Management, Credit Hurt Nonprofits, Expert Says

March 3, 2009, The Gazette (Colorado Springs) — A national expert on nonprofits who will speak in Colorado Springs on Friday estimates that, because of the bad economy, 100,000 of the nation's 1.3 million nonprofit organizations will collapse this year from frozen lines of credit, late payments by government entities and lack of efficient management.

"The economy is very troublesome for the nonprofit sector, and I'm hearing nothing but concern," said Paul Light, a Paulette Goddard Professor of Public Service at New York University and author of 18 books.

While there remains hope for a "miraculous rescue" from federal or state government, there's little probability of that happening, said Light, who will deliver the keynote address at Friday's Nonprofit Day 2009 event.

But, he said, there is the possibility of rejuvenation for nonprofits that "think the unthinkable" by taking a cue from the business sector and merging to improve efficiency and productivity, or pooling resources and sharing back-office functions such as accounting, personnel and marketing.

"Some will survive this tough period and perhaps prosper; others will wither," Light said. "Many already have instituted hiring freezes and salary caps. If revenues don't pick up and the stock market continues to plummet, some won't be able to make payroll."

Nonprofits dependent on government support will suffer the most as margins tighten, cash reserves drop and government funding is increasingly delayed or even withdrawn.

"Basically, nonprofits have to become more sensitive to their role and be wise stewards of the dollars they receive," he said.

Sponsored by the Center for Nonprofit Excellence and BKD CPAs & Advisors, this year's Nonprofit Day also will feature a panel discussion on funding requests, an exhibition hall, marketing and media tips, and practical applications of Light's presentation.