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

This post on Carolyn’s Nonprofit Blog was written in fall 2018. Needless to say, in 2020 with the onset of COVID-19, stay-at-home restrictions and global uncertainly about the dramatic changes we are witnessing in all aspects of our lives, having a reserve fund continues to make sense. Smart nonprofits will continue to add to their reserve funds as they are able to do so, while diversifying their fundraising techniques and by conducting ever more in-depth research to identify more prospective donors. Not everyone is negatively impacted by a recession, so let cool heads and smart thinking prevail during these challenging times.

See the links at the conclusion for more information.


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 of a decade ago – the magnitude of which we all hope will never be repeated – my advice for nonprofits during every 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. And you might even consider a specific major gift campaign effort to establish a reserve fund! #SmartThinking

Rainy day funds are important.

Noteworthy Media Coverage (Most Recent First)

National Council for Nonprofits, “Operating Reserves for Nonprofits” (timeless advice, helpful resources)

I have an article on Carolyn’s Nonprofit Blog called, “Economy and Philanthropy” you might also enjoy. It dates back to when I launched my blog during the economic downturn of the late 2000s and early 2010s. Looking back to those days, I would also say, not every business nor philanthropist suffers during a recession. Adjust your fundraising accordingly and do your research.

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