The Federal Reserve cut interest rates by half a percentage today, with an additional half-point reduction expected by the end of 2024. This move is significant as it is the first rate cut in four years, and the largest reduction in 16 years. For households, this means borrowing will become less expensive, offering some relief from sustained inflation, which has driven costs 23% higher on average across the past five years.
The large cut initially boosted market trading, but volatility soon followed, with all three major U.S. indices closing slightly lower. This reflects the ongoing uncertainty in the broader economic landscape.
High-income households – an increasingly vital segment of charitable giving as direct response fundraising declines – are particularly anxious. Nearly two-thirds of the top-earning 20% of households ($150K+) are anticipating a recession during the remaining months of 2024, a rate 33% higher than that of lower-income households.
This brings to mind the timeless adage: “Ask for money, and you’ll get advice; ask for advice, and you’ll get money.” For relational fundraisers, now is an opportune time to seek advice from major donors and those with donor-advised funds (DAFs). Given the elevated asset markets, it’s a good time to consider profit-taking strategies.
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