There is a moment when the reality of decreased charitable giving hits each of us individually. It may be that you experience a reduction in the level or number of services provided by a nonprofit organization. Or when you see the number of clients of a social sector organization increase dramatically. Perhaps it comes when you receive an email or letter requesting an additional donation to help a favorite charity weather hard times. With end of the year solicitation letters on their way and holiday campaign preparing to go into full swing, challenging decisions lay in front of all of us. Whatever our unique place in the world, each one of us has or is about to cross the threshold of being effected by tough economic times.

I found myself at a table this week as a funding organization confronting the issue of preserving the future of the foundation’s value or distributing funds in response to the grant requests being made by important organizations. The foundation had already exceeded its 5% payout requirements for the year. So there the Directors sat, listening to the investment advisor discuss our strategy for the coming months and politely acknowledging that no accurate forecast of the broader markets exists. With a significant reduction in the foundation’s value and the prospect of uncertain times in the future, the conversation turned to self-preservation or entering a grant making death spiral. Clearly the prudent decision was to conserve the foundation’s financial value and position its resources for a sustainable future. No grants awarded, discussions about annual grant reductions, and excess distribution carry-forward balances were the order of the day. Save dry powder for the next round.

For the first time in my association with this funding organization, no grants were made. It felt a bit like a Fourth of July without fireworks or a Christmas without Santa Claus. How could we not fund those who were in more need of assistance than ever before? Upon reflection, many of the grant requests were for capital campaign initiatives and probably will not impact the organization’s operations in 2008 or 2009. But I wondered what set of dominoes are being aligned for the future? A series of unfunded grant requests that will likely roll-over to the next grant meeting in 2009 coupled with the usual flow of returning grantees plus a new mix of those who are making a play for funding in hard times. The longer the economic downturn the more frightening the prospects become of the potential backlog. Like holiday catalogues piling up at the post office, the line of organization’s seeking grants looms larger and more daunting.

And now I look at the first letters soliciting year-end giving support that have come to my mailbox or email account. Many were crafted prior to the financial drama of the last couple of weeks. These communications were sent just before the outer bands of the hurricane came ashore. The organizations speak of rosier times and the impact of their great work. No doubt almost all are worthy of a donation. But as I circle my personal economic resources, I am now weighing the donor’s dilemma. Do I give a little to as many organizations as possible. For some organizations this would be welcomed. A donor retained from last year, I avoid becoming a LYBNT (last year but not this year), the very type of person that an organization will spend additional dollars to communicate with using the theory that asking for a repeat gift from a recent donors has a higher probability of success than getting a lapsed donor who has not contributed in years to consider a gift. Do I communicate to those organizations that I do not give to that they should save their precious resources and we will talk in 2009 but please do not spend more time and money trying to secure my 2008 gift (I just cannot give at this moment in these times)? How about the scope of my giving? Do I circle the inner circle and give what I have to those core institutions? Do I reward them for the place they hold in my heart or the service and programs they provide that I deem most essential? Or do I adopt a conservation mindset like the foundation and preserve financial value for a future day and refrain from making any gift until the storm has passed?

Clearly this is just the start of a debate involving my core values and wallet. I have reached what looks like a philanthropic draw bridge and the platforms are being raised.