Preparing Your Nonprofit for a Possible Recession

At Team Kat & Mouse, we’re no strangers to external turmoil disrupting the nonprofit space. We began working with organizations in the immediate aftermath of the COVID-19 pandemic; our clients were bold and determined to execute their missions, but still adapting to the disruptions we all experienced in the first days and months of the crisis.

Now, similar disruptions could be on the horizon. With instability in global financial markets, there is increasing discussion of a possible recession in the near future. Nothing is certain, and the economy could rebound, but it’s good for us to be aware of the possibility of an economic downturn.

For nonprofits, a recession raises some natural fears. What if individual donors have less to give? What if corporate giving dries up? What if foundations hold on to more of their funds while the stock market is volatile? 

These are natural concerns, and it’s good for us to consider how they could impact our work. That said, a downturn shouldn’t stop us from executing our missions and focusing on growth in the years to come. Here are some factors to consider now so you can be prepared if a recession ends up happening:

• Understand which funding may be threatened: There may be some funders that will experience obvious threats in the near future. For instance, if your organization receives funding from a corporation whose business will be heavily impacted by changing tariff policies, it’s possible you’ll see a decline in giving. Take stock of those possibilities now and start working on a plan to make up for any lost funds.

  
  

• Communicate, Communicate, Communicate: You can never communicate with your donors enough during challenging times. If the economic situation deteriorates, let your donors know that you remain committed to the work and your partnership with them. If you face internal challenges because of outside events, maintain transparency and ensure your stakeholders know your plans. 

  
  

• Don’t say “no” on a donor’s behalf: There’s a natural temptation to stop asking for money during times of hardship. While there may be times that you have a clear signal not to ask (a corporation pausing giving, for instance), don’t stop engaging with your donor base. For every donor who decides to hold on to their money and pause their giving, there may be another who is looking to double down on their commitment during trying times. Let your donors know how much they mean to you and that, regardless of their ability to give, you appreciate their investment in your mission.

  
  

• Continue expressing gratitude: One of the most inspiring aspects of our sector’s response to the pandemic was the feeling of community that emerged from our organizations. In spite of the crisis, we all felt like we were in it together, and if hard times come, our organizations should cultivate that same spirit with our donors and supporters. No matter what, make sure to spread the love, make donors (current or past) feel a sense of community and shared purpose in the work.

  
  

Get creative: Necessity is the mother of invention, and outside circumstances can spark some of our best new fundraising ideas. At the end of 2019, nobody had ever thought about the possibility of virtual fundraising events - by the end of 2020, they were the norm. This type of innovation can take many different forms, but keep an eye on your peer organizations and what kind of innovative ways they’re using to raise money and engage their supporters. Be prepared to experiment - you may end up discovering a valuable new fundraising tool that will help your organization during a recession and beyond.

A recession may or may not come to fruition, but it’s good for us to be aware of the possibility and start preparing now. Understand possible threats, have a plan in place, and be ready to execute that plan so your organization’s work can carry on without interruptions.

If you’re overwhelmed by the news or need help with planning, we’re here to support you! Drop us a line for a free consultation so we can get your nonprofit ready for outside challenges.