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Panel Detail:

Monday, April 27, 2009
9:30 AM - 10:45 AM

How Nonprofits Can Sustain Their Mission in a Down Economy

Moderator:

Greg Simon, President, FasterCures / The Center for Accelerating Medical Solutions

In this economic downturn, nonprofits are seeing a decrease in institutional giving, but a spike in donations from individuals. Panelists said charities′ coffers would benefit greatly from innovative models of funding and research, more transparency and collaboration in medical research, and increased accountability on the part of nonprofits.

Asked by moderator Greg Simon why nonprofits exist, Carl Schramm said charitable giving and nonprofit activity is really a function of capitalism. For Schramm, the "nonprofit sector exists in some regard to make up for market failure" because the dynamic market conditions of a capitalist society will necessarily fail to provide what society needs, and nonprofits will spring up to fill the void.

However, Schramm said government can have a negative effect on the level of charitable giving in the United States because charitable giving declines as the state takes more of the gross domestic product. Schramm said governmental action is premised on the flawed idea that the state can better dispose of income than individual charitable impulses. As an example of such flawed government spending, Schramm pointed to the federal stimulus program, which he said will subsidize many unworthy nonprofits that would otherwise cease to exist.

Schramm said business is not the enemy of nonprofits because "all entrepreneurs are social entrepreneurs" in that they create jobs and the wealth that sustains an individual′s charitable impulses.

Sherry Lansing said when a cause "strikes someone′s heart, that′s when you really get [individuals] to give." But being motivated to donate is not the end of the decision-making process, she said. In a market downturn, donors are inspecting nonprofits and calling for greater accountability. Lansing encouraged all donors to follow the money to evaluate how much goes to overhead and to make decisions about worthy causes based on how effective their donations will be in furthering the cause. In this environment, Lansing said, nonprofits need to adopt better practices and higher standards to withstand the scrutiny of the donor market.

Jonathan Simons predicted that institutional giving will be negatively affected for the next three to four years but agrees with Lansing that more individuals will donate to charitable causes. Simons said medical philanthropy is different from other charitable causes in that medical philanthropists "want to wake up one day and turn out the lights" by finding a cure for a specific disease.

The difference between philanthropy and charity, he said, is that philanthropy is finding a way to solve a problem and charity is giving money to the solution. Simons would like to see more demands made of the government, as the nation′s largest medical philanthropy investor, to examine best practices of medical research.

John Walsh has used innovative funding to sustain his charitable organization despite the market downturn. Walsh figured out how to fund medical research in a meaningful way by recycling insurance dollars into research. One such innovative funding method was when he persuaded a pharmaceutical company to make a legacy gift of $1 million dollars that would be restricted to research, even though the company was being acquired by another pharmaceutical company. This type of innovative funding is more important during down economic times, he said.

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