Last November, when we reported on the results of our annual nonprofit economic survey, we warned, "Fasten Your Seatbelts: It's Going to Be a Bumpy Giving Season." As 2008 ended and 2009 began, we saw a deluge of news reports about the economy's impact, including its effect on nonprofits. Given the severity of the downturn and the number of stories about organizations adversely affected by it, we decided to do a follow-up nonprofit economic survey.
We invited Newsletter subscribers associated with 501(c)(3) public charities and private foundations to participate in the survey. Readers representing 2,979 organizations took the survey on-line between March 2 and March 16, 2009. Here’s what they told us.
Bumpy Giving Season and New Year, Indeed
We asked, "Did total contributions to your organization increase, decrease, or stay about the same between October 2008 and February 2009, compared to the same period a year earlier?" Some 52 percent of organizations reported a decrease. That figure was significantly higher than the 35 percent who reported lower contributions for January-September 2008, which was nearly double the 19 percent who reported a decline for January-September 2007:
Change in Contributions
|Period Covered by Survey||Contributions Decreased||Contributions Stayed about the Same||Contributions Increased||Don't Know|
|October 2008-February 2009||52%||27%||20%||1%|
Some 31 percent of organizations stated that contributions had dropped "modestly," and 21 percent said that they had fallen "greatly." An equal number—71 percent—of organizations for which contributions had dropped cited "Gifts from individuals were smaller" and "Fewer individuals gave" as causes of the decrease.
Grantmakers also felt the pinch. About a third (31 percent) said they gave less money in grants over the five-month period than during the same period a year earlier.
A total of 59 percent of organizations reported increased demand for their services between October 2008 and February 2009. Some 32 percent said demand had increased "modestly," and 27 percent said it had grown "greatly."
Eight percent of organizations reported that they were in imminent danger of folding because of financial reasons.
How Nonprofits Are Coping
In addition to learning what charities and foundations were experiencing, we wanted to find out how they were responding to the crisis. Only 35 percent of organizations had cut their 2009 budgets from 2008 levels. That more had not done so, however, reflected more of an increased need for their services than prospects for raising money to meet that demand.
Of the organizations that had cut their budgets, 57 percent had reduced services, 45 percent had frozen staff salaries, 37 percent had imposed hiring freezes, and 30 percent had resorted to layoffs. Other strategies included salary reduction (20 percent), reduction in employee benefits (20 percent), and reduction in operating hours (13 percent).
Although a majority (57 percent) of grantmakers reported that they had not altered their grantmaking practices or guidelines in response to the downturn, the remaining grantmaking organizations (less the 2 percent who did not know) reported that they had:
- Cut back on types of programs funded—17%
- Reduced amounts of payouts they had previously committed to—8%
- Stopped accepting grant applications—7%
- Only accepted applications from organizations they had funded before—5%
- Increased grantmaking specifically to help grantees cope with the economy—5%
- Did not make payouts they had previously committed to—1%
More Follow-up This Year
Because of the severity of the current crisis, we will conduct another nonprofit economic survey next month. The results will be published in the August issue of the Newsletter. We’ll conduct our annual nonprofit economic survey in October. Those results will appear in our December issue.
Suzanne E. Coffman, May 2009
© 2009, GuideStar USA, Inc.
Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter. Chuck McLean, GuideStar’s vice president for research, and Carol Brouwer, research assistant, conducted, analyzed, and prepared the report on the March 2009 nonprofit economic survey.