by Thomas W. Mesaros of member firm The Alford Group

Like many not-for-profit organizations these days, you are probably asking the following questions: Will the economy ever recover?  How soon might we begin the initiatives to fulfill our strategic plan?  Is this the time to begin, or should we wait until we are sure the time is right?  These are good questions and the answers may seem elusive.

Since World War II there have been 17 economic recessions and 17 recoveries.  We are currently in the 17th recovery but for many, especially the unemployed and the underemployed, it feels like this recession is continuing and recovery will never get here.  Many economic “prophets” or prognosticators have predicted a double dip (especially over the past summer months) but those fears seem to be easing.  From the end of 2008 and into 2010 we experienced the worst recession since the Great Depression.  Let’s not forgot that this is not normal.  It has been tremendously difficult and it will take time to recovery properly.

But signs of recovery are appearing.  Is this the time to make your move on a new initiative?  Here are some key facts to consider:

  • Currently there is $2.7 trillion sitting in money market funds earning about .25% annually.  (That is a lot of money earning nothing).  This does not count checking accounts, traditional saving accounts or short term certificates of deposits.  There is plenty of money out there.
  • The savings rate in America has been running just under 5% for the last 10 quarters.  People are saving rather than spending – which is one reason the economy is only slowly recovering.
  • Credit card debt is going lower every month rather than increasing, as it was before the recession.
  • During March 2009 the DJIA hit a low of 6,500.  Today (October 26) the DJIA closed at 11,869.  That is a percentage gain of 82% over 31 months.  Many people have made a lot of money during that 31 month period.
  • The unemployment rate nationally is around 9%.  Some states are better than this and some states are worse than this.  For individuals with a college education the unemployment rate is only 4% – a significant difference.
  • Corporate profits continue to be up as companies run “lean and mean” rather than increase employment.
  • If the European Union can resolve its debt issues, especially around Greece, the stock market will grow even more rapidly.

As not-for-profits ponder these facts, we are advising them to do the following:

  • Think long term and be nimble short term.  This is the time to do significant planning to better meet the community needs your mission calls you to address.
  • Focus on community need, not your organizational needs; donors will respond to those who are improving the lives of people.
  • Be bold in your approach.  During recessionary periods community needs increase, and the response should mirror that increase.
  • The economy will recover and those organizations that have a clear vision and direction will attract the attention of their community leadership during that recovery.  Develop that clarity and begin to move forward.
  • Board and senior staff need to act in unison.  The not-for-profit dynamic has a duel leadership aspect.  Organizations with strong staff and strong boards, where each understand their respective roles, flourish.  Be sure there is unity of purpose and vision before you embark on any new initiative or campaign.  If there is, you have a much greater chance for success.

These are difficult times, but it is time to move ahead.  Get in front of the pack and move forward now!

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