As we’ve seen in the past few years, the stock market can be at its all-time high on a particular date in a particular year, such as it was on October, 2007, and then crash a year later, then be at a significantly low point further down the road (February, 2009) and now it’s back in record territory – over 21,000. Last year at this time, it was around 18,000; two years ago, it was around 17,000; three years ago around this time, it was over 16,000; and four years ago, it was over 15,000 (see a pattern there?) But even though more and more people are opening eTrade accounts to make money on the money they make, experts still say that the Stock Market is best measured over the long-term than it is in the day-to-day, month-to-month, and, as shown here, year-to-year performance.
Here’s a piece of advice that may sound a bit strange at first: financial advisors encourage working individuals to keep contributing to their mutual fund retirement accounts when the market is down. Now why would you want to continue to put your hard-earned money into investments that are losing value?
Because investors know you buy when the market is low, and sell when it’s high. If you’re funding your retirement, you can’t really take funds out without incurring significant penalties. So some folks decide not to put any money at all in if it’s not going to make money for them immediately.
However, if you still have the capability to invest funds by putting them in the stock market, contributing the same monthly investment will purchase quite a bit more shares than the same amount did when shares were trading at higher levels. Then, when the market begins to climb again, those additional shares will significantly increase in value. That’s the other reason why investors say that you must diversify – so you can take funds that have reached a plateau, and reinvest them in places that have bottomed out and are beginning to climb.
The bottom line – it’s all about trends over the long-term, and not the day-to-day ups and downs. It may sound counter-intuitive at first, but it’s all about being aware of what’s happening, knowing the correct process to follow (even though it may sound counter-intuitive at first), and doing the little things right on a consistent basis which lead to a successful long-term investment portfolio.
Such practices and long-term view also lead to a successful financial Development program!
So what’s the problem? Everyone wants to see results NOW, and that’s Fundraising mindset…NOT a Development one.
Some organizations have seen quite successful Development efforts in a challenged economy. A national non-profit dedicated to music programs in schools held their first annual appeal seven years ago, targeting as many participants as possible that were involved with their organization to help meet its budget. Even they acknowledged that selling products (one of the most popular forms of non-profit fundraising) just aren’t enough anymore. While some leaders think, “Let’s have more fundraisers,” if everyone is tightening their collective belt, then six fundraisers now might raise the same amount as three did a couple of years ago. And, keeping in mind the Law of Diminishing Returns, those six fundraisers might even earn less, especially if your school keeps going after the same people time and time again. Further, in difficult economic times, unnecessary purchases are the first things to be cut from the family budget. Unfortunately, those are usually the things that fundraisers sell, and kids (nor parents) don’t need to hear, “Sorry, I don’t need a candle, some cookie dough, wrapping paper or magazines right now.”
(By the way, is your school still selling magazine subscriptions? You know that there are these things called “apps” today, and magazines are now being downloaded to one’s mobile device rather than being delivered to your home’s mailbox).
Also last month, it was stated that the letters in the word “CHANGE” can stand for six aspects of development, since development is a change from fundraising – Communication, Happenings, Appeals, Networking, Grants and Gifts, and Enrichment/Educate/Energize are activities that take place within a development structure. In September and October, we’ll take a closer look at three of these elements per month, and, provide more details on changing that word (we could call it a metachange), taking into consideration three more things a Development Director needs to do.
© Michael V. Ziemski, SchoolAdvancement, 2010-2017