The Recession of 2008 and 2009 came at the worst time for Meridian Health. The company that operates six hospitals in New Jersey had capital campaigns under way or in the works at four of its hospitals.
Despite concerns regarding the economy, especially after the recession began in 2007, Meridian surpassed a $20-million goal for Jersey Shore University Medical Center in Neptune, N.J.; began the public portion of a $15-million campaign with $11 million already pledged; and soon will go into the public phase at two other hospitals.
“Overall, we’ve been fortunate,” said Robert Wahlers, senior director of development and gift planning. “In just about every case, everybody is living up to their pledge agreements. There might be one that we had to adjust to allow some additional time.”
Not all nonprofits were as fortunate as Meridian. Wahlers said he “saw a trend that folks who might have had five or six or seven organizations they support, with the recession they supported only two or three of their favorites, or that they were most passionate about.”
In a survey of the recession’s impact on 363 nonprofits by the Johns Hopkins University Institute for Public Studies in Baltimore, Md., more than half reported losses in individual contributions as large financial institutions failed and others were saved by government bailouts, stock prices plunged, and housing values plummeted during what some call the Great Recession. Four out of five of the organizations reported some level of fiscal stress between September 2008 and March 2009, the period covered by the survey, and 40 percent considered the stress to be severe or very severe.
The Federal Reserve reported that the average household wealth fell by nearly 20 percent in two years, from $598,000 in 2007 to $481,000 in 2009.
As a result, some donors with the best of intentions made pledges they were unable to meet. That should have sent ripples through nonprofits since Lawrence Henze, managing director of Blackbaud Target Analytics, noted “most successful organizations get most of their money from individuals, not corporations and foundations.”
But not everyone suffered from the Recession of 2009. While the wealth of two-thirds of households in the Federal Reserve study fell, well-off families reported an increase of 27 percent.
The San Diego Foundation’s Amy Walling, senior director of planned giving, estate administration and research, cautioned nonprofits to tread lightly in trying to devise more ways to investigate a donor’s ability to honor the pledge. “Sophisticated donors are aware that background research is done on them. They might feel it is counterproductive, if they are already leaving the charity in their estate and have shared this information with them." Those who have suffered financial setbacks also might consider more research counterproductive “since they may not feel they are in a philanthropic position at that time.”
Communicating with donors and prospects also is important since Meridian Health’s Wahlers said nonprofits “can put a lot of effort into getting those gifts, but if they don’t keep donors informed they have a hard time getting future gifts.” Meridian Health made a conscious effort to beef up communications to keep donors informed of how their money was being put to use during the recession since many were cutting back on the number of organizations they supported.