By Norman B. Gildin

“Will the coronavirus pandemic affect fundraising?” Anyone who can answer this question deserves the “Fortune Teller of the Century” award. No one can say with certainty how this story will end, but we can conjecture based on previous calamities.

Let’s state the obvious. We have never experienced anything like the coronavirus pandemic in our lifetimes. Ever. And, God willing, we should never again face such a catastrophic event. But we might glean “trend patterns” from history.

There are three relatively recent financial disasters from which to draw inferences: (1) 9/11, (2) the 1987 financial crash and (3) the 2008 Great Recession and housing collapse. Each of these events triggered great financial devastation. The difference now, however, is this: Those events did not wreak the same massive havoc this pandemic is inflicting on the economy.

9/11/2001

9/11 was a pivotal moment in history, and it caused Wall Street to shut down for an unnerving six-day period, rocking financial markets everywhere.

Investopedia recounts how bad the markets reacted: “On the first day of NYSE trading after 9/11, the market fell 684 points, a 7.1% decline, setting a record at the time for the biggest loss in exchange history for one trading day (this has since been eclipsed by the market reaction during the global Coronavirus pandemic). At the close of trading that Friday, ending a week that saw the biggest losses in NYSE history, the Dow Jones was down almost 1,370 points, representing a loss of over 14%. The S&P index lost 11.6%. An estimated $1.4 trillion in value was lost in those five days of trading.”

Yet, The NonProfit Times reported that “Despite the challenges of September 11 and a slowing economy, nearly 60 percent of charities raised more money in 2001 than in 2000…” A survey in The NonProfit Times also showed “that an additional 10 percent of charities raised the same amount of money in 2001 as in 2000, and slightly more than 15 percent of respondents raised at least 30 percent more funds.”

Not more than a month passed before the Dow Jones, Nasdaq and S&P regained their pre-9/11 price levels. So, what prompted donors to be generous at a time when financial markets were shaken?

Some factors to consider: A united country was motivated to “pull itself up by the bootstraps” and show terrorists and the entire world that America wouldn’t capitulate to terror. Also, many believe that philanthropy always rallies during times of crisis and a new normal sets in.

The 1987 Financial Crash

October 19, 1987, also known as “Black Monday,” saw the Dow Jones Industrial average plunge by 22.6% causing a sudden and dramatic global stock market decline. The cause was not attributable to some financial crisis or a growing recession. Instead, markets tumbled largely because of massive computer program, or digital, trading that manipulated vast numbers of stocks and financial portfolios. We also suffered through a chain reaction of financial distress factors such as the trading of risky securities, a declining dollar and hard-to-understand algorithms egged on by a 24/7 media hysteria.

The economy eventually stabilized, and stocks recovered. The 1987 financial crisis established the essential “circuit breakers” that pause trading when stocks dive to scary depths marked by percentage markers. There also were other structural flaws in the market that aggravated losses. However, this is not the forum to discuss these, but is an opportunity to see how fundraising fared during that era of financial turmoil.

Unlike the 1929 Depression that took decades from which to bounce back, the 1987 crash rebounded within two years and topped previous market levels. The Federal Reserve was a calming influence that added liquidity to the economy. New regulatory reforms helped steady markets. Fundraising made a comeback commensurate with the economic rebound. It took time, but recovery occurred because of renewed confidence in the monetary system.

2008 Recession

The Great Recession of 2008 was linked to the “subprime mortgage crisis.” The stock market rocketed to greater heights after a period of recuperation following the Great Recession. However, in a blog post for CCS, Tyler Mark, the executive director of CCS Fundraising, wrote:

“… the U.S. economy was in the depths of the most devastating economic downturn since the Great Depression. The impact was substantial and widespread when 8.8 million people lost their jobs, GDP fell more than 4%, and home prices deteriorated by 30%. At the same time, Americans collectively gave less to charities than they had since the 1990s.”

Mark continued, “However, despite the resiliency of Americans during tough economic times, the Great Recession’s deep and widespread impact left many people giving less. Giving decreased by 3.7% in 2008 and then 8.3% in 2009. Much of this drop can be attributed to declines in giving by the wealthiest Americans.”

Nevertheless, in time, the economy strengthened and rallied. It took time. But, fundraising also bounced back because the American people recognized the plight of the needy and less fortunate and responded accordingly.

Coronavirus Pandemic

Here is what we know at the time of this writing.

The Coronavirus pandemic brought the U.S. economy to a virtual halt, with some exceptions. There are grave concerns that many small businesses, the bedrock of America’s commerce, will go bankrupt or go out of business. U.S. Treasury Secretary Mnuchin suggested that unemployment could rocket to 20%, which many consider to be a conservative estimate. Stocks tumbled to the extent of wiping out all the gains made in the last three years. Major industries such as the auto industry came to a standstill and, on a war footing, auto plants converted their factories into ventilator production. The health care industry was expected to be overwhelmed and unable to handle all the cases coming its way. And the list of bad news piled on as the COVID-19 disaster rippled throughout the economy.

So, what can we learn from previous financial debacles? We can only surmise how this story may end.

If the panacea provided by the $2 trillion stimulus works in tandem with effective treatment protocols and a vaccine is discovered, there is no reason to believe fundraising won’t rebound as in previous disasters.

Let’s not consider the alternative.

Norman B. Gildin has fundraised for nonprofits for more than three decades and has raised upwards of $92 million in the process. A resident of Teaneck for 34 years, he now resides in Boynton Beach, Florida.