Learn From History to Combat Possible Economic Downturn
By Allan Burrows, CEO Capital Development Services
With all the talk regarding inflation and looming recession, what's a nonprofit to do?
According to a Washington Post article in May of this year, former Goldman Sachs chief executive Lloyd Blankfein warned of a "very, very high risk" of recession; Wells Fargo CEO Charlie Scharf said there was "no question" that the U.S. economy is heading toward a downturn; and former Fed chair Ben Bernanke cautioned that the country could be poised for "stagflation" "— a slowing economy combined with high inflation.
Given these predictions, how do nonprofits continue to provide critical services and seek philanthropic support when inflationary costs are rising, financial markets are declining and optimism in our economy is waning.
The answer is clear: learn from history.
1) Recessions are temporary.
The last three recessions—early 90's, early 2000s and the Great Recession—typically lasted between eight to 18 months, according to the National Bureau of Economic Research.
Nonprofits should plan how to outlast this temporary economic setback. Tighten budgets, utilize reserves appropriately, clearly communicate impact, etc.
2) Donors are long-term.
The last recessions and the recent pandemic proved once again that donors are resilient and want to stay invested with you. Size, timing and purpose of gifts during recessions must be considered in a nonprofit's approach to its closest donors. Steward donors well during these times!
Nonprofits need to stay "near, dear and clear" to their donor base, especially with major donors who have continued to provide a substantial amount of philanthropy over the last decade.
3) Campaigns can survive-and-thrive during recessions.
A well-planned and relationship-built campaign can be successful, even during economic slowdowns. CapDev and its clients have raised millions of dollars, even during the Great Recession, when a client has built a strong case, has a well-cultivated donor audience, has built a strong campaign infrastructure, and has enlisted a dynamic volunteer leadership who give generously and work closely with their peers to give as well.
Nonprofits need to take the time to properly ready themselves—and their donors—for the campaigns ahead. Leaders should be enlisted and engaged early so that they have "ownership," especially when they also often have the relationship with those who can make a difference in the organization's success.
As the famous baseball bard Yogi Berra's attributed quote says, "Predictions are tough, especially when they are about the future." It is hard to know exactly how a possible recession will impact services and support. CapDev's encouragement is simply focus on what you can impact: donor relationships and stewarding of resources! If you follow this relational philanthropy model, you and your nonprofit can weather the economic ups and downs that may await!