I just returned to the office from three days of site visits. When I left the office last Friday, the DJIA closed the day at 10,325. Right now it's dipping below 9100. 

It's hard to believe but less than 2 months ago, on September 2, the first trading day after Labor Day, the Dow closed just above 11,500. By mid-September Lehman Bros. would fail and much more financial woe followed. And the Dow has lost about 21% since September 2nd.

Historically foundations and other large endowments have invested heavily in the stock market. A reasonably diversified portfolio will provide both safety and the returns a foundation needs to be able to pay out its 5% minimum along with meeting other costs.

The current financial crisis has a few twists that all development professionals need to consider. First, there doesn't seem to be a lot of safe territory. In other stock market declines there was safety in real estate and bonds. But both of those are feeling the pinch in this current crisis.

Second, the drop in the stock market is magnified by people's reactions. Remember the saying, "It isn't what happens to you, but how you react to what happens to you." The reaction to the stock market drop creates its own reality. Right now, organizations that have seen losses in their portfolios are not yet sure how to react to those losses.

So what can local nonprofits do?

First, set priorities. Who are your most vulnerable clients? Who needs your services the most? If you simply cut back, without thinking about these issues, the most vulnerable may be left behind.

Second, don't fire the fund raisers and don't stop fund raising. Double your efforts. Sure, you may want to rethink the grand gala event; but are there ways to simplify yet still put on a first class event in keeping with the times?

Also, along this line, think of a lot of smaller gifts rather than large gifts. Talk to foundations that normally won't give you a grant every year and see if they'll make an exception in these tough times. Ask for a small grant that keeps services available for the most vulnerable in your community.

Finally, remember, this blog loves feedback. What are your ideas?

Email me at kenristine@hotmail.com or post a comment below.