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A Time for Counter Cyclical Investing

An Interview with Ken Nickerson

 

The Philantrhopic Initiative - September 2008

While many donors may step back onto the side lines until the smoke clears, we sat down for a conversation with one donor for whom recent turmoil has brought clarity and a renewed sense of focus.

Ken Nickerson is no stranger to the ups and down of the financial sector. A former hedge fund manager who recently retired from Morgan Stanley (confirmed to exist in some form at the time of publication), Ken reminds us that our entire financial system is based on trust. When enough of that trust erodes, the entire system is at risk for complete collapse. Likewise, there is an inherent sense of trust that supports private philanthropy – a sense of trust we’d need to uphold especially during times of chaos.  

“While the uncertainty of the market place makes us nervous and has hurt many of us financially – it is really only impacting our marginal behaviors.” Ken said. “Think about the impact this will have on those who do not have a cushion. Those who are right on the edge. It will be devastating.” 

“As donors, we may have lowered capacity during a recession, but we can choose to be more generous because this is when follow citizens truly need our help. A great philanthropic investor should be a counter cyclical investor.”

Ken reflected on the possibility of the huge increase in basic needs we’ll see if we slip into prolonged recession – in addition to the struggles donors will face in sustaining their giving.  “Some donors will hold back, and even small differences in giving will have an impact. Concerns about paying college tuition and saving enough for retirement are real, yet, we’ll see more and more people who can’t meet car payments and won’t be able to get to work, we’ll see more people who can’t make their rent or mortgage and be forced to move into shelters, we’ll see medical events that trigger personal economic spirals. There are so many urgent needs – and given incredibly high energy prices and increased food prices – any downturn will really stretch our most vulnerable citizens.”

To many wealthy donors, home foreclosures are abstract; the stock market upheaval and restructuring of the financial industry is real. As Ken remarked, “This is a wake up call and an opportunity for all of us to think carefully: What does it mean to be generous?  If you want to help people in need, now is the time.”

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