Tuesday, December 9, 2008

2 Tips For Israeli Non-Profits To Survive Economic Crisis

News reports have been filled with stories of Israeli non-profits organizations scrambling to make up lost donations. Usually the punch line is that if the economic situation worsens, many of these organizations will have to close down due to lac of funding.

First of all I have a friend DB, who works for a large Jewish philanthropic organization and he tells me that historically, during economic slowdowns, donations don't drop off that much, as the large donors are asked to fill the void of mid size and small donors who tend to tapped out on giving.

Ruth Cheshin of the Jerusalem Foundation has a really interesting op-ed in Globes on this topic. She says, "The global economic crisis is already being strongly felt by NGOs and philanthropic foundations. Major donors, who have lost substantial amounts of money, are in no rush to commit to new contributions. Nobody knows what the future holds, so even those who still have millions in their pockets, prefer to be cautious. Medium and small-scale donors, who were in the past able to contribute, are hesitant about answering the call to give in these times. For those who are not eager, the economic crisis represents an excellent excuse for no longer giving.
Whatever the reasons there is one conclusion: the number of potential contributors has been greatly reduced, and with it the money set aside for philanthropic aims. Consequently, NGOs and philanthropic foundations can expect to feel a substantial fall in the volume of donations, and the first to be hit will be the welfare NGOs assisted by these important donations."

I think that there are 2 things that can be done to help ease the pain for these non-profits.

1- Cut costs. There is no reason that these organizations can't be run like businesses. they need to trim the fat and get trimmer. I am not sure how ethical it is anyway for non-profits to pay out exorbitant salaries and provide great perks to their workers. Ultimately these expenses come out of the donation, so the donor ends up giving far less than was intended. Part of this maybe to bring in financial people on a consultant basis to make sure the finances are in order. Let's not forget that non-profits are run by people who want to do good, they may not necessarily be the best in business.

2-Try teaming up with local business. In the US we see non-profits doing joint ventures with companies and members of the business community. It's beneficial for both sides. It's good for corporate involvement in the community, and it's a good source of financial support for the non-profit. Why don't we see that happen in Israel.

Obviously there are more steps that can be taken, but tackling these 2 issues will go a long way in surviving the current economic downturn.

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