Nonprofits Employ Tougher Measures as Downturn Deepens

The negative effects of the economy on nonprofit organizations has accelerated over the last six months, according to responses from nearly 100 nonprofit leaders participating in a Bridgespan study initiated in November 2008 and updated in May 2009. The percentage of nonprofits that have resorted to layoffs, broad-based programmatic reductions, and reserve draw-downs has increased measurably. Nevertheless nonprofit leaders appear to be optimistic about the future. Almost half of the respondents reported that they believed their organization would be on stronger financial footing in a year’s time.

Since that initial survey, the country has a new President, and a new budget and stimulus package. Nonetheless, as the economic crisis has deepened, the situation for nonprofits has continued to deteriorate. According to Bridgespan partner William Foster, “This survey highlights just how tough times really are. Ninety-two percent of nonprofits responding to the May 2009 survey indicated they were experiencing the effects of the downturn, up from 75 percent in November. Forty-nine percent reported that their financial situation had worsened, and the percentage of nonprofits reporting funding cuts has increased from 52 percent to 69 percent. Further, the percentage reporting cuts of more than 20 percent has increased from 13 percent to 24 percent.

Further analysis of all of these tactics suggests that large nonprofits in particular have been using the economic crisis as an opportunity to strengthen their organizations by redesigning programs to achieve outcomes in a less costly manner, actively looking for newly-available talent, and examining and improving key processes and structures to increase organizational efficiency.”

Here’s the complete results, Managing in Tough Times: May 2009 Nonprofit Leaders Survey Update.