Donations in a Down Economy

Recent reports on the state of the nonprofit sector in 2010 indicate that only 18 percent of the more than 1,300 nonprofit leaders surveyed expect their organizations to end 2010 in the dark. Whereas in 2009, 35% of organizations ended the year with an operating surplus. 61% of the organizations surveyed have less than three months of cash, while 12% have no cash. (Source: The Foundation Center.)

80% of non-profit organizations anticipate an increase in demand for their services in 2010, while only 49% expect to be able to fully meet this demand. Organizations are taking a number of steps to maintain and expand service delivery during this time of economic uncertainty. 52 percent said they have collaborated with other organizations to deliver programs, 43 percent have expanded or expanded their program offerings, 18 percent have expanded the geographic area served by their programs, and 60 percent have become more engaged with their board of directors.

The impact of the economic crisis on foundations includes the following: 1) Funders clearly expect the field of philanthropy to become more strategic as it has weathered the economic crisis. There are long-term consequences of the crisis on their own foundations that force them to engage in “more robust strategic planning”, “more targeted use of the foundation's capabilities” and to be “more focused and disciplined in executing our strategy. "

All of this means that the field of philanthropy will become more strategic following the global economic crisis. With declining aggregate consumer demand and the highest unemployment rates in our country in a quarter of a century, it is therefore not surprising that the future prospects of the non-profit community have been affected by the recession.

Many experts believe that the nonprofit sector will emerge stronger, but all agree that ultimately there will be fewer organizations due to consolidation. In the United States, charitable donations experienced an estimated 22% drop in foundation assets in 2008. It was predicted that 2009 donations from more than 75,000 grantmaking foundations across the country "would decrease by approximately 8-13% ". The economic crisis has forced non-profit organizations to adjust their operating costs. More than two-thirds of those interviewed in the September 2009 survey said that they had somewhat cut their operating expenses since the start of the economic crisis, even those who still have endowments. It seems that some non-profit organizations are trying to preserve the value of their endowments so that they do not permanently decrease the capacity to grant grants, while others have determined that they will be smaller institutions in the future and make the necessary staff and expenditure adjustments.

Many have cut spending by cutting operating costs since the onset of the economic crisis and by cutting staff travel and salaries. Two-thirds of respondents who cut back on spending said they had cut staff travel budgets and/or limited staff to attend conferences. Slightly more than a third indicated that they also reduced the opportunities for staff training and professional development.

Respondents expect their donations to be lower in 2010 (26%) to higher (17%). Large foundations, those that donate more than $ 10 million, are more likely than small foundations to further reduce their donations next year. Average assets limit the impact of economic fluctuations on annual donations, but the extreme asset losses of 2008 will not be offset by the growth in assets of 2007 and the recovery of 2009 in the market.
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