A LIGHT AT THE END OF THE TUNNEL
THE CURRENT DOWNTURN: HOW BAD IS IT?
An IMF World Economic Outlook Report released last 23 April 2009 predicted that a shrinking global economy in the next two years will lead to trillions of dollars in lost business and more business failures; the increased frequency of closure of organisations; surging unemployment; and, more people thrust into poverty, hunger and homelessness.
All told, “…the global economy will shrink 1.3 per cent. Lost output worldwide could reach US$4 trillion this year alone. We can be fairly confident that in 2010 or even 2011, economies will not be back to normal”, the IMF predicted in its dour forecast. If there is any light you’ll be seeing at the end of this tunnel, it’s probably going to be a fast-approaching freight train heading straight at you.
By any measure, this downturn represents by far “…the deepest global recession since the Great Depression”, the IMF report highlighted. All corners of the globe are being affected. Governments today are being told about the immediate urgency of employing contingency plans for infrastructure spending in 2009 to do more for fiscal stimulus because next year will be too late — we would be in the middle of something very close to a depression.
The global downturn guarantees that countries all over the world will be hit with extraordinarily high unemployment rates. With the tremendous number of unemployed people comes the possibility of political unrest and rising crime. Perhaps millions more could be forced into poverty and out of their homes.
I mentioned in an earlier blog entry As The World Shifts that the current economic environment is here to stay with us for a long while. It is going to be a deep and painful experience for most. It will be a time when the leadership of governments, business, households and social service organisation around the world will be put to the test.
For organisations, one of the essential keys to survival during these times of stress is really having just enough nous to embrace a new approach. It is one that widens the support base by creating a strong sense of community and mutual support and one which effectively makes use of technology — technology that helps build capabilities to influence, mobilise, fundraise and attract other types of support in ways that may not have been imagined. And it’s sustainable.
If you’re asking yourselves today how can your organisation survive the recession and how it can effectively build a capability to gain access to scarce financial resources, more customers and supporters, then the answer to those two questions is – invest in social media.
In another blog entry ‘Why Conversations and Stories Matter’ I mentioned that smart leaders of businesses and organisations realise that this is the absolute worst time to stop communicating with current and future customers and supporters. While troubled times won’t last for-ever, organisations that do the best job of staying in touch now will be best-positioned when the dollars start flowing again.
WHAT IS AT STAKE?
In addition to for-profit entities, the impact on social and civic-oriented organisations may be severe not only to themselves, but on the economy as a whole. A Statistics New Zealand report published in 2005 revealed that nonprofit institutions and their volunteers contributed a massive NZ$6.95 billion to the New Zealand economy. The data used to complete that report was sourced from the 2004 Non-Profit Satellite Account, which was the most recent year for which any comprehensive information about the subject was available. That’s when times were good.
It is the first time that an official measure of the economic contribution that nonprofit institutions has ever been made –- from how many exist, to their income and expenditure and how many people they employ. It is also the first time that Statistics NZ have measured the value of the unpaid labour given by volunteers to nonprofit institutions in the country.
Statistics NZ Minister Clayton Cosgrove said the report showed that nonprofit institutions and the unpaid labour given to them in 2004 equated to 4.9% of New Zealand’s gross domestic product (GDP) at a market rate. The report also showed that there were 97,000 nonprofit organisations operating in New Zealand as of October 2005.
At the time of the report, more than one million New Zealanders volunteered for these nonprofit institutions and worked extremely hard. Kiwi volunteers worked an average of 5.1 hours per week compared with 3.2 hours in Australia and 3.1 hours in Canada.
“Nonprofits make a huge contribution to New Zealand’s economic and social well-being”, Mr Cosgrove said. The success or failure of nonprofit organisations relies on the hard work of its leaders, employees and the dedication of volunteers. “The government has an important stake to encourage and support the sector”, he added.
But now that world recession is past our doorstep and reeling onwards on its downward spiral, it is becoming increasingly clear that contributions which the nonprofit sector can make, as it has for New Zealand’s economy in previous years, will just as rapidly dissipate unless a significant number of them take a long hard look at planning for their own self-sustainability, development and delivery of social services and programmes.
Today, everyone is hurting in one or another way and our Government is not exempted from that either. When you honestly look at it, the new Government, businesses and the nonprofit sector are facing some very serious challenges –- shrinking income, increasing demand for support services, decreased demand for goods, and everyone hoping that someone will save the world.
It’s time we stopped dreaming and do something about it!
Click here to read Part 2
Other related blogs:
Can Organisations Survive This Recession? – Part 3
(Opening Up A New World Of Opportunities)
(A Tremendous Opportunity For Nonprofits)
(Building Communities On The Web)
Learn more about the author of this blog and Convergent Digital Solutions Ltd.
