Vital nonprofit services at risk, report says

August 17, 2009

Donations to nonprofits are falling just as demand for their services is increasing, twin problems a new report says are threatening the social safety net in the U.S.

In canvassing research on the effects of the recession on the U.S. nonprofit sector, the National Council of Nonprofits says the dire situation calls for cooperation between government and nonprofits to protect the nation's most vulnerable populations.

More than half of nonprofits are seeing increased demand, rising operating costs and declining revenues, and more than one in three have had to trim their operations, the report says.

Almost four in 10 nonprofits say they are under severe or very severe stress, and 13 percent worry they may not survive, says a report from Johns Hopkins University Listening Post Project.

More than eight in 10 nonprofits expect to run a deficit this year, and almost a third don't have enough cash on hand to cover one month's operating expenses, says the Nonprofit Finance Fund.

Smaller nonprofits are hardest hit, with more than four in 10 reporting cuts of more than 20 percent of their overall funding, says Bridgespan.

And reports detailing similar struggles are surfacing from nonprofit sectors in states across the country.

The National Council of Nonprofits is asking government representatives to take steps to shore up the nonprofit sector:

• Work to ensure contracts to nonprofits are paid on time.
• Work with state associations of nonprofits to organize a meeting of government and nonprofit representatives to discuss joint solutions.
• Solicit input from nonprofits when designing government services.
• Recognize nonprofits as employers when creating economic-development, health-reform or workforce strategies.

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