During Good Times, Don’t Forget to Prepare for Rainy Days

“A recession is a significant decline in economic activity that goes on for more than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP), although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession.” – Investopedia

I have read quite a few articles and watched videos featuring leading financial experts who are discussing the possibility of a recession. White opinion remains divided, the thought that several predict a recession causes me to revisit the idea of nonprofit organizations establishing “rainy day,” or reserve funds.

From USLegal, “A reserve fund is a fund of money created to take care of maintenance, repairs or unexpected expenses of a business.” Having watched nonprofits suffer intensely during the last recession – the magnitude of which we all hope will never be repeated – my advice for nonprofits during this busy year-end fundraising season is to be prepared. Take some of those year-end charitable donations and sock them away into a savings account or other fund where you can get to them easily if and when needed.

At the conclusion of this blog post, I include links to a few articles that gave me pause. Having said that, one of my favorite experts, Jim Cramer suggests in an article by Elizabeth Gurdus for CNBC, “Cramer explains the market volatility and why another Great Recession is not in the cards” (October 25, 2018). I hope he is right.

But even if a less harmful recession comes our way in 2020 or 2021, why not be prepared? #JustDoIt

Gold Piggy

Food for Thought

I have a primary article on Carolyn’s Nonprofit Blog, “Economy and Philanthropy” that you might also enjoy!

Think Again …

I came across this article by Leslie Albrecht for MarketWatch, “One-third of American households have struggled to afford either food, shelter or medical care” (September 27, 2018). If America’s economy is so strong and vibrant, why is this still an issue? I would argue no economy can be considered “strong” and “healthy” when such adversity exists.

 

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