China’s Financial Crisis and Nonprofits: What to Expect
Global stock markets are reeling after the widely predicted (yet no less jarring) Chinese financial crisis caused the Shanghai Composite to plummet, stoking fears that the world’s second largest economy is facing a bleak economic outlook. The Dow Jones plunged 1,000 points (before rebounding a bit). Markets from Europe to Southeast Asia also suffered big loses.
Throughout the summer, Chinese markets had been on the rise. Between 2014 and 2015, the stock market rose 150 percent, in part because 40 million Chinese citizens entered the stock market for the first time.
Many of these new accounts – however – were founded on borrowed money. Analysts projected the eventual reversal of fortune, as China’s debt-fueled economy and speculative investing were unsustainable bedrocks for the country’s surging financial sector. Last minute efforts by the Chinese government to regulate debt-based investments, pump the economy full of cash, and suspend new public offerings were ultimately too late.
The global financial plunge comes at a poor time for the nonprofit sector. With an amazing post-recession rebound, the philanthropic sector has benefited over the last year from an uptick in giving and other positive developments, such as the growing popularity of #GivingTuesday.
The continued resurgence – however – may be tempered by a growing financial storm, as nonprofit professionals head into the biggest fundraising season of the year with markets in the doldrums. Top-income level donors who leverage assets to make their charitable gifts may be less inclined to give this holiday season, as well as other giving demographics that choose to spend conservatively amidst the confusion and pessimism that may emerge from the Chinese crisis.
Development and nonprofit professionals eager to continue the positive fundraising trends of the last year need to begin gearing up for year-end giving immediately. Only through careful planning and considerable time commitment can fundraisers excel in times of financial uncertainly and flux.