The smart money on Wall Street and the smart politicians in Washington, DC are looking for ways to get the stimulus money out and circulating to lubricate the economy. Here's a novel idea. How about sending the stimulus money to the squeaky wheels? You know, as in the squeaky wheel that gets the oil. I believe that those who are themselves suffering spend wisely and spend locally. Please allow me to recast the recent news to make my point.
As we all have heard, the first wave of the stimulus package went to financial institutions. Unfortunately, the first pulse of stimulus money did not get out on the street in loans or in purchases of services. Banks kept the money in their own savings accounts to strengthen their balance sheets. As Brian Hussain, Coastal Community Foundation's VP for Finance explained to me "This is all about liquidity. Those with liquidity constraints (read: poor folks) spend their money as they get it. Those who have cash reserves (read: rich folks) save the money. In the first stimulus package they gave the money to people who did not have to spend it. So it did not flow into the broader economy."
If we only have a little bit of money (it is hard to imagine a number near one trillion dollars being prefaced by "a little bit of money" but it is all relative, of course) how best to get that money running through the economy? While they are not asking me, everyone's got their own facts and figures to justify their own stimulus plan. Here are my facts:
Fact One: As you probably heard last week, Blackbaud earnings beat expectations. Blackbaud is a Charleston-based software company that makes accounting and fundraising software for museums, schools, arts organizations, and all sorts of other nonprofit organizations. Nonprofits are still spending money even in this economic slowdown because they need to continue to solicit donations and account for the money that comes in. Even while they are hurting they need to keep the fundraising machinery working. That Blackbaud's earnings are above expectations means that the nonprofit sector, while hurting, has at least not lost its way.
Fact Two: As we all heard, Spoleto took a huge hit this year with the State pulling back its support by hundreds of thousands of dollars. Yet in a recent story in Charleston Regional Business Journal, many of their long-time business sponsors, even those that are hurting, are maintaining their high level support for Spoleto. Why? Because Spoleto returns millions of dollars to the local economy (and by extension to those business sponsors) by creating a draw for tourists and so generating customers for the hospitality industry and everyone else. Nonprofits do not pay distant stockholders so they return money to the local economy almost immediately. The few that have endowment funds use that money to stabilize the flow of money back into the local economy during times like these. There is really no other place for the money to go. Local nonprofits purchase goods and services locally. A gift to a nonprofit is a gift that keeps giving.
Fact Three: There is something magic about working at a nonprofit organization that makes you aware of the rest of the community. A case in point: MUSC Staff have donated more than $173,000 to the "Furlough Fund." These donations are coming from people who themselves are taking major pay cuts, furloughs, and are running the risk of losing their jobs. These donations are to repay lower-paid staff who were among the 1,200 staff required to take four days of leave without pay at MUSC. As reported in the Post & Courier, those furloughs are a result budget cuts by the State. MUSC depends on charitable gifts to survive. People, and organizations, that are dependent on the chariable instincts of others are themselves charitable.
So what I get from this collection of facts is that those in need, spend. Those who spend locally, create benefits that reach us all. And finally, those who have the best interests of the community in mind are where I would want to put my money.
So since the smart folks in Washington and Wall Street are not asking each of us our opinions, let's just decide to create our own personal economic stimulus plans. We can each write a check to a nonprofit of our choice and watch as the money goes around and around and comes back to benefit us all.
One more fact.
Fact Four: Charleston Symphony Orchestra and the Charleston Ballet have forged a new partnership in their efforts to ride out these tough times. They will perform together. Both will benefit. Perhaps this how we will all get through this...together.