Nonprofits Report Dangerous Financial Impact of Down Economy

The survey of 986 nonprofit leaders in markets nationwide found only 12% of all respondents expect to operate above break-even this year, according to a press release. Just 16% anticipate being able to cover their operating expenses in both 2009 and 2010, and 31% say they do not have enough operating cash in hand to cover more that one month of expenses, with another 31% saying they have less than three months’ worth.

More than half (52%) of respondents expect the recession to have a long-term (2+ years) or permanent negative financial effect on their organizations, the press release said. Many organizations are experiencing a decline in funding even as demand increases. In 2009, 43% of respondents expect a decrease in government funding; 62% expect a decrease in financial support from foundations; and 49% expect a decrease in contributions from individuals.

When asked to identify actions taken within the past 12 months or planned for the next 12 months to weather the financial crisis 39% identified “reduce or eliminate programs”; 41% identified “reduce staff or salaries”; and 23% identified “delay payments to vendors.”

Many nonprofits leaders who responded to the survey expressed interest in exploring new ways to manage through the crisis and beyond, NFF said. Fifty-eight percent would like to conduct scenario planning; 52% want help communicating their financial picture to board and/or funders; and 34% are interested in program profitability analysis.