According to Nonprofits, the Recession Is Not Over

Posted by Alex Goldmark

nonprofits economy,

Nonprofits are on the front lines of the recession, tending to our neighbors in need. A new survey released today finds that American charities expect 2011 to be another tough year of increasing demand and dwindling resources.

The Nonprofit Finance Fund 2011 Survey finds that 85 percent of nonprofits expect demand for their services to expand this year, but fewer than half have the resources to meet that growing need. This comes after three consecutive years of increased demand on these nonprofits, the survey finds.

“Years of economic uncertainty have forced nonprofits to adjust to the ‘new normal’ of scarce resources and increased demand,” said Rebecca Thomas, vice president of consulting services at NFF. “Some of the adjustments we’re seeing are creative and healthy... Other effects [such as] layoffs, people who need services being turned away... are further compromising the social safety net at a great cost to America.”

That's a dire warning at a time when elected officials are planning to cut many services further. But there's hope. The NFF is offers some suggestions, thinking mechanically about solving problems by fortifying organizations. NFF surveyed these 1,900 nonprofits about their fiscal solvency as well as their predictions. The groups say it's not just more donations or more revenue they needed, but a better kind of funding: general operating revenue, the kind that can be used to pay the mortgage, not just the sexy new initiatives.

On a related note, the NFF has measured the importance several kinds of funding for nonprofits. In a recent report they found that for organizations looking to scale "philanthropic equity" that can be used to help high impact group scale can be especially powerful in impact for dollar terms from a donor perspective. The lesson seems to be, restrictions on how a nonprofit can use the funds they get, well intentioned as they may be, can hamper good work.

“Last year, we received more restricted money and less of the important general funds that help us manage the organization," said Ann King, executive director of the Tri-Valley Haven, a community resource center dealing with domestic violence, sexual assault, or homelessness. "We’ve said ‘no’ to funding opportunities that didn’t cover their own cost." She added, "unfortunately, the recession is not over for many of us in the nonprofit sector.  One of the hardest things is finding funding for operating support.”

There was some hope in the NFF data though. The survey found 44 percent of groups ended 2010 with a surplus, that's up from 2009, and about a third of the groups reported actually raising more money than expected.

Complete survey data and information.

Image: (cc) by Flickr user taberandrew.

[UPDATED clarifying the language and distinction of "philanthropic equity"]