Nonprofits and the Economy; a Mixed Bag
Nonprofit organizations have seen a slight turnaround in giving so far this year that mirrors the slow economic recovery, a new survey from the Nonprofit Research Collaborative (NRC) finds. But the small rebound hasn’t been enough to help many nonprofits that are grappling with staff and service cuts even as demand for their services has increased.
The national survey showed that 36 percent of charities reported an increase in donations in the first nine months of 2010, compared with only 23 percent in the same period of 2009.
Thirty-seven percent of charities reported a decrease in giving, a dramatic change from 2009’s 51 percent. Among those experiencing a decline in giving, the main reason cited was fewer individual donations and smaller amounts. Lower amounts received from foundations and corporations also contributed to the overall lower giving amounts at these charities. Giving remained unchanged at 26 percent of nonprofits in 2010 vs. 25 percent in 2009.
Among the 20 percent of nonprofits anticipating reduced budgets next year, 66 percent say they will have to reduce programs, services, or operating hours, 59 percent expect to cut or freeze staff salaries or benefits and 49 percent are planning layoffs or hiring freezes.
The survey is the first product of a collaboration involving six organizations that serve the nonprofit sector: the Association of Fundraising Professionals, Blackbaud, the Center on Philanthropy at Indiana University, the Foundation Center, GuideStar USA, Inc. and the Urban Institute’s National Center for Charitable Statistics.
“For the first time in two years, there is cause for cautious optimism about the nonprofit sector in this economy,” said Bob Ottenhoff, president and CEO of GuideStar. “Nonetheless, in this latest study, as in all prior years, nonprofits also are reporting increased demand for their services. Even as giving increases, philanthropic dollars fall short of the amounts needed to help people in our country and abroad.”
In fact, demand for services increased at 78 percent of human service nonprofits and 68 percent of charities overall in 2010. Charities will be hard-pressed in 2011 to secure funding for growing needs, especially as individual and foundation donors are cautious about boosting support and other sources of funding – including government contracts for services – are cut.
“Younger, less well-established nonprofits have been especially hard hit by the recession,” noted Lawrence T. McGill, vice president for research at the Foundation Center. “Many foundations, seeking to maximize more limited resources, have steered their grantmaking toward organizations they believe have the best chance to weather the economic storm.”
Additional highlights include:
- Half of the organizations represented in the survey receive the bulk of contributions during the last quarter of the year, the period known as the giving season. Of this number, 36 percent predict that contributions received during the fourth quarter of 2010 will exceed those from the last quarter of 2009, 43 percent expect end-of-year contributions to be about the same as last year, and 22 percent anticipate that end-of-year contributions will be lower.
- Nearly half (47 percent) of participants expect their organizations’ budgets to increase next year.