The Nonprofit Finance Fund just published a survey on how the economic downturn is affecting nonprofits’ current and long-term finances. Their conclusions are scary. According to the executive summary,
- Only 12% expect to operate above break-even this year.
- Just 16% anticipate being able to cover their operating expenses in both 2009 and 2010.
- 31% don’t have enough operating cash in hand to cover more that one month of expenses, and another 31% have less than three months’ worth.
- 52% of respondents expect the recession to have a long-term (2+ years) or permanent negative financial effect on their organizations.
- 93% of lifeline organizations that provide essential services anticipate an increase in demand in 2009.
The report makes it sounds like a significant number of nonprofits are about to close their doors. That may be true, but after reading the details I was reluctant to jump to that conclusion. Over half of the respondents were from organizations with budgets under $2 million, and 25% had budgets below $500K. I wonder what a a longitudinal study would reveal about questions like “We are concerned about meeting next month’s expenses,” “We are concerned with meeting expenses for 2009,” and “(We only have) enough (reserves) to cover 1 month of expenses.” I expect that many of the small organizations they surveyed might have said the same thing in past years as well.
I’m not trying to be a Pollyanna here. I expect that we’ll see a lot of closures or mergers, particularly among small nonprofits. But I believe that many of those organizations were unsustainable before the downturn.
A summary of the survey is available at http://www.nonprofitfinancefund.org/content.php?autoID=166
The full results are at http://www.nonprofitfinancefund.org/docs/2009/SurveyResults.pdf