I suspect much of the trouble is the same as the trouble investors have trying to take advantage of this strategy: it requires marking a better prediction than the prediction the market is implicitly making with its current prices. Although it seems reasonable to predict that a recession will come “soon” since it’s been unusually long since the last one and they appear cyclically (approximately coordinated with the approximately 5-year business cycle?), making that prediction too soon and switching to hoarding assets in anticipation of a drop so you can re-buy assets when they are at the bottom to maximize gains on the way back up will result in unnecessarily giving up potential gains. You might make a lucky guess once, but in the long run you’d need some reason to believe you can predict recessions or else you will perform worse than the market, not better.
So this seems probably only relevant if you are so good at predicting recessions so you can use that to make money and then donate that money, and will probably also require keeping quiet about your prediction and your evidence such that you can maximize the amount of advantage you can take (up to the limit of your funds, including the use of leverage, which might cause you to carefully share your knowledge in an attempt to fill gaps in opportunity you wouldn’t be able to take advantage of yourself). If you’re a non-profit, regular donor, or anyone else, you’re probably best off not trying to beat the market, and only accounting for this in the normal way of holding funds in reserve so you can weather temporarily shocks to the market, i.e. have enough operating capital that you won’t have to draw down on your investments before they recover.
I suspect much of the trouble is the same as the trouble investors have trying to take advantage of this strategy: it requires marking a better prediction than the prediction the market is implicitly making with its current prices. Although it seems reasonable to predict that a recession will come “soon” since it’s been unusually long since the last one and they appear cyclically (approximately coordinated with the approximately 5-year business cycle?), making that prediction too soon and switching to hoarding assets in anticipation of a drop so you can re-buy assets when they are at the bottom to maximize gains on the way back up will result in unnecessarily giving up potential gains. You might make a lucky guess once, but in the long run you’d need some reason to believe you can predict recessions or else you will perform worse than the market, not better.
So this seems probably only relevant if you are so good at predicting recessions so you can use that to make money and then donate that money, and will probably also require keeping quiet about your prediction and your evidence such that you can maximize the amount of advantage you can take (up to the limit of your funds, including the use of leverage, which might cause you to carefully share your knowledge in an attempt to fill gaps in opportunity you wouldn’t be able to take advantage of yourself). If you’re a non-profit, regular donor, or anyone else, you’re probably best off not trying to beat the market, and only accounting for this in the normal way of holding funds in reserve so you can weather temporarily shocks to the market, i.e. have enough operating capital that you won’t have to draw down on your investments before they recover.