Assessing the Likely Impact of Recession / Prolonged Inflation on Nonprofits

A simple process to assess the impact of the new economy on nonprofit fundraising, staff retention and program success.

The world just witnessed the longest economic expansion on record from 2009 to 2020. This is the economy in which we recruited donors and volunteer activists, served communities in need and hired our staff. Many nonprofit leaders and managers (including my self) have never known what it is like to navigate choppy economic waters such as a recession or inflation. But what happens if economists are correct and we are headed toward both a potential recession and/or prolonged inflation in the coming months and years?

Predicting the likely impacts on fundraising, program operations with volunteers, beneficiaries and on staff development and retention is not an easy task. Start by brainstorming on a list of scenarios of how economic change will impact your core stakeholders (donors, staff, volunteers, beneficiaries). I recommend thinking about both opportunities and threats for each stakeholder. This is important because in reality we know that past crises have been opportunities for creativity and decline.

Next, I suggest using a simple probability / consequence chart to rank and prioritize scenarios based both on their likelihood to happen and their amount of consequence on the organization.

The most important use of this process is to generate discussion about the known and unknown risks to organizational resilience now that the longest period of economic boom on record may soon come to an end. Based on the prioritization above boards and nonprofit leadership can generate an action plan to manage these risks proactively.

Are you currently thinking about the potential impact of the economy on your organization’s mission? If so where are you in your planning?

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