Nonprofits expect tough financial year

March 29, 2010

Nonprofits stretched themselves in 2009 to cope with rising demand for services in the tough economy, and they expect 2010 will be even tougher, a new survey says.

Nearly 90 percent of more than 1,200 nonprofit leaders responding to the survey by the Nonprofit Finance Fund say they expect 2010 to be as difficult as 2009 or more difficult.

Eighty percent expect demand for services will grow, and only 49 percent expect they will be able to fully meet demand.

While 35 percent ended 2009 with an operating surplus, only 18 percent expect to end 2010 above break-even.

And 61 percent have less than three months' cash available, while 12 percent have none.

"We expect 2010 to be another treacherous year for many nonprofits that routinely take heroic measures to meet demand for services," Clara Miller, president and CEO of the Nonprofit Finance Fund, says in a statement.

"The economic ‘recovery' has not yet reached people in need, or the organizations that serve them," she says. "We must do more to repair the tattered social safety net."

For "lifeline" groups that provide critical services for people in need, the survey says, 68 percent expect 2010 to be financially more difficult for people they serve, 64 percent do not expect to be able to keep up with demand for lifeline services, 56 percent expect 2010 to be financially tougher for their own organizations, 39 percent plan to add or expand programs, and 26 expect to reduce programs.

Nonprofits also are moving to ensure service delivery.

In the past year, the survey says, 52 percent have partners with another organization to provide programs, 43 percent have added or expanded programs, 19 have expanded the geographic regions they serve, 60 percent engaged more closely with their board through more reporting and increased communication, and 39 percent relied more on volunteers.

And while demand for services is growing, the survey says, nonprofits     continue to operate with little or no financial "buffer."

Demand for services grew for 73 percent of nonprofits in 2008 and for 71 percent in 2009, with 80 percent expected greater demand in 2010.

And the share of nonprofits that reported ending the fiscal year with a surplus fell from 40 percent in 2008 to 35 percent in 2009, with only 18 percent expecting a surplus in 2010.

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