Hypothesis: X[giving] is directly correlated to Y[financial success]

March 15, 2009 8:12 AM

How has the financial crisis affected the nonprofit sector?

Is there anyone here belonging to a nonprofit with a personal experience to share? What's the general climate at the workplace: loss of morale? No difference? Have there been job losses, budget cuts? Maybe funding has increased, unexpectedly? Would like to hear your stories and find out if the crisis has increased a sense of cynicism/idealism in people. I'd also like to know if the crisis keeps people from contributing or fuels them to help out more in whatever way possible. I'm asking this as a person looking to start "a career" in the nonprofit field. Thanks a lot.

P.S. I've checked out Alltop prior to this. And that Nancy Lublin article.

posted by drea to society & culture (26 answers total)

Probably not exactly the perspective you're looking for, but my community band recently became a non-profit org, and we're definitely noticing that money is tight this year. Most of our income comes from concerts we play in the summer at venues such as parks, retirement homes, community events, etc. For the last few years we've had incredibly busy summers and have actually raised our fees quite a bit. This year it's been a struggle to adequately fill our schedule, and we're having to bargain a little with some of the venues. They're all saying the same things, that their budgets for these types of events have been reduced significantly, and that they're trying to bring in new (i.e. cheaper) groups rather than book our group as they have for many years.
posted by LolaGeek at 8:27 AM on March 15, 2009

I've worked in fundraising for the last 10 years. Currently I am at a well regarded international NGO. We made our year end goal, but just barely, and only because we had been significantly ahead for the first half of the year. We've planned to raise less this year, but not significantly. We are really digging in for a hard year, and looking a revenue streams we've previously paid little attention too (although that has more to do with a shift in internal politics that the economy). So far no mention of lay-offs or salary reduction or other extreme reactions. But my org was very well situated before the economic collapse. However, I have been told directly by several donors that they are significantly reducing their funding. Some are cutting grants to us, or our strongest supporters are keeping their funding levels the same, and cutting giving to others. Other funders have fallen off the radar (at least one of them closed because of Madoff investments). Right now, we've only raised 75% of what we had at the same time last year.

I wouldn't say morale is low... right now everyone is preparing for "battle" and hoping for the best, but we are all a little uneasy.

I think it really depends on which sector you are in. I think the arts are going to take a huge hit. Humanitarianism and social services not as much. But layoffs are already rippling through the industry. In the past couple of months, Planned Parenthood Federation of America laid off 20% of their staff. ACLU's national office laid off 10%. I have friend at a small environmental org that's been asked to work 3 days a week at 50% salary.
posted by kimdog at 8:55 AM on March 15, 2009

All of the non profits that I have worked for have had a fiscal year that runs from July 1- July 1. That means that grant funding secured last year, when things weren't so dire, is still in effect. That being said, there's a lot of worry about levels of individual donations dropping this year and next year - along with an anticipated drop in grant funding next year due to bad returns on foundation investments. There is a lot of preemptive belt tightening and contingency plans going into place for next year. Enrollment in programs requiring a fee/tuition payment saw a large drop in participants who were willing to pay full tuition and a corresponding rise in requests for financial aid. It was very tough filling spaces in these programs this year.

The mood was pretty grim in the non-profit I just left, and is worried in the one I just joined. Both are educational based religious non-profits.

Jobs are still definitely available - but it depends on what you want to do. There tends to be a lot of "churn" in non-profit employment - they don't pay incredibly well and the jobs are stressful and a lot of work. You may find that it's best to look for contractor positions right now until you can gauge whether or not your chosen non-profit is financially viable enough to risk getting a job there. Larger, more traditional non-profits will slow hiring as much as they are able, but quite frankly, the show must go on and they must run programs to continue fulfilling their funding requirements. Good luck!
posted by The Light Fantastic at 9:07 AM on March 15, 2009

Totally anecdotal, but I have a friend who works in fundraising for nonprofits. He got laid off from his previous job a few months ago and has had a hard time finding another. Recently he's had a couple of encouraging interviews from another nonprofit, but the tone that he's hearing from the organization is definitely downbeat--lots along the lines of "here's the situation we're in, have we scared you off yet". Strangely enough he's perceiving that as encouraging--they're showing their (bad) hand to him to make sure he knows what he'd be getting into, should he be offered and take the job. But what a way to come on board an organization...

Less anecdotally, though I have no cite, I understand that Bernie Madoff's follies have had/will continue to have bad, bad repercussions in nonprofits as donations from victims evaporate.
posted by Sublimity at 9:08 AM on March 15, 2009

I was working as administrative assistant for a small non-profit until about a month ago when I was laid off because they were having a really tough time. Funding has dropped off sharply and the organization was falling short of its fundraising goals. Events and fundraisers were not doing as well as they had in previous years, and there had been a number of large pledges withdrawn because people and businesses just didn't have the money. We also had more bounced checks and declined credit cards in the last couple of months I was there than we'd had before.

Everyone involved in the non-profit was definitely worried. They tried to focus on maintaining connections with the donors they had and also networking so that when the economy does turn around they're in a better position.
posted by radiomayonnaise at 9:23 AM on March 15, 2009

Obama wants to significantly reduce the tax deduction for charitable contributions. If that happens, things will get a whole lot worse for the nonprofits.
posted by Chocolate Pickle at 9:25 AM on March 15, 2009 [1 favorite]

Here in southeast Michigan the downturn in the automotive industry is having terrible effects on non-profits. The GM Foundation cut big grants to the Michigan Opera, Detroit Institute of Art, Detroit Zoo - on the order of $250K each. Our economy is so hard hit that all charitable giving is way down. Combine this with the state talking about cutting all arts funding to the degree that the NEA won't give the state any arts money because the Michigan agency overseeing it won't meet the NEA's criteria of being an agency, i.e. not enough budget and you have a really dire situation in the arts and cultural arena. If you live in Michigan you can send a letter to Governor Granholm from this link.

I don't work directly for the non-profit sector - I'm an artist - but grant money, support for arts entitities directly effects thousands of people's livelihoods in the state.
posted by leslies at 9:43 AM on March 15, 2009

I'm at a small nonprofit that gets a lot of its funding from the Wall-Street-driven wealthy suburbs. So far our funding is okay because it's front-loaded in the fiscal year, but we're hearing from some big donors and foundations that they won't be able to meet expectations this year. We're expecting things to get worse as the year goes on even if the economy overall perks up. Lots of belt-tightening measures in place: reducing travel, screening purchases, limiting the IT guy's time, using unpaid interns instead of paid, and moving the office to a cheaper location. The financial/grants/donors employees are working their asses off and program staff has been asked to help them as much as possible. No one has been laid off, but to manage that we're all taking cuts in pay and two-week furloughs. I credit that for strong morale--everyone is on board with making small sacrifices to reduce the risk of having to lose anyone. That, and it's always been a small office with little redundancy, so everyone feels very necessary.
posted by hippugeek at 9:48 AM on March 15, 2009

I work for a performing arts non-profit, and the biggest way we've seen it affect us so far is having concert venues cancel our bookings for our next fiscal year. An average concert hall at SuchandSuch State University pays us a fixed sum for a performance, but *their* funding is often tied to sources that are drying up/tightening up, namely university endowments, corporate sponsorships, etc. We've been lucky in that we haven't had a prohibitive number of agreed-upon domestic dates for next season cancel, but we've had at least twice as many presenters bow out for the upcoming season compared to other years. I've heard *so* much from other presenters/concert venues about having to tighten up spending for next year - less shows, period, and less expensive-to-book shows. It's not just small places either - think big venues in big cities.

International concert halls, however, have been canceling quite a bit. It's affected both rapidly-approaching performances and performances for next fiscal year.

I can't speak too directly for fundraising (not my department), but the year-end fundraising campaign last year seemed pretty...stressful. Lots of anxiousness/griping. I would not be surprised if our fundraising goal was not met last year.

Also seconding the belt-tightening measures: little things like canceling the newspaper subscription, hiring part time people to replace full time, and such.
posted by soleiluna at 10:48 AM on March 15, 2009

I run a company that provides technical assistance and training in fundraising. We provide funding research, write proposals, perform program evaluations, and train folks in grant writing and fundraising. We're noticing several trends with the change in the economy: 1) competition for the funds that exist is getting stiffer, 2) grantmakers are targeting their giving to their very highest priority issues, and 3) nonprofits are finding it necessary to patch their program funding together with smaller amounts from a wider variety of grantmakers.

If you work in nonprofit development, remember that US foundations must give a certain percentage of their funds in order to remain a foundation legally. So giving won't stop entirely in most cases, but it will probably be reduced until investments begin earning again. Foundations who have invested their funds more conservatively in past years will likely have more to give than those who accepted more risk (and lost) in their investments.

As a company, we've changed our focus toward an emphasis on training nonprofits to create realistic, balanced funding plans for the next 18-24 months, and on hands-on training and mentoring in grantwriting. We believe that helping organizations increase their internal capacities to raise funds and cut costs without sacrificing core programs will provide the most valuable services over the remainder of the recession.
posted by northernlightgardener at 10:52 AM on March 15, 2009

I work on the program side, not on the development side, so some of this is second-hand from those individuals. Our medium-sized environmental nonprofit is being extremely cautious and concerned, but thus far, has not seen the bottom fall out of our funding (* KNOCKS ON WOOD *). We made major preemptive budget cuts early last fall, and I noticed hiring freezes go into effect at other organizations at the same time. We reached our major donor fundraising goals only through far-beyond-normal effort by our development staff.

For foundation money, the theory has always been that nonprofits will be part of the second wave of impacts that will get hit more in late 2009 and 2010. Most foundations have cut their planned giving for these upcoming rounds of funding proposal, since they typically give out a certain percentage of what their portfolio earned. (I did hear of at least one foundation boosting that percentage or even planning to spend a bit of their endowment to meet the higher need now.) I can't speak for our foundation dollars as most of those proposals are just going out now (wish us luck). From what I've heard, foundations seem quite aware of what groups are going through right now and are tightening their focus on helping certain groups or certain activities continue through this time. So, as opposed to cutting every group's funding in half, they're dropping funding to new start-ups, to groups that aren't really working on their core goal, etc.

In California, the worst hit to nonprofits that I've seen has come from the state bond freeze. Certain groups get bond money from the state -- land trusts, affordable housing developers, certain kinds of researchers -- and others do consulting for state agencies. On the other hand, and speaking now more as an outside observer than an insider, it seems like programs that are extremely relevant to the current moment are seeing new action: green energy, homeownership and low-income mortgages, social services, policy work with the new administration. For the most part, that need is being met by current staff between the hours of 9pm-11pm and 5am-7am (judging by the emails I receive), but I have noticed a little hiring.

The general morale now, I think, is more affected by the new administration than the financial crisis. It seems to be one of high hopes and much lower cynicism than before. Having the Obama administration make supportive statements about certain goals has spread a lot of hope. All of a sudden, change truly seems possible. In my field, people have received a few nasty surprises from legislators they thought were allies, and are trying not to be too naively hopeful lest they be terribly disappointed later. But it's hard to see allies get drafted into high places or go to Washington to work on policy there without getting pretty hopeful. * KNOCKS ON WOOD AGAIN *
posted by salvia at 11:06 AM on March 15, 2009

Also, I'll ditto hippugreek that there's a "we're in this together" feeling about the budget tightening now. A few upper-level staff have chosen now to cut back to part-time, in part for their own personal reasons, but also with the explicit goal of getting raises and increases in authority for their lower-level staff without any overall increase in payroll.
posted by salvia at 11:12 AM on March 15, 2009

I'm the development manager for a midsized theater in Chicago. Our subscriptions are way down (we have a weird season-- June through Dec instead of Sept thru May), but the number of people giving small donations (under $500) has remained steady, although the size of gifts has gone down about 20%. Our few donors who are living on their portfolios have cut us off entirely; we are encountering more foundations that are not accepting new applications, although current funders are promising to maintain grants, if not at prior levels. Gala ticket sales suck. Bank funding is gone gone gone I doubt it will ever come back for local and midsized companies. Recovery money has oodles of restrictions (starting with limiting who can apply for it at every level). Every nfp I know is coping by making program changes to save money. If you don't have a robust individual giving program you are screwed this year. If you do, you should be able to weather it (we have before).

In the arts at any rate conventional wisdom seems to be that small (under $500K) nfps have enough flexibility and small staffs so they'll tighten their belts and survive. Majors like the Chicago Symphony are "too big to fail" they'll just fire a lot of staff and cut some 'nonessential' programs (like arts-in-ed, which CSO has done). The ones that are going to hurt are the midsized ones which have staffs too small to really deal with losing anyone, hideous health care increases and lean programs from which you cannot make cuts without affecting artistic quality.

It's going to be a bumpy ride, folks.
posted by nax at 11:21 AM on March 15, 2009

I work at a community health clinic. In health care, it's a mixed picture. As was said above, we are currently operating with money that was allocated more than a year ago, so it hasn't directly hit us yet, although some of the programs that operate parallel to our work have started to dry up. Nearly all of our money comes from county, state, and federal government, mostly the state. My state has a budget deficit anywhere from 8-11 billion dollars and many health programs are being cut back. However, the governor's proposed budget includes an increase in block grants to community health centers, the only proposed increase in spending anywhere in the budget, which is perceived as an acknowledgment that the need for our services is going to increase and the work we do is strongly supported by the current administration. That said, people are a little stressed about the uncertainty and that is being channeled into a very active volunteer lobbying effort on the part of staff members.

Morale isn't great, but it's not terrible either. Everyone working at the clinic got into this work out of a sense of personal commitment and the state of the economy only emphasizes the importance of what we're doing. The clinics have seen tough times before and have managed to get through them and I don't think anyone believes we are going away. Plus, community health clinics always have a fairly high turnover generally even in good times so I'm thinking we won't see massive lay offs, at least not on the scale that local medical groups and hospitals have been forced to cut. I just started hear, moving from a hospital that just layed off 300 people right after I left, and morale there is absolute shit right now. Everyone at my old job is worried about themselves while everyone at my new job is worried about the well being of the organization, which I think is actually the sign of a great place to work.

I would echo what salvia says about the democrats being in charge now. It makes such a huge difference to know that the government supports what you're doing instead, even if it hasn't translated to actual money flowing yet.

*/also knocks on wood*
posted by Slarty Bartfast at 11:35 AM on March 15, 2009

I guess I should also point out that at my organization, I am an absolutely essential person whose job isn't at risk unless the whole organization goes down so that probably colors my perspective quite a bit.
posted by Slarty Bartfast at 11:42 AM on March 15, 2009

I work at a mid-sized legal nonprofit. Much funding comes from individual lawyers and law firms. There have been lots of layoffs at big firms since the first of the year, so we're waiting to see what happens with giving this year. It's hard to tell at this time of year (traditionally not a fundraising season for us -- we do end of year and a big mid-year event). We're nervous. We've already made the cuts we can make easily.
posted by ClaudiaCenter at 12:30 PM on March 15, 2009

I work for a small national charity - less than 10 staff - in the UK. We are a support and information organisation working in the area of women's health. We receive no grants or government funding of any kind; we are kept afloat entirely by public donations, legacies and very small scale personal fundraising from the women we help. We have noticed no downturn in income at all in the last 12 months. We're keeping an eye on things, but for us nothing has changed and we're doing nothing differently.

We share an office with an equally small sister charity, working in exactly the same field as us but with an emphasis on research. They also receive no grants, but most of their money comes from corporate sources and retail partnerships. In the last 12 months, they have seen their income cut in half and are economising desperately in every way possible. Drastic budget cuts, redundancies, the lot.

Charity support appears to be one of the first things that big business cut loose when tightening their belts. Fortunately - in terms of our income - women just keep on getting the disease we were set up to support.
posted by Acarpous at 12:41 PM on March 15, 2009

I work at a fairly large nonprofit membership association in programs. Our endowment took a big hit, and the leadership is pretty freaked out. That's our safety net, and we need it to be a big safety net, because corporate funding is down, and we've lost grants. We've cut back on programs, slashed spending on current programs, and salaries were frozen this year.

That said, though, our core programs are safe and we're not in danger of folding or anything. We have membership fees and journal subscriptions as sources of funding, too. We're pinching pennies to avoid a financial crisis, not because we're currently experiencing one.
posted by desuetude at 1:58 PM on March 15, 2009

Chocolate Pickle writes Obama wants to significantly reduce the tax deduction for charitable contributions. If that happens, things will get a whole lot worse for the nonprofits.


What Obama is proposing is that people in the topmost tax brackets (adjusted gross income of $208K or higher for 2009) will only be able to deduct 28% of their charitable contributions, rather than 33% or 35% as they can currently, depending on their marginal tax rate. Whether this counts as "significant" or not is in the eye of the beholder.

Another consequence of this proposed change is that those rich people will have to give ~20% more to charity in order to get the same degree of tax break as before. I fail to see how this will be bad for nonprofits.

The Obama administration's argument for making this change is that richer people shouldn't get bigger tax breaks for making the same dollar-amount contribution than less-well-off people.

Leave it to the people who've been enjoying this perk for the last decade or so, and don't want it to end, to spin it that the nonprofits will suffer. I see this as rather nonsensical. They'll still get a big fat tax break for charitable contributions and no tax break if they don't make the contributions.
posted by Sublimity at 3:11 PM on March 15, 2009 [1 favorite]

I work in development for an environmental nonprofit. The vast majority of our revenues come from: membership dues, and government grants, with notable contributions from foundations and special events. The tone at the office is very seriously about how we can get through this together. Our executive director is very committed to making sure that we make it through this.

Memberships are steady. There has been no precipitous drop-off in memberships. In fact, our Major Donor campaign concluded at the beginning of 2009, and exceeded last year's campaign. That essentially means that real people that we speak to at their front doors are still giving money.

Government grants are steady currently. We have at least one new contract as of last week. Some previously secured government contracts may be harder to re-secure.

Our major events are on track to remain a solid contribution, breaking even with or slightly exceeding last year's events.

Foundations - which is my job - have been the most difficult. First off: foundations tend to give on a three year, averaged estimate, which helps them absorb some of the issues associated with lowered revenue. That said, foundations are NOT creating new relationships, they are simply funding their current commitments in order to make sure that they are able to continue doing so. I have seen a lot of new guidelines being adopted, though I am inclined to think that is coincidence and not necessarily anything to do with the economy. Adopting new grantmaking guidelines takes a lot of work, and usually isn't done quickly enough to have been inspired by the economy.
posted by greekphilosophy at 5:42 PM on March 15, 2009

I work at a non-profit and money is definitely tighter. When an organization relies on donations for funds, and people have less money to give, the org feels the pinch. I know my organization has had to cut costs in a lot of areas, including jobs.

I know universities have been hit pretty hard, too. Their usual alumni donors are not giving as generously as they may have in the past, and the endowments have been hit as well.
posted by fructose at 6:08 PM on March 15, 2009

I work for a national non-profit. We're projecting a drop in revenue for next year, and are budgeting accordingly, including some belt-tightening in this fiscal year. We just implemented the new budget plan last week, which included layoffs, salary cuts at the highest levels, reductions in benefits, and scaling back in most program areas. One of the layoffs was the person with whom I share an office, and we're both in a state of shock (her far more than me, obviously). Morale is not great, and there's a fair amount of anxiety across the organization, but at the same time, I think the executive leadership did a good job communicating what was going on and getting input from everyone.

The Madoff scandal has had an impact on us and on a number of organizations we work closely with. The JEHT Foundation closed its doors in January, for example. Beyond that, a lot of our major donors just don't have the money they did last year, and are cutting back on their philanthropy. We get almost no governmental funding because of the work we do, so it's mostly individuals and foundations.

In addition, a lot of the local health and social service agencies were hit with government funding cuts last year, and will be hit with more this year. Locally the Health Dept is cutting a quarter of its discretionary general funds, which will mean $100 million less in services for people, much of that provided by non-profits. We're going to lose a lot of essential services and even whole agencies before this is over.
posted by gingerbeer at 6:38 PM on March 15, 2009

I work at a university. We've been hit by 2 things: our ( not very large) endowment is worth a lot less, and is producing less income. This directly affects some operating costs, and scholarships. The state is getting less tax revenue, and has cut their funding to us. The outlook for next year is not optimistic.

The Madoff embezzlement scandal forced some nonprofits to shut down, because they had all their capital invested with him.
posted by theora55 at 7:51 PM on March 15, 2009

I work for a very well-known non-profit, and there's no changes at all. Business as usual.
posted by Windigo at 9:48 PM on March 15, 2009

I can only speak for the theatre side of things, but a lot of theatres are taking a big hit, either laying off staff, reducing budgets (out of immediate necessity or preemptively), canceling or postponing shows to next season: as one example, Penumbra Theatre in Minneapolis is cutting its budget by a quarter, and slowing down its August Wilson Cycle project to one play a year instead of two. Giving is down, foundation money is down. The "Development Process" class I took last semester went from vaguely optimistic to death-knell gloomy over a few months. It's never been an easy time to be a theatre, but the number of theatres that have started "We need to raise (x) dollars by (x) time or we're closing for good" is amazing (in a terrible way) and I'm really not sure it's helping the cause or general impression of, theatre. The theatres that will likely do the best are the ones that manage to pare down to, or at least focus on, their core mission - removing bloatware, so to speak. The combination of the economy and the impact of technology on how we entertain ourselves is resulting in what seems like a sink-or-swim, watershed moment for theatre in many ways.

Or perhaps I'm just in an overly-excitable program. :)

For a pretty good indication of what's happening to arts non-profits, take a look at www.artsjournal.com for a daily collection of articles on the subject.
posted by ilana at 10:27 PM on March 15, 2009

I work for a local office of a national environmental nonprofit.

We laid off 15% of staff nationwide in February, and restructured the organization (in terms of regional structure) in a very significant way. Our local office in Maine is seeing a steep decline in institutional giving, and we've had at least one large private donor tell us flat-out that they were not going to give to us this year because they were giving exclusively to social services charities instead.

The remaining staff here is working hard, and we're looking at the way we do fundraising in new ways. Because part of what we do is acquire land for conservation, its an odd time here, because prices are dropping and some acreage that had been sold for subdivisions and whatnot is now back on the market, giving, in effect, a "second chance" at conservation for some places we thought were lost forever. If we can raise the money, its possible that the downturn in the real estate market could end up being a net gain for conservation. But the "raise the money" part is a BIG if.
posted by anastasiav at 7:59 AM on March 16, 2009