Great Recession Continues to Hurt Nonprofit Sector, New Survey Finds

GuideStar says transparency among charitable organizations more important than ever

Release date: August 16, 2010

Washington, D.C., and Williamsburg, Va.—GuideStar USA, Inc—the leading source of nonprofit information—today announced the results of its first economic survey of public charity and private foundations in 2010, which show that the nonprofit sector continued to take a beating in the wake of one of the nation's worst economic downturns. About 40 percent of respondents have seen a further decline in contributions in the first five months of 2010 compared to the first five months of 2009. At the same time, a majority (63 percent) have seen an increase in demand for their services.

"Our survey echoes what we've been hearing from the nonprofit sector for the past couple of years," said Chuck McLean, GuideStar's vice president for research. "The results prove that nonprofits have a long way to go to achieve the success they experienced before the recession."

For the most part, the pain was pretty well spread among different types of organizations, although 51 percent of respondents involved in mental health and crisis intervention reported a decline in contributions. Some 78 percent of mental health organizations also reported an increase in demand for their services, well above average, and 42 percent reported that demand increased "greatly." In addition, a number of organizations that rely largely or in part on reimbursement for services from state and local governments experienced cash flow issues due to delays in payments, and were facing upcoming state budget cuts nervously.

"There's no doubt that the nonprofit sector continues to face an incredibly difficult philanthropic environment," agreed Bob Ottenhoff, GuideStar's president and CEO. "It's more important than ever that nonprofits are transparent about their earnings and offerings so that donors and grantmakers will know that their dollars are going to organizations that will use their gifts wisely."

Among the survey findings:

Eight percent of respondents indicated that their organizations were in imminent danger of closing.
In order to balance budgets, 17 percent of respondents reduced program services, and 11 percent laid off employees.
More than 60 percent of participants reporting decreased contributions attributed the drop to a decline in the number of individual donors and the size of their donations.
Among organizations that use volunteers, 17 percent used one or more in what had formerly been paid positions.
About a third (32 percent) of organizations increased their reliance on volunteers, whereas 9 percent experienced a decline.

About GuideStar's Economic Survey

The survey was conducted online from June 14 through June 28, 2010, and elicited responses from 7,014 people, with 92 percent (6,434) of the responses coming from public charities and 8 percent (580) coming from private foundations.

Download a free copy of the survey report, rich with data and graphics, here.

About GuideStar

GuideStar connects people and organizations with information on the programs and finances of more than 1.8 million IRS-recognized nonprofits. GuideStar serves a wide audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.

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