National Council of Nonprofit Associations

August 2009 – Special Reports No. 8 and 9 Highlight Recent Survey Data on the Impact of the Economic Crisis on the Nonprofit Sector

New survey data reported in the spring and early summer of 2009 sheds light on important collective experiences of nonprofits all around the country:

• Contributions and grants, from all sources: individuals, foundations, corporations and government, are all dramatically decreased from levels a year ago.
• Foundation assets have shrunk by, on average, 26%.
• Corporate giving programs are giving less, if at all.
• Individuals are giving fewer dollars and fewer gifts. Giving USA reported that overall giving was down by 5.7% in 2008.
• Demands on charitable nonprofits are dramatically increasing as individuals rely more heavily on social services provided by nonprofits to address their own financial challenges.
• Arts and cultural nonprofits are experiencing a decrease in the demand for their programs, so their ticket sales are down.
• Operating costs continue to increase, especially in connection with health care insurance.

Finally, while a volunteer “surge” has not materialized, many organizations under fiscal stress struggle and are only able to maintain the same level of services they provide to their clients by utilizing volunteers. Yet many other organizations, especially those that have decreased their staff considerably, are simply unable to fully absorb or manage an increase in volunteers. Therefore the “volunteer surge” we’ve been hearing about is not (to date) the solution some believed it would be, to either our society, or the sector’s woes.

While these bullet points do not shed a pretty picture, we share them because of the significance of these findings, and to highlight the fact that you are not alone if your nonprofit is feeling financial stress. Not only are you in good company among your nonprofit peers, but local governments are also struggling. This combination has resulted in a near-crisis that all sectors: government, nonprofit and for-profit, need to recognize: nonprofits that provide essential services in our communities are at risk.

The National Council has prepared “Special Report No. 8” to highlight and synthesize the recent survey findings that illustrate how challenging the current environment is for the nonprofit sector. Each nonprofit’s struggle with decreased revenue and increased costs as well as increased demands for services are echoed around the country in every community. We can learn from each other’s experiences, and together the sector can ensure that our partners in government and philanthropy, as well as the donating public, knows what a challenging environment we are navigating.

Special Report No. 8 issues a polite but firm “warning call” to our partners in government: the community safety net provided by the nonprofit sector is unraveling – government should not, and cannot expect nonprofits to maintain services to needy individuals in our communities in the current environment, and government cannot, and should not expect to balance its budget on the backs of nonprofits.

Special Report No. 8 serves also to raise awareness about how serious the crisis is, and will continue to be, for the sector, and to spur the sector’s leaders to serious action. Nonprofit sector leaders must prepare individual nonprofits for a protracted financial shortfall, coupled with heightened expectations for the delivery of services to individuals and communities that will extend well into the nation’s economic recovery.

The National Council’s related Special Report No. 9 [LINK] summarizes the findings from recent national and state specific surveys and focuses on actions nonprofit sector leaders can take to help their organizations, as well as the individuals and communities they serve, make prudent decisions about the allocation of scarce resources.

Below are links to recent national surveys and studies referenced in these special reports:

• Guidestar: Report on the Effect of the Economy on the Nonprofit Sector

• John’s Hopkins University Listening Post Project: Communique No 14: Impact of the 2007-209 Economic Recession on Nonprofit Organizations.

• The Bridgespan Group: Update to “Managing in Tough Times – 7 Steps”

• Nonprofit Finance Fund “America’s Nonprofits In Danger”

• Giving USA 2009: The Annual Report on Philanthropy for the Year 2008.

State Specific Surveys:

• Arizona: Finding a Way – Arizona Nonprofits Economic Survey

• Colorado: Weathering the Storm: Challenges and Opportunities Facing Colorado Nonprofits During Recession

• Connecticut: How Late Payments Harm Nonprofit Providers

• Idaho: Idaho Nonprofit Current Conditions Report - January 2009

• Illinois: Economic Outlook 2009

• Louisiana: Louisiana Nonprofit Sector Fiscal Health Survey

• Michigan: Financial Crisis Impacts Nonprofits in Michigan

• Minnesota: Nonprofit Current Conditions Report June 2009

• New Jersey: 2009 New Jersey Non-Profits: Trends and Outlook