Summary of US Dollar’s Recent Activity
The peaks in the dollar/shekel exchange rate this past year and a half make me more nauseous that the merry-go-round at the local playground (and they really make me queasy). The dollar tanked and leveled out against the shekel at an 11-year low in late May of 2008, trading for 3.24. As if to prove itself, the dollar then proceeded to rise faster than analysts had predicted, peaking a little less than a year later in Mach of 2009 at 4.25. Since those glory days of March, the dollar has plummeted against all of the world’s currencies. Specifically, the last six months have seen the dollar drop against: the Pound, 7.2%; the Shekel, 8.9%; the Euro, 8.7%; and the Yen, 10.6%. With world markets (and charities financed by donations in US Dollars) hanging on the dollar’s every move, things are, once again, looking just a tad scary. Not monster-in-the-closet terrifying, mind you, but enough to make me bite my nails more often than I should.
Haaretz on Sunday summed up the danger of a low US dollar quite nicely:
The weakness of the dollar is problematic for almost the entire world…a low dollar makes it hard for them [Europeans and Israelis] to export their goods to the United States and other markets around the world that are linked to the dollar…The Americans must guard the dollar’s position as the world’s main currency for trade and savings, otherwise they’ll have a hard time continuing to issue bonds and rolling over their huge national debt.
What Should Nonprofits Be Thinking
What we in the nonprofit world need to realize is that the problems with the dollar are much larger than the USD/NIS rate of exchange. Changes in the dollar affect the world – Israel is just one of many. The Bank of Israel’s moves to buy dollars might be helping a little and the in the short term stemming the decline of the greenback, but Bank of Israel Governor Stanley Fischer is similar to David trying to fight Goliath armed with only a rubber band. Many argue that the problems of the US dollar are larger in scope and strength than anything that Fischer can throw at it.
With the future of the US Dollar unknown, where does it leave nonprofits – local and international – that operate in Israel financed by donors and/or foundations in the United States? Two words: budget low. A director of a nonprofit summed up his policy as follows: “I budget and then cut it by 10%. Then I cut it again another 10%.”
Taking it One Step Further
The primary responsibility of directors of charitable organizations is to ensure the continuation of their organization; they must adequately plan in order to protect their organization’s vital work. A surplus at the end of the fiscal year does not send the message of “mismanagement” to donors. Conservative budgeting that guarantees the survival is objectively a very good thing and should be at the forefront of every director’s mind.
As a former boss of mine once said, “Charities can’t do charity.” Simply put, doing one favor or helping out one extra family could, literally, tip the balance, sending the organization into debt. Fiscal responsibility and a broad vision are crucial. Sometimes the needs of the many really do outweigh the needs of the few.