy and financial markets go south. But American charitable giving does not fluctuate widely with the economy. It tends to go sideways in weak economies and up during good economies. My point is that on a national basis, it should not be expected that giving will drop significantly.

    But there is a uniquely bad situation that will likely affect NY and DC much worse due to the concentration of the effects from this crisis.

  3. foundationwriter says:

    but this doesn’t seem to be a “normal” downturn; it seems “uniquely bad” for the american economy. i use the word “seem” because it’s apparent that no one knows anything. given the uncertainty, and despite past giving experience, i’d be very hesitant to make predictions.

  4. Unfortunately, I’ve consciously chosen not to share my investment and economic views on this blog because doing so would bring on significant regulatory considerations. So I think I’d just comment that there is always a chance that “this time is different”, but my comment in this post was meant to point out that even during a recession (something that we are not official in, at least so far), charitable giving shows surprising resilience.

    The wealth advisor in me would love to have a long conversation about my economic and financial market views with you, but alas my compliance obligations must be respected.

  5. Gonzalo Pena says:

    I do consultancy and fund-raising work in Salt lake City for non-profit organizations, and I have already seen how some of the bigger donors have already reduced (or completely shut down) the funds originally destined to philanthropic causes. The financial crisis is definitively being felt our field, but I remain optimistic. I think that it is going to take more tenacity and creativity to become effective in the area of philanthropy given the current turbulent waters that we are sailing. It is my prayer that we exit this financial storm as winners.

  6. foundationwriter says:

    i rspect your compliance obligations. and there is one bright note. charitable endowments that use a constant growth approach to spending will actually be able to give away more money–albeit a modest increase–in their next fiscal years.