I find it amazing how our language changes, how words morph to describe different things and phrases enter the popular lexicon. Perhaps such phrases succinctly capture a mood or sum up an experience that many can relate to. "The new normal" is one example. It is used to describe how a situation that once was shocking has become familiar, and to suggest it is likely to persist.
In finance, "the new normal" has been used to describe the economic situation after the credit crisis in 2008. The phrase was coined in May 2009 by Mohamed A El-Erian, the head of Pimco, one of the biggest active global fixed-income managers in the world. This new world is characterised by low economic growth as individuals, companies and governments pay down debt. With state spending cuts, low growth and high unemployment, the new normal is a tough environment for charities.
A recently released report, the latest in a series produced by PricewaterhouseCoopers, the Charity Finance Group and the Institute of Fundraising, looks at how charities are reacting. Aptly titled Managing in the 'New Normal' - Adapting to Uncertainty, it unsurprisingly finds that charities are facing an increase in demand for services and a much more difficult fundraising environment.
However, it gives further evidence of the sector's resilience and adaptability. It shows that charities are examining other funding sources and that collaboration is on the up. The charities surveyed remain open to drawing down their reserves and a majority say their finance function has become more engaged. Perhaps the most interesting conclusion from the report is that a spirit of optimism is emerging as the sector becomes accustomed to this new normal.
For investments, the new normal was expected to mean lower-than-par equity market returns - some even declared that the cult of the equity was dying. How wrong they were: the UK equity market has returned an incredible 78 per cent since May 2009.
But what if economic growth remains slow? Doesn't that mean that equity markets will deliver poor returns? Not necessarily. A 2005 study by Dimson, Marsh and Staunton analysed returns in 53 countries and did not find evidence of a stable positive relationship between GDP growth and equity returns.
A new paper by Schroders proposes a correlation not with GDP growth, but with expectations. Equity returns are more likely to be good if GDP growth is above expectations. So if we all expect the worst, things might turn out better.
Although recent equity returns are impressive, they pale in comparison with the huge increase in use of the term "the new normal". The Australian newspaper gave the term the title "cliche of the week" in 2011, noting that its use in global mainstream media had increased from 50 times a month in 2002 to 700 by May 2011.
So when does the new normal become just "normal"? And what is normal? We are all required to do our best to deliver our charitable aims whatever the prevailing economic weather - normal or otherwise. It is best to focus on this challenge.
Kate Rogers is client director at Schroders