“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
Food for Thought | Noteworthy Articles (Most Recent First)
- Jill Cornfield for CNBC, “One-third of Americans have cut their spending this year, and some fear a recession is coming” (July 1, 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 a primary article on Carolyn’s Nonprofit Blog, “Economy and Philanthropy” that you might also enjoy.
As time moves forward, I continue to add new articles and resources.