Economic Trends, Donor Behavior, & Q1 Insights
This being 2025, we wanted to do an experiment very much in keeping with the times we live in, we asked Gemini to give us a description of the first 10-minutes of “Saving Private Ryan,” Steven Spielberg’s multi-award-winning opus on World War II, which is often considered the most excruciating opening in film history. Here’s what it came up with:
The opening 10 minutes of Saving Private Ryan are a visceral plunge into the maelstrom of D-Day on Omaha Beach, an unrelenting sensory assault that begins with the jarring crash of the landing craft ramp. Immediately, a chaotic scene of carnage unfolds, the air thick with the metallic tang of blood and the acrid smell of gunpowder as relentless German machine gun fire tears through the ranks. Screams of agony are swallowed by thunderous mortar explosions, sending sand and body parts skyward while soldiers are cut down the instant they disembark, their bodies collapsing into grotesque heaps or sinking silently beneath crimson waves. Amidst this brutal fight for survival, terror-stricken faces and desperate movements paint a horrifying picture, punctuated by gruesome details like severed limbs and vacant stares of the newly deceased. Captain Miller, a figure of haunted intensity, navigates this chaos, his grim face reflecting the dawning realization of the unfolding slaughter, all underscored by a masterful sound design of relentless gunfire, booming explosions, and guttural cries. This unflinching and unforgettable opening strips away any romantic notions of war, thrusting the viewer into the terrifying reality faced by those young men and setting the stark tone for the film's depiction of immense sacrifice and horror.
Purple prose aside, we then asked our robot-buddy to compare that terrifying opening with the first 90-days of the current administration. Here’s what it came up with:
Comparing the opening scene of "Saving Private Ryan" to the first 90-days of a presidential administration, like the current administration’s, highlights the contrast between a visceral depiction of wartime chaos and the complex dynamics of political action. The film focuses on the raw, unfiltered horrors of war, emphasizing the physical and emotional trauma of combat within a singular, intensely violent event, primarily a sensory and emotional experience.
In contrast, a presidential administration's early days involve implementing policy agendas, political maneuvering, and public communication, unfolding over a prolonged period of multifaceted activity with long-term consequences. While the film's chaos is immediate and sensory, political "chaos" involves complex, often abstract, processes and decisions, evoking a wider range of emotions tied to ideology and policy, rather than the film's aim for a visceral, emotional response. Furthermore, the film depicts a very short, intense period, while the first 90 days of a presidency encompass a long period with numerous actions, as seen in Trump's high volume of executive orders, immigration policy changes, and foreign policy shifts.
Essentially, "Saving Private Ryan" offers a concentrated, harrowing depiction of a specific event, while a presidential administration's early days are a complex tapestry of political actions with far-reaching implications.
What we think it left out is that both were hard to watch, had you on the edge of your seat, consistently uncertain about what will happen next, uncomfortable, drenched in sweat, and, ultimately, exhausted, and not sure you ever wanted to see that again. Also, while a ticket to “Saving Private Ryan” cost about $15, the last 90 days were likely significantly more expensive to your endowment, revenue-pipeline, and/or personal 401k.
As such, WhiteLabel Impact wanted to offer a non-AI-aided perspective on the current environment, hopefully, providing some clarity, context, and strategic direction. We’ve structured this missive around two themes:
Navigating Market and Political Volatility: Considerations for engaging with donors and investors during this period of uncertainty, including key insights and next steps.
Q1 Highlights and Looking Ahead: A concise recap of progress in the first quarter and our focus as we move into Q2.
I. Navigating Market and Political Volatility
The recent stock market and political volatility has raised significant questions for endowments. This is a time of uncertainty, and there are best practices for engaging, and sustaining strong relations, with your donors and investors during times of hyper-change, including:
Optimize Liquidity: As John Maynard Keynes commented: “Markets can remain irrational longer than you can remain solvent." In times of uncertainty, the best practice is to optimize liquidity. Remember, you can control costs, not revenues.
Prioritize one or a few issues and Conduct Thorough Research: Before engaging with donors, consider how recent events – such as tariffs, policy shifts, or other economic triggers – might directly impact them or their job. This preparation ensures your approach is informed and sensitive.
Maintain Open Lines of Communication: Check in with your donors. Personal engagement is valuable, especially during periods of uncertainty. Proactive communication demonstrates care and helps maintain robust relationships.
Continue Fundraising Efforts, Thoughtfully: Fundraising should proceed, but with an awareness of the current climate. Consider reframing your requests with sensitivity: "In light of the current economic and political landscape, we invite you to consider a gift, with the understanding that these conditions may understandably shape our conversation.”
Explore Adaptive Strategies: Adaptable giving options can be particularly attractive during times of economic uncertainty, especially for non-institutional/individual donors. Consider presenting "market-sensitive" gift structures such as flexible payment schedules, clauses for economic adjustments, or the acceptance of non-cash assets. It's also worth noting that donors may shift towards utilizing donor-advised funds (DAFs) in uncertain times, making it a relevant avenue to explore.
Our Perspective: We are observing the initial phases of a potentially extended period of trade adjustments, resulting in significant market fluctuations. While some developments may stabilize markets, others could introduce further turbulence (such as the frequently shifting news regarding the easing of certain tariffs). Our primary guidance: maintain focus on your core mission and continue your essential work. Prioritize the elements within your control, emphasize clear and thoughtful communication, and offer flexibility in your engagement strategies.
II. Q1 Highlights and Looking Ahead
Reflecting on the past three (really 9) months, the dynamic nature of the challenges and opportunities within the mission-driven sector have been evident. Early on, understanding the key drivers of effective leadership was a priority, and clear communication consistently emerged as a critical element.
Macro Trends: See-Saw Economic and Policy Landscape
The past three months have brought notable turbulence to the economic landscape. The current administration's active pursuit of its agenda through a massive volume of executive orders and policy changes has spurred over 100 related legal challenges already underway.
These policy shifts are having a broad impact, and the challenges to them mean uncertainty will persist, potentially for quite a while, about whether and when some of them will actually take hold. As a result, the scope, scale, and even the direction of the impacts could be a see-saw ride.
Key indicators to monitor include inflation, unemployment rates, consumer confidence, tariffs, and overall economic growth. We've observed one quarter of negative growth, and another consecutive quarter would technically signal a recession, with betting markets wagering this is the most likely outcome.
We also witnessed significant equity market volatility, with the trend around buying the dips, largely, being broken. Unemployment has remained relatively low (around the critical 4% mark), largely due to private-sector job creation, with government sector, roughly 24% of GDP and 13% of employment, clearly being a drag.
Maintaining inflation close to the 2% target is crucial for sustained economic stability, but ongoing tariffs present potential complexities. If you were alive, and following the markets in the 1970s, this should be familiar territory for you.
Micro Trends: The Nonprofit Sector in Focus
The nonprofit sector is navigating a period of considerable change in response to these macroeconomic shifts and federal policy adjustments:
Threats to Nonprofit Tax-Exempt Status: Several factors currently threaten the legal standing of nonprofit organizations. The IRS is under pressure to scrutinize tax-exempt statuses more rigorously, particularly concerning organizations with activities deemed to have an "illegal purpose" or those seen as contrary to public policy. Recent executive actions and legislative proposals suggest a growing interest in redefining which nonprofits qualify for 501(c)(3) status, potentially impacting those involved in areas like immigration aid or DEI initiatives.
Government Funding: With approximately 27% of US nonprofits relying on government funding, the potential reduction or elimination of many programs is driving organizations to intensify efforts in individual giving to offset these anticipated losses. There is also considerable concern around the nomenclature that nonprofits are attaching to their programs and services, and how that will be perceived by the present administration.
Corporate Philanthropy: Companies are exhibiting caution due to concerns about potential repercussions and economic uncertainty. Many are re-evaluating or adjusting their philanthropic commitments, often favoring less risky giving approaches.
Foundation Support: Some foundations have responded by increasing support to current grantees or adjusting their strategic priorities. However, this increased giving is unlikely to fully compensate for reductions in federal funding.
Individual Giving: Individual donors, who contribute approximately 67% of nonprofit funding, remain a vital source of support. While their giving is less directly impacted by government cuts, market downturns can influence their capacity. Maintaining a focus on individual philanthropy remains essential for nonprofits.
In short, the nonprofit sector is demonstrating its inherent resilience and adaptability. Excluding government funding from overall giving totals, the sector is likely to navigate these economic conditions with overall giving potentially remaining relatively stable. While short-term market volatility will influence individual giving, a longer-term perspective suggests a path to moderate impact.
Yet some sectors, such as international development and others caught in the adverse fire of the administration’s policies, are in much more uncertain territory, and may need to consider transformative actions to sustain their missions.
Looking ahead, important issues remain, particularly the anticipated tax legislation. While changes to charitable deductions seem less probable, potential new taxes on endowment income or challenges to the status of certain organizations with business-like activities warrant attention. On a positive note, the standard deduction might become more inclusive of charitable donations, potentially encouraging giving from non-itemizers. Staying informed and advocating where possible is crucial – we will continue to monitor these developments.
Looking Ahead:
We remain committed to closely monitoring macroeconomic and political developments, providing timely insights on emerging trends and potential risks. We anticipate these external factors may moderate growth within the nonprofit and social enterprise sector in the short term, and, in certain areas, lead to a reallocation of private donor funding. This is, to use the standard journalistic expression, a developing story.
Conditions for Corporate Actions in Nonprofit Sector Skyrocketing: The global economy is contracting, and the debt overhang is a quantum larger than during the Great Financial Crisis. Funding and tax treatment for nonprofits is being disrupted too. This speaks to a confluence of factors that suggest nonprofits, as well as commercial organizations, should consider their merger options.
What’s in a Name? Potentially, Everything: The most politically exposed subsectors within the nonprofit world may need a holistic rethink of their approach - whether in terms of strategic focus, business models, structure, staffing, and communications. We anticipate some potentially major changes in some of these organizations to maintain their resilience.
What’s the Difference Between a Recession and a Depression: A Recession is When Your Neighbor Loses Their Job; A Depression is When You Lose Yours: The job market may become more tense. Between government lay-offs, strategic shifts, and the growing use of AI, more people may be looking for work at a time of structural change in the market. This is unfortunate, but also a time of opportunity. Large numbers of people leaving the US Government are a pool of mission-driven, highly skilled women and men that could be a talent and innovation influx for nonprofits that have the means to recruit them.
The World Has Become a Larger Place: We’re looking at how the dynamics of international cooperation may change over the next couple of quarters in light of tariffs and other policy changes. Will we see less appetite for work on transnational projects, at some or all levels, from business to policy to donors? Will individual or groups of nations move toward new forms of trade ties with one another to offset impacts of access to US markets?
Take Care of the Downside, and the Upside Will Take Care of Itself: While we acknowledge that this missive starts off with a rather bleak anecdote and doesn’t lose pace, we maintain confidence in the long-term resilience of both the economy and the nonprofit sector. While immediate growth may be tempered, the sector's capacity to attract broad donor support remains strong.
Our last point comes from something a wise, and extraordinarily successful investor once told us about the key to his achievements: he focused on the downside, making account of all the exogenous and endogenous factors that could hurt his investment.
Once those were understood, and mitigated (and yes that includes climate disruption), as much as possible, he felt that there was nothing left but upside. Similarly, focusing on the factors within your control, prioritizing clear and thoughtful communication, and offering flexibility in your engagement strategies and keeping the culture and morale of your organization intact is a strong strategy for making it through uncertain times. As with all things, this too shall pass.
And, of course, if WhiteLabel Impact can help, please reach out! We’ve got your back.
WhiteLabel is a growth and transformation firm, partnering with mission-driven enterprises to do the world’s most important work. info@wlimpact.com