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 25,000. Last year at this time, it was over 21,000. Two years ago, 18,000; three years ago, around 17,000; four years ago, over 16,000; and five years ago, it was over 15,000 (see a pattern there?). And now, because it’s steadily gained ground, and has increased by 3,000, or 4,000 points in the past few years, analysts are saying there could be another “adjustment” or even crash soon. And 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.
And note that “long-term” does not mean “year-to-year.” Long-term means 3 to 5 years, or even 5 to 10 years.
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: the focus must be on trends over the long-term, and not the day-to-day ups and downs. It may sound counter-intuitive at first, but one must be aware of what’s happening, know the correct processes to follow (even though it may sound counter-intuitive at first), and do 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 – as in “short-time.” And now usually doesn’t mean next year. NOW means NOW. Let’s change one letter of that word so that it becomes NOT. Such a demand is NOT a Development mindset – it’s a Fundraising mindset. It’s certainly not an Advancement mindset either, since Development is just a part of Advancement, which is also impacted by Enrollment, Retention, Marketing, and Asset Management. Remember, the beginning of wisdom is to call things by their right names. Fundraising is also not the same as Fund Raising.
Some organizations have had successful Development efforts in a challenged economy. A national non-profit dedicated to music programs in schools held their first annual appeal eight years ago, targeting as many participants as possible who were involved with the 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 there are these things called “apps” for mobile devices today, and magazines are now being downloaded rather than being delivered to your home’s mailbox).
Today’s takeaway: Development is long-term, and will see results in three to five years. It’s the effective engagement with more and more people with your organization’s vision. Why not the mission? It could be…but it all depends on “how” your organization’s mission isn’t just stated, but conveyed. Mission is tied to “who and what;” vision is tied to “where,” and case is tied to “why.” Those are other elements that need to be defined properly, as one is not synonymous with another.
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, 2010-2018