Mutually assured survival: library fund-raising strategies in a changing economy

Library Trends, Summer, 2003 by Lisa Browar, Samuel A. Streit

In contrast to corporate giving, foundation grants grew by 5.4 percent in 2001, to an estimated $25.9 billion, an inflation-adjusted increase of 2.5 percent. The Foundation Yearbook's extended analysis of estimated foundation giving in 2001 suggests, however, that a weak recovery from the nation's first recession in ten years, along with two years of declining equity values, will mean, at best, no increase in foundation giving for 2002. This prediction is borne out by advance warnings ranging from giant foundations such as the Ford and Gates foundations to local community foundations across the country (Foundation Center, 2002a).

Just as the recession has impacted the fortunes of private donors and philanthropic foundations and their generosity, so too has it affected the financial health and well-being of universities and their endowments. The New York Times reports, "the investment losses incurred in this recession mark the first time since the early 1970s that universities have lost money on the endowment investments two years in a row" (Zernike, 2002, pp. A1-24). According to the National Association of College and University Business Officers, universities lost an average of 3.6 percent on their investments in the fiscal year ending in June 2001 (Zernike, 2002, pp. A1-24). Public and private universities have been similarly wounded, but private universities have absorbed a greater impact because they depend on their endowments for a greater share of their budget than do public universities (Zernike, 2002, pp. A1-24). Programmatically, the repercussions have ranged from serious to catastrophic, with hiring freezes, layoffs, and postponed or cancelled building projects that would have resulted in additional classrooms, laboratories, dormitories, and medical facilities. Ironically, the budgetary shortfalls caused by losses in anticipated endowment income have increased institutional dependency on the largesse of philanthropists who have sustained similar investment losses since the recession began.

This recent economic volatility may well emerge as a continuing factor in twenty-first-century fund-raising. With widespread corporate retrenchment taking place throughout American industry, the near- and long-term economic forecasts do not bode well for corporate and family philanthropic foundations and individual investors who habitually contribute a percentage of their incomes to nonprofit organizations. The fallout from declining corporate revenues and individual investment income will mean, at the end of the day, that development officers raising funds on behalf of nonprofit institutions, including special collections librarians endeavoring to maintain the flow of philanthropic dollars into their libraries, will have to work harder and longer, and live with more disappointment than usual, to sustain their funding bases.

As special collections librarians and their development officers spend increasingly larger amounts of time raising funds, the opportunity cost associated with this activity will increase, making fund-raising a more expensive organizational proposition than ever before. Every hour a special collections librarian spends raising money instead of performing collections-based tasks, the cost of that hour is known as the "opportunity cost," or the cost associated with the activity, in this case, fund-raising. If in the current economy a librarian has to spend twice as many hours raising amounts similar to those prior to the economic downturn, the opportunity cost of raising that money will double.