The Effect of the Economy on the Nonprofit Sector, March – May 2009
Executive Summary
A survey of public charity and private foundation employees was conducted on-line from June 8, 2009, until June 22, 2009, the second of three such surveys that will be conducted by GuideStar in 2009. The purpose of the survey was to try to gauge the effect of the downturn in the economy on the American nonprofit sector during the period from March 2009 to May 2009, compared to the same period a year earlier. There were 2,279 usable responses, 2,098 (92 percent) from public charities and 181 (8 percent) from private foundations.
The results of the survey were remarkably similar to those from the survey GuideStar conducted earlier this year that covered the period October 2008 to February 2009. One way to interpret this similarity is to surmise that things haven’t gotten dramatically worse for America’s charitable nonprofits over the last three months. On average, that interpretation may be true, but in reading respondent comments, one senses that at many organizations where things were going badly earlier in the year, they are going worse now. Reserves are being burned up, and services that had already been cut have been cut further. A typical comment from these organizations was “We are hanging on, barely.”
Even among organizations where contributions were up over the period, it was often a crisis that served as a catalyst for increased funding. Reported one executive director, “The only reason we are still solvent is that we had a financial crisis and could no longer pay our utility bill. After media coverage of the situation, we were inundated with generosity and kindness, and the donations covered the utility bill and the excess paid off outstanding bills, with a little cushion for the future. We were very fortunate. We realize this is a one-time deal, but it has put us back on our feet.”
Among the findings:
- More than half (52 percent) of the organizations have experienced a decrease in contributions.
- More than a third (36 percent) of grantmakers gave less money in grants over the three-month period.
- Of the organizations that have cut their budgets, the majority are making ends meet by cutting services (54 percent) and freezing staff salaries (44 percent).
- Eight percent of organizations reported that they are in imminent danger of closing their doors because of a lack of financial resources.
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