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As many of you know, Nonprofit Finance Fund (NFF), a leading nonprofit lender and financial consultant, recently conducted our 2010 State of the Sector Survey of nonprofits nationwide. The Survey was a follow-up to our 2009 Survey, which aimed to uncover the impact of the economic crisis on nonprofits and those they serve.
Our deep appreciation goes out to this year's 1,315 survey respondents, who took time out from their exhausting schedules to let their voices be heard. THANK YOU! It's clear that our community continues to recognize the need for consistent, in–depth information about our financial state. We at NFF are committed to making this a priority.
The headline story: you are amazing, and we are lucky to have you. I say it every chance I get: in the nonprofit sector, we have on our front lines and as leaders the most resourceful, courageous, clever and dedicated people in the economy. Our evidence? Story after story about the relentless pursuit of mission in the face of financial challenge, of nonprofits stretching budgets, cutting costs, and sacrificing personally to put mission first. But numbers sometimes speak much louder than words, so here are some of the findings:
Rising Demand, Strained Resources and Revenue Streams
According to survey results, an extraordinary 80% of nonprofits anticipate an increase in demand for services in 2010; 49% expect to be able to fully meet this demand level. It's also getting harder to break even, a critical problem magnified by low cash supplies: Only 18% of organizations expect to end 2010 above break-even, and the majority—61%—have less than three months of cash available. More than half of respondents expect government and foundation/United Way revenue streams to decrease in 2010.
Of the 40% of organizations who identified themselves as "lifeline," providing critical services to people in need, we found that:
From projections to scenario planning, nonprofits said that they've used the tools below in the last 6 months, to navigate in these times. (See NFF's definitions of each of these tools, for more information).
Reports Prepared in Last 6 Months (% of total respondents)
Budget vs. actual income statement: 86%
Balance sheet: 82%
Budget projections/scenarios: 76%
Monthly cash flow projection: 65%
Program economics analysis: 29%
Creative Responses and Strategies
We asked you to tell us how you responded in 2009, and plan to respond in 2010, to the economic challenges. In most cases, actions for 2009 are in line with plans for 2010, which indicates that most of you are continuing to see the need for targeted action. It also might suggest that you have found coping strategies that work reasonably well - at least for now.
For full results, click below. (Also, visit our Annual Survey Page for additional information on both the 2010 and 2009 surveys.)
Survey Full Results
In Their Words: Quotes from the Survey
So What Have We Learned?
Looking at broad patterns, one of the things that we've learned from the last two recessions is that the social sector tends to feel the effects of an economic downturn for a longer period of time than other sectors. This means that we must be more cautious in our financial decisions, despite the messages of recovery we hear in the media. We survive and flourish on the strength of our optimism - especially in times of crisis. If we can offer one piece of advice it's to be cautiously optimistic, since recovery may be slow.
Anecdotally, many of the comments and stories people told us in the survey have indicated that nonprofits are taking a close look at their finances, their long-term strategy, and their core mission-driven goals. As one respondent put it: "What started out as an attempt to cut costs, pinch pennies and squeeze out extra revenues became a mission-fulfilling program development campaign that now promises to bring our services to more people in a way that is more viable..."
There is a truly heartening message in this! We can use this crisis as an opportunity to substantively change our financial practices, as individual organizations, and as a whole sector. Blending short-term needs into long-term planning - with a spirit of innovation - is the key to adapting to a changed economic reality. And if you need help or support in this financial planning process, please call us!
For more resources, tips, and information about NFF, visit us online at nonprofitfinancefund.org. Be sure to check out our Full Results and our Annual Survey page to learn more about the survey.
NFF is working hard to put this data in front of as many funders, decision-makers, and media sources as we can. Please check out the recent New York Times and Chronicle of Philanthropy stories, which covered the results in depth. Our goal is to use the knowledge gained from the survey and our expertise to promote systemic change in funding and financing practices, with an eye to capitalization practices that support effectiveness. To help us, please forward the survey results on to your colleagues and friends!
We extend our deepest thanks to our many respondents, and to the thousands of nonprofits out there that are working so hard for our communities. Your support and participation in this process has made a very important, tangible impact on our work and we are all lucky to have you do your wonderful work!
President and CEO
Nonprofit Finance Fund
As one of the nation's leading community development financial institutions, (CDFI), Nonprofit Finance Fund (NFF) makes millions of dollars in loans to nonprofits and pushes for fundamental improvement in how money is given and used in the sector. We provide a continuum of financing, consulting, and advocacy services to nonprofits and funders nationwide. Our services are designed to help great organizations stay in balance - in both good and bad economic times - and grow and innovate when they're ready.
Learn more about NFF's:
Tools for Tough Times
Loans and Financing Opportunities
Full Line of Consulting Services
NFF serves nonprofits nationwide from seven local NFF offices.