It isn’t every day that representatives from more than 120 non-profits come together in one room in North Texas. But it’s also not every day that Bank of America puts on a special luncheon to share advice with Dallas-Fort Worth charities about today’s economy.
That’s just what happened, though, on Wednesday, September 7, when BofA’s Managing Director/Dallas President/America Private Bank Head of Philanthropic Solutions Jennifer Chandler hosted an event titled “Nonprofit Success in a Changing World: Insights for Navigating Current Market Conditions” at Dallas’ Pegasus Park.
The bank’s Dallas leader greeted guests during a packed reception before the luncheon, remarking on its spectacular setting at Pegasus — a repurposed, mixed-use complex near the Dallas Design District that was created in part by Lyda Hill of Lyda Hill Philanthropies.
Nearly a third of the state’s 100,000 non-profits are located in North Texas, BofA officials said during the event, and those DFW non-profits were well-represented among the attendees. Among them: First Choice Social Services Founder/Executive Director Bridget Vinson-O’Neal and Sixth Floor Museum Executive Director Nicola Longford.
While the guests sat down to enjoy their lunch — seasonal soup, herb-roasted breast of chicken, pound cake with whipped cream and berries — they heard presentations from two of the bank’s top investment experts: Michael Strauss, a managing director and senior institutional investment strategist at Bank of America Private Bank, and William Jarvis, who heads strategic thought leadership for institutional and private nonprofit organizations in BofA’s endowment and foundation group.
Michael, up first, provided a frank, helpful overview of the current economy. He said that after the Federal Reserve “recognized the need to build a rickety bridge over a giant gorge” because of the COVID-19 pandemic — in other words, a need to pump extra dollars into the system — the Fed made a mistake thinking the 8 percent to 9 percent inflation that followed would be “transitory.”
Now the central bank is battling higher prices by raising its benchmark interest rate, which in Michael’s view “should put inflation on a lower trajectory over the next two or three years.” He expects the Fed to raise the benchmark by another 75 basis points at its meeting later this month and then by 50 and 25 at successive gatherings this year, after which the “tightening” could begin to ease.
Are we in a recession yet? “No, not yet,” Michael said. “But we might be in six months.”
For his part, William stressed the need for non-profit fiduciaries to navigate the post-pandemic environment with hope and confidence, as well as knowledge. While “many of us are probably better off than you expected to be,” he said, a “window has opened that may see us through the next 18 months.”
Most likely, this upcoming period — which began earlier this year — will be marked by a shrinking money supply, “lowish” unemployment, a modest deterioration of corporate earnings and then the resumption of a long-term bull market.
To cope effectively with these changes, non-profits will need to have a new strategic plan in place, William emphasized. “The challenge for you is to figure it out,” he said, “to think strategically about asset allocation — stocks and bonds,” for example. “You may need to invest in private versus public companies. How are you going to do things in this new regime?”
He added that three things above all will be critical for board and investment committee members of endowed non-profit organizations to understand: Knowing where you stand (in terms of your portfolio). Knowing why you stand there. And knowing where you’re going. Having a handle on these things will be more important than ever, William said, because “donors want transparency these days,” and they are skeptical.
* Photo provided by Bank of America