How the Economic Downturn Has Affected Nonprofit Fundraisers and Foundations

By Joe Boland

In June, charity database information provider GuideStar surveyed 7,014 public charity and private foundation employees to gauge the effect of the downturn on fundraisers. GuideStar published the results in a report, The Effect of the Economy on the Nonprofit Sector: A June 2010 Survey, written by Vice President of Research Chuck McLean and Research Assistant Carol Brouwer.

The survey, which took place online from June 14 to June 28, received 6,434 responses from public charities and 580 responses from private foundations; 97 percent of organizations surveyed accept contributions, and 83 percent award grants. According to McLean and Brouwer, 40 percent of respondents saw further declines in contributions in the first five months of 2010, while 63 percent saw an increase in demand for their services, putting even more pressure on fundraisers.

Organizations that rely on reimbursement for services from state and local governments experienced cash flow issues due to delays in payments, and many faced upcoming state budget cuts, even further hindering funding, the report finds. One area that went against the grain was food and nutrition organizations. For the most part, contributions largely kept pace with the increased demand — only 24 percent experienced a decline in donations, while 56 percent experienced a modest or substantial increase.

Here are more findings from the report.

Did total contributions increase, decrease or stay about the same from Jan. 1, 2010, to May 31, 2010, compared to the same period last year?

40 percent said contributions decreased
30 percent said contributions increased
28 percent said contributions were about the same
2 percent were unsure

Evaluating further, 6 percent responded that contributions increased greatly and 24 percent said they increased modestly (making up the 30 percent); 26 percent said they decreased greatly and 14 percent said they decreased modestly (40 percent).

What factors caused total contributions to decrease?

67 percent said fewer individuals gave
66 percent said gifts from individuals were smaller
40 percent said corporate gifts were smaller
40 percent said private foundation gifts were smaller
22 percent said private foundation grants were smaller
20 percent said government grants were smaller
19 percent said corporate gifts were discontinued
10 percent said government grants were discontinued
10 percent said government contracts were smaller
9 percent said other factors contributed
5 percent said government contracts were discontinued
2 percent weren’t sure

Did demand for your organization’s services increase, decrease or stay about the same?

63 percent said demand increased
29 percent said demand stayed about the same
6 percent said demand decreased
2 percent weren’t sure

Of the respondents, 28 percent said that demand increased greatly and 35 percent said it increased modestly, while 1 percent said it decreased greatly and 5 percent said it decreased modestly.

For those that award grants, did the total amount of money your organization awarded increase, decrease or stay about the same?

40 percent said it stayed about the same
31 percent said it decreased
28 percent said it increased
2 percent were unsure

Of the respondents that award grants, 8 percent greatly increased the amount of money awarded; 20 percent increased modestly the amount of grant money; 10 percent decreased the amount greatly; and 20 percent decreased it modestly.

Did the economy cause you to change your grantmaking practices?

62 percent — No, we made no major changes
12 percent — Yes, we cut back on the types of programs we funded
11 percent — Other
8 percent — Yes, we reduced the amount of payouts we had committed to
6 percent — Yes, we increased our grantmaking specifically to help grantees cope with the economy
4 percent — Yes, we only accepted applications from organizations that we have funded before
4 percent — Yes, we stopped accepting grant applications
1 percent — Yes, we did not make payouts we had committed to
2 percent — Unsure

Did the number of funding applications/grant requests increase, decrease or stay about the same?

44 percent said the number stayed about the same
41 percent said the number increased
9 percent said the number decreased
6 percent were unsure

Of the responders, 12 percent said the number increased greatly, and 29 percent said it increased modestly; 2 percent said it decreased greatly, and 7 percent said it decreased modestly.

How does your 2010 annual budget compare to 2009?

41 percent said their budgets increased — 7 percent said budget increased greatly, 34 percent said it increased modestly
29 percent said it decreased — 9 percent said it decreased greatly, 20 percent said it decreased modestly
28 percent said it stayed about the same
1 percent were unsure

What measures have you used to reduce your budget?

58 percent — Reduce activities/services
50 percent — Salary freeze
38 percent — Layoffs
30 percent — Hiring freeze
23 percent — Reduction in employee benefits
21 percent — Salary reduction
18 percent — Other
16 percent — Reduce operating hours
12 percent — Restructure organizations or merger

Has your total numbers of volunteers increased, decreased or stayed about the same?

48 percent said the number of volunteers stayed about the same
32 percent said it increased — 6 percent said it increased greatly, 26 percent said it increased modestly
10 percent don’t have volunteers
9 percent said the number of volunteers decreased — 2 percent said it decreased greatly, 7 percent said it decreased modestly
1 percent were unsure

Did you use volunteers in positions that were formerly paid positions?