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Glass Half Full or Half Empty? Results of GuideStar's Latest Nonprofit Economic Survey

August 2009

"We’ve got good news and bad news." The old joke fits the findings from our latest nonprofit economic survey, which looked at how charitable organizations fared financially between March and May 2009. The good news is that the proportion of nonprofits reporting decreased contributions, 52 percent, remained unchanged from our previous survey, which covered October 2008 through February 2009. So things apparently didn't worsen dramatically for charitable organizations between March and May.

The bad news is that the numbers don't reflect the stress the economy is placing on nonprofits. As one participant put it, "We are hanging on, barely." Another reported, "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."

Still, the numbers do give us insight into the impact that the recession is having on charitable organizations. For the specifics, read on.

The Survey

Newsletter readers representing 2,279 charitable organizations—2,098 public charities (92 percent) and 181 private foundations (8 percent)—took the survey on-line between June 8 and 22, 2009. This was the second of three nonprofit economic surveys that we will conduct in 2009.

Contributions

We asked, "Did total contributions to your organization increase, decrease, or stay about the same between March 2009 and May 2009, compared to the same period a year earlier?" The results were remarkably consistent with our survey covering October 2008 through February 2009:

Change in Contributions
Period Covered by SurveyContributions DecreasedContributions Stayed about the SameContributions IncreasedDon't Know
March-May 200952%29%18%1%
October 2008-February 200952%27%20%1%

The primary reasons that contributions dropped remained consistent with the earlier survey as well:

Reason Contributions DecreasedOctober 2008-February 2009March-May 2009
Fewer individuals gave71%69%
Gifts from individuals were smaller71%68%
Corporate gifts were smaller39%38%
Private foundation grants were smaller34%37%
Corporate gifts were discontinued25%23%
Private foundation grants were discontinued23%22%
Government grants were smaller13%14%
Government grants were discontinued8%7%
Government contracts were smaller6%6%
Government contracts were discontinued3%3%

Grantmaking

We asked grantmakers, "Did the total amount of money your organization awarded increase, decrease, or stay about the same between March 2009 and May 2009, compared to the same period a year earlier?" Their responses showed only slight change from our previous survey:

Change in Grantmaking
Period Covered by SurveyAmounts Awarded DecreasedAmounts Awarded Stayed about the SameAmounts Awarded IncreasedDon't Know
March-May 200936%39%23%1%
October 2008-February 200931%44%22%2%

As we did in our previous survey, we asked grantmakers if the economy had caused them to change their grantmaking practices or guidelines between March and May. Some 43 percent said that they had, compared to 41 percent in our previous survey. Specifically, they:

Change in Grantmaking PracticesOctober 2008-February 2009March-May 2009
Cut back on program types funded17%20%
Reduced payouts already committed to8%9%
Increased grantmaking to help grantees cope5%7%
Stopped accepting applications7%6%
Accepted applications only from previously funded organizations5%6%
Did not make payouts committed to1%1%

Demand

Some 58 percent of organizations reported that demand for their service had increased. Again, the responses to this question were consistent with our earlier survey:

Change in Demand
Period Covered by SurveyDemand DecreasedDemand Stayed about the SameDemand IncreasedDon't Know
March-May 20096%34%58%1%
October 2008-February 20096%34%59%1%

How Nonprofits Are Coping

When asked, "How does your 2009 annual budget compare to your 2008 budget?" 36 percent of organizations said it had decreased, 27 percent reported it had stayed about the same, 36 percent stated it had increased, and 1 percent didn't know. Again, these results are very similar to those from our previous survey:

2009 Budget Compared to 2008 Budget
Period Covered by SurveyBudget DecreasedBudget Stayed about the SameBudget IncreasedDon't Know
March-May 200936%27%36%1%
October 2008-February 200935%26%58%2%

Organizations that had cut their budgets took the following steps to do so:

Measure Taken to Cut BudgetOctober 2008-February 2009March-May 2009
Reduction in program activities/services57%54%
Salary freeze45%44%
Hiring freeze37%33%
Layoffs30%29%
Salary reduction20%23%
Reduction in employee benefits20%21%
Reduction in operating hours13%16%

We'll follow up on this survey in October, when we conduct our annual nonprofit economic survey. Those results will be published in our December 2009 issue.

Download a free copy of the survey report

Suzanne E. Coffman, August 2009
© 2009, GuideStar USA, Inc.

Suzanne E. 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 June 2009 nonprofit economic survey.