Nonprofits Strained to Breaking Point by Recession, Survey Finds

America's nonprofits, including the safety-net or "lifeline" organizations that many depend on for food, shelter, and other basic services, are being strained to the breaking point by the recession, a new survey from the Nonprofit Finance Fund finds.

The survey (8 pages, PDF) of 986 nonprofit leaders from across the country found that a large number of respondents expect decreases in government funding (43 percent), foundation support (62 percent), and individual contributions (49 percent) this year. Only 12 percent expect their organizations to operate at or above break-even, while 16 percent anticipate being able to cover their operating expenses in both 2009 and 2010. Some 31 percent of respondents said their organizations don't have enough operating cash on hand to cover more than a month of expenses, while another 31 percent said they have less than three months' worth of cash on hand. Compounding the problem, 93 percent of safety-net organizations said they anticipate an increase in demand for their services in 2009.

The survey also found that 52 percent of respondents expect the recession to have a long-term (two or more years) or permanent negative financial effect on their organizations. Actions taken by respondents within the past twelve months or planned for the next twelve months in response to the downturn include reducing or eliminating programs (39 percent), reducing staff or salaries (41 percent), and delaying payments to vendors (23 percent). However, many nonprofit leaders expressed interest in exploring new methods to manage through the crisis and beyond, with 58 percent of respondents saying thay are engaging in scenario planning and 34 percent devoting resources to analyzing the profitability of their programs.

"The survey reveals the precarious state of a sector that is continually asked to do more with less, and brings a long-standing problem into sharp relief," said Nonprofit Finance Fund president and CEO Clara Miller. "Lifeline organizations, 91 percent of which focus on serving vulnerable populations, simply will not be around to provide critical services if we continue with current practices. We must free the entire sector from the archaic assumptions and harmful constraints that keep many organizations perpetually on the brink of survival, and especially at risk in times of recession."

"Nonprofit Finance Fund Survey: America's Nonprofits in Danger." Nonprofit Finance Fund Press Release 03/26/2009.