“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 the fall of 2018. I continue to update it with important discussions as they become available. 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 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.
Food for Thought | Noteworthy Media Coverage (Most Recent First)
National Council for Nonprofits, “Operating Reserves for Nonprofits” (timeless advice, helpful resources)
- Fidelity Charitable, “Sustain All Nonprofits” (March 20, 2020).
- The Editors of NPQ: Nonprofit Quarterly, “On COVID-19, the Recession, and Nonprofits: A Special Series” (March 17, 2020 concerning the Spring 2020 issue).
- Mark DeCambre for MarketWatch, “Here are 5 reasons the stock market booked its worst decline since 2008, and only one of them is the coronavirus” (February 28, 2020).
- Sergei Klebnikov for Forbes, “America’s CFOs Are Warning Of A Recession. Here’s Why That’s An Important Indicator” (January 13, 2020).
- Daniela Cambone for TheStreet, “The ‘Greatest Depression’ Is Coming; This Is How to Prepare” (November 1, 2019). “Celente added that the Fed’s latest rate cut can be likened to ‘monetary methadone,’ where liquidity is pumped into a credit system that is already over-levered. ‘It’s just shooting in more money to keep the addicted bull running. It’s not boosting economies around the world, we’re looking at a global slowdown, and the numbers are there, and even people like the IMF, the World Bank, one after the other, they’re warning of a recession,’ Celente said.”
- Alan Murray and David Meyer for Fortune, “Economy on a Knife’s Edge: CEO Daily” (October 11, 2019).
- Ksenia Galouchko for Bloomberg, “Recession Fears Spike to 2011 High as Risk of Bubbles Spreads” (August 13, 2019).
- Jill Cornfield for CNBC, “One-third of Americans have cut their spending this year, and some fear a recession is coming” (July 1, 2019).
- Erik Sherman for Fortune, “A Majority of Economists Think the Next Recession Will Come by the 2020 Election” (June 4, 2019).
- Mary Romano for Fortune, “This Recession Predictor Just Hit Levels Not Seen Since 2007” (May 30, 2019).
- Jen Wieczner, Rey Mashayekhi, Lucinda Shen, Erik Sherman, Shawn Tully, and Nicolas Rapp for Fortune, “Spot the Next Recession: Today’s good times can’t last forever. Here’s how to decode the economy’s messages before a bear market eats your savings” (April 24, 2019).
- Chris Morris for Fortune, “Alan Greenspan Warns Investors: Bad Economic Times Are Looming” (December 18, 2018).
- Brian Sozzi for Yahoo Finance, “Not terrified of a recession? These stocks hint you should be” (November 12, 2018).
- Emily Stewart for Voz, “How close are we to another financial crisis? 8 experts weigh in” (September 18, 2018).
- Sean Williams for The Motley Fool for USA Today, “6 signs we’re closer to the next recession than you think” (September 5, 2018).
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.