How will the current economic climate impact your budget for 2023? That is the question I will explore in this edition of the Coach, entitled Recession Proofing Your Offerings. I appropriated the title from my first book seen here on the left.
Let’s start by asking, are we headed towards a recession? A pastor texted me that question a few weeks ago. Ironically, a few days before I received this question, I had asked my long-time banking expert and friend, Dennis Moses, the same thing. Without pause, he responded, “Aren’t we already in a recession?” The White House is saying “technically” we are not. I think Americans see it differently.
Whether we are technically in a recession or not I can assure you that your members feel like they are in one. And like it or not, recessions do impact giving. This is why you need to be aware of how the current economic climate will impact your budget and giving in the coming months. Awareness is the first step toward recession-proofing your offerings. Let’s begin with a bit of history on recessions.
Every Six Years – This is not our first rodeo. Recessions are a steady occurrence in American life. In fact, there have been eleven recessions since 1948. We have had at least three since 2000 and could be in our fourth. This means we are averaging about one recession every six years.1.
How will a recession impact your giving? The honest answer is that no one knows. One reason why is that not every recession was followed by a decline in giving. In a few, we saw a giving increase. In 2008, I published Recession Proof Your Offerings. Here is a quote from that book, “Patrick M. Rooney, director of research at the Center on Philanthropy at Indiana University, says that on average giving declines only 1 percent in recession years. The generosity of the American people, he says, is ‘resilient.’” 2. I would agree but a potential 1 percent decline on top of everything else you have experienced might put a strain on your budget.
Another reason why it is hard to make an accurate prediction is that declines in giving sometimes lag behind the recession. In a few recessions, giving did not decline until months after it began. Again, let me quote from Recession Proof Your Offerings with this quote from John J. Havens, of Boston College’s Center on Wealth and Philanthropy. I quoted him saying, “Based on the previous recession, Mr. Havens predicted a lag of up to a year before donations decline”3. He could predict that because of past performances. I believe we are seeing this now, as many of our top-tiered donors dug deep to help get us out of the 2020 recession. Do they have any gas left in their tanks for another recession?
Here is another reason why predicting giving during recessions is hard. Recessions happen region by region and sector by sector, but they produce a national feeling of economic uncertainty. For instance, Detroit has felt recessions harder than places like Washington DC. Yet our politicians and the Mainstream Media assure us that there will always be negativity surrounding any economic decline. This leads to uncertainty about the future and insecurity of our finances. Which can lead to a decline in giving.
The Coach’s View on Recession – I don’t care if we are technically in a recession or not. I simply know that gas and groceries are higher, and people are feeling the pinch of this economy. I know that getting people to give is harder. I know giving still has not fully recovered from the 2020 pandemic. Whatever margin churches had before Covid is gone now. With the looming mid-term elections starting within weeks, you can be assured that the economy is going to be on everyone’s mind well into the start of 2023. My view is, recession or not, we are in for a challenging year for giving.
Here is my question. If you know a crisis happens every six years, wouldn’t it be wise to prepare ahead of time? Let’s work on recession-proofing your offerings now whether we are in a recession or not. How? See, my Bonus Section.
Mark Brooks – The Stewardship Coach
- “After the Fall: Financial Crisis is Affecting Nonprofit Groups in Myriad Ways.” Ben Gose, Paula Wasley, and Ian Wilhelm. The Chronicle of Philanthropy, October 16, 2008
- “Charitable Giving Might Not Melt Down, Philanthropy Scholar Predicts.” Paula Wasley. The Chronicle of Philanthropy, October 8, 2008, online edition.