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The credit crunch and major donors

The credit crunch and major donors

I’d love to get inside the minds of some of the super rich just now – especially those in the financial sector. What is it that they’re thinking. I’d like to bet that philanthropy is far from top of their mind.

So how do we engage with high net worth individuals who are seeing their net worth tumble by the day?

Ironically, I think now might be a very good time. These HNWIs are being given a very bad press at the moment and that will only get worse when the inevitable bail out happens. They are going to need to be seen to be putting something back. Gordon Gekko is no longer acceptable – greed is out.

So how can we develop major donor strategies that can tap into this new zeitgeist? I think there are two approaches that can make sense.

Firstly, we need to examine the whole area of deffered giving. HNWIs are going to be unwilling to offload shares which are half of their value of a few weeks ago. So why don’t we ask for gifts that are realised when share prices reach a certain point – say 6000 on the FTSE? We’d benefit from that gain along with the HNWIs, but we’d have to share their pain as well.

Alternatively, we could ask for share options which we could then sell as and when the price yields a profit. In this case, an HNWI would offer us £100,000 of stock, say, at today’s prices and we could take up that option at any time over the next two years. Obviously, we’d only take up the option if share prices rose significantly and we could make a profit on the difference. HNWIs understand all about share options, so why don’t we use that mechanism?

Secondly,I think that charities could encourage groups of HNWIs to come together to share risk in a fundraising venture, providing interst-free loans, for example, to finance fundraising programmes. Their money would be safe (safer than in a bank!) and they could reclaim tax on the interest foregone. This could be something that CAF could lead on perhaps, or individual charities.

Even more simply, bringing groups of financiers with similar backgrounds together to support a major project could have more resonance as together they could be seen to be making a real difference to the lives of others – great PR and a step up from usual major donor programmes.

Let’s see if we can turn this credit crunch round into something positive for major donor fundraising

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