Economic forecasts are pointing to a rocky 2019 and 2020 for the global economy due to a variety of causes. Pre-2007, the thinking was that nonprofits, charities, and churches were more “Recession Proof” than enterprise or commercial ventures due to the patterns of previous economic downturns and market corrections. While giving from individuals and foundations dipped, they didn’t suffer dramatic drops and tended to hold steady in giving amounts compared to previous years.
However, the Great Recession of 2008-2010 taught us a different lesson as outlined in the report below. We’re seeing a global remapping of the economic system towards software and algorithms that defies previous statistics and models about the severity of downturns. If we do see an economic slow down or correction, I’m sure we’ll see a troubling situation for many charities, nonprofits and especially churches more kin to 2008 than 1972.
Not only is the economy itself transforming globally, but the religious landscape in the United States is certainly seeing a complete transformation such as the decline of traditional denomination membership numbers, fewer giving dollars from individuals and foundations, and the rise of the “Nones” the correlates with the decline of the perceived role of the church in American society.
Now is the time to start planning for the eventual economic downturn, whether it happens in 2019 or 2021. Churches of all sizes and shapes and histories need to be prepping and planning ahead with concrete fundraising and marketing strategies and are certainly not “too big to fail.”
“Even if so, though, what’s good for the industry as a whole is going to be bad for a whole lot of individual companies. Enterprises will tighten their belts, and experimental initiatives with potential long-term value but no immediate bottom-line benefit will be among the first on the chopping block. Consumers will guard their wallets more carefully, and will be ever less likely to pay for your app and/or click on your ad. And everyone will deleverage and/or hoard their cash reserves like dragons, just in case, which means less money for new or struggling companies.”
Here comes the downturn – TechCrunch
Nonprofits have faced a two-fold dilemma. On the one hand, they are facing high and growing levels of demand from individuals and families who are struggling in this down economy and in need of their services. On the other hand, the nonprofits find themselves with decreased resources as individual and corporate giving and federal and state funding decline. Who is affected the most? Service-based and Faith-based organizations.
The Impact of the “Great Recession” on the Financial Resources of Nonprofit Organizations