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 Survey	Contributions Decreased	Contributions Stayed about the Same	Contributions Increased	Don't Know
March-May 2009	52%	29%	18%	1%
October 2008-February 2009	52%	27%	20%	1%

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

Reason Contributions Decreased	October 2008-February 2009	March-May 2009
Fewer individuals gave	71%	69%
Gifts from individuals were smaller	71%	68%
Corporate gifts were smaller	39%	38%
Private foundation grants were smaller	34%	37%
Corporate gifts were discontinued	25%	23%
Private foundation grants were discontinued	23%	22%
Government grants were smaller	13%	14%
Government grants were discontinued	8%	7%
Government contracts were smaller	6%	6%
Government contracts were discontinued	3%	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 Survey	Amounts Awarded Decreased	Amounts Awarded Stayed about the Same	Amounts Awarded Increased	Don't Know
March-May 2009	36%	39%	23%	1%
October 2008-February 2009	31%	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 Practices	October 2008-February 2009	March-May 2009
Cut back on program types funded	17%	20%
Reduced payouts already committed to	8%	9%
Increased grantmaking to help grantees cope	5%	7%
Stopped accepting applications	7%	6%
Accepted applications only from previously funded organizations	5%	6%
Did not make payouts committed to	1%	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 Survey	Demand Decreased	Demand Stayed about the Same	Demand Increased	Don't Know
March-May 2009	6%	34%	58%	1%
October 2008-February 2009	6%	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 Survey	Budget Decreased	Budget Stayed about the Same	Budget Increased	Don't Know
March-May 2009	36%	27%	36%	1%
October 2008-February 2009	35%	26%	58%	2%

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

Measure Taken to Cut Budget	October 2008-February 2009	March-May 2009
Reduction in program activities/services	57%	54%
Salary freeze	45%	44%
Hiring freeze	37%	33%
Layoffs	30%	29%
Salary reduction	20%	23%
Reduction in employee benefits	20%	21%
Reduction in operating hours	13%	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 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.