Managing Through Tough Times

Despite recent stock market gains and speculation that the recession has ended, the situation for many nonprofits continues to decline. Over the last year, The Bridgespan Group has reached out to approximately 800 nonprofit leaders at six month intervals, asking questions about how their organizations were managing through the downturn and received approximately 100 responses to each survey. Their latest survey, conducted in the fall of 2009, showed that 93 percent of the nonprofits surveyed were experiencing the effects of the downturn, up from 75 percent one year ago.

The number of organizations that reported funding cuts has increased to 80 percent from 52 percent; the number dipping into reserves rose to 48% from 19%; and 43% have reduced staff this year compared to 28% last. In the past six months, the situation for many nonprofits has continued to deteriorate: 44 percent of leaders reported that they are worse off now, while only 15 percent said their situation had improved.

Not surprisingly, even though funding has declined, the demand for services has increased: 58 percent of respondents in November 2009 noted an increase in demand versus 30 percent a year ago.

While the hardship of prolonged financial pressure cannot be overstated, many organizations appear to be making the difficult decisions that may gain them stronger footing as market conditions improve. They are:

• Improving processes: contingency planning is up, with 70% of organizations reporting that they have initiated plans compared to 48% last year;
• Strengthening funder relations: 42% said some funders are providing additional support compared to only 11% last year; and
• Getting more bang for the buck from programs: 69% of organizations are redesigning programs to achieve outcomes in a less costly manner compared to 59% last year.

GuideStar has also recently released new survey data on 2009, Charities Report Decreased Contributions, Increased Demand.