June 29, 2009
Nonprofits Employ Tougher Measures as Downturn Deepens
The negative effects of the economy on nonprofits has accelerated during the past six months, according to responses from nearly 100 nonprofit leaders participating in a Bridgespan study initiated in November 2008 and updated this past May.
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. 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. “ It shows 92 percent of nonprofits responding to the May 2009 survey indicated they were experiencing the effects of the downturn, up from 75 percent in November and 49 percent reported that their financial situation had worsened. The percentage of nonprofits reporting funding cuts 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.
Bridgespan’s survey indicates a shift in tactics being employed by nonprofits in response to the economy. Five of those efforts include:
- Working closely with existing funders to address challenges 79 percent this past November and 81 percent this past May;
- Redesign programs to achieve outcomes in a less costly manner: 59 percent in November and 67 percent this past May;
- Examine and improve key processes and structures in increase organizational efficiency 48 percent in November and 62 percent this past May;
- Have a clearly defined contingency plan 59 percent in November and 67 percent this past May; and,
- Consciously identify key positions and shift resources to keep these positions filled.
“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,” said Foster.
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This article is from NPT Weekly, a publication of The NonProfit Times.
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