As the U.S. economy continues to contract, more than half of the nation’s nonprofits believe the negative effects will linger for a long time, or even permanently, a new study says.
Only about 12 percent of U.S. charities say they will operate above a break-even level this year, and only 16 percent expect to be able to cover their expenses both this year and next, says the study by the Nonprofit Finance Fund.
Almost a third of the 986 nonprofit leaders surveyed say their organizations have enough cash on hand for more than one month of expenses, and only slightly more say they have enough for three months.
Many of the struggling organizations are those that provide front-line support for people who are hungry, homeless or otherwise in need of basic services.
And virtually all of these “lifeline” nonprofits expect the demand for their services to increase this year.
As demand rises, funding for many nonprofits is falling, with one in four saying their government funding is down, over six in 10 anticipating a drop in foundation grants, and about half planning for less from individuals.
Unless significant changes are made, these lifeline organizations, nine in 10 of which serve vulnerable populations, may not survive, Clara Miller, president and CEO of the Nonprofit Finance Fund, says in a statement.
“We must free the entire sector from the archaic assumptions and harmful constraints that keep many organizations perpetually on the brink of survival, and especially at risk in times of recession,” she says.
When asked what cost-cutting measure they have pursued over that past year, or plan to implement in the next 12 months, almost four in 10 identified scaling back or eliminating programs, over four in 10 mentioned cutting staff or salaries, and almost a quarter say they have or will delay payments to vendors.
Nonprofits appear ready to look for new ways to manage through the current environment, with about half interested in planning for different scenarios, more than half looking for assistance in presenting their financial situations to their boards, and a third seeking information about analyzing the profitability of programs.