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Is the economic downturn hurting nonprofits?

April 7, 2009

On March 26 results from a new survey conducted by the Nonprofit Finance Fund raised concerns that the economic health of nonprofit organizations is rapidly deteriorating (according to the New York Times).

img_6833The survey of over 900 nonprofits found that only 12 percent of the organizations expect to operate above break-even, compared with 40 percent reported last year. Just 16 percent anticipate being able to cover their operating expenses in both 2009 and 2010. Obviously, nonprofits are experiencing huge challenges due to the economic crisis.

With corporations and foundations facing losses from the stock market plunge, many are cutting back or halting their usual charitable giving. And with considerable job losses around the nation, individual giving forecasts are unclear. In an end of the year survey covered in The NonProfit Times, more than 40 percent of organizations said that they’re seeing smaller gifts and fewer individual donors. At a time when needs are greater and resources are less, the economic downturn has affected nonprofits in a range of ways.

As a repercussion of the reduced giving due to the slower economy, many nonprofits are forced to make budget and program cuts. Many are also freezing hiring or laying off staff members, in some cases with workforce-reduction percentages in the double digits. In an end of the year survey reported in The NonProfit Times, 40 percent of organizations said they did worse in 2008 compared to the year before, and 41 percent said about the same. Less than twenty percent said they did better in 2008 than 2007.

But even with all of these discouraging economic reports, there is some hopeful news as well.

A Chronicle of Philanthropy survey in March revealed that a majority of Americans who give to charity still plan to donate as much this year as they have in the past. Fifty-two percent of donors said their gifts would be the same as 2008. Only 17.5 percent said they’d give less, and with 30 percent undecided, there is room for people to recognize the importance of giving in hard times.

Many people struggling in this economic crisis themselves are realizing that there are plenty of others out there who need help now more than ever. Of those who planned to give at least as much in 2009, 50 percent said they were willing to make compromises in other areas of their life to do so.

Nonprofits can also benefit from people who aren’t able to contribute financially right now, but perhaps instead could img_6834volunteer their time and skills. On March 15 the New York Times covered “the growing army of the newly unemployed that have been marching into the offices of nonprofit organizations since the recession hit, looking to do some good, and maybe network a little.”

For those who have already experienced job losses due to the economic crisis, volunteering can help them make contacts that could lead to a new job, as well as fill the hours they used to be at the office. And for professionals worried about job security, it’s a great way to stay involved and brush up your skills while benefiting your community.

– Francesca Dalleo

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