Nonprofit Finances

One of the good results of financial difficulty—given that the nonprofit has time to implement them—is the development of innovative strategies to replace the funding shrinkage, especially true for organizations which largely rely on the government for their funding, a sure path to long-term stress in tough times.

This article from the New York Times looks at the situation and the social enterprise exhibited by some of the organizations profiled is heartening.

An excerpt.

“A new survey of nonprofit groups suggests that this year will be as challenging for them as 2009, when many organizations suffered from declines in giving, delays in government payments and increased demand for their services.

“Some 80 percent of the 1,315 nonprofit groups responding to the survey said they expected the demand for service to be even greater this year, and only 49 percent of the respondents expected to be able to meet that demand, according to the survey by the Nonprofit Finance Fund, a charity that provides loans and other financial services to nonprofit groups.

“Only 18 percent expect to end the year above break-even financially, compared with the 35 percent that ended 2009 with a surplus.

“One of the clearest messages coming out of this survey is that any kind of green shoots of recovery are very slow to get to the nonprofit sector,” said Clara Miller, chief executive of the fund. “Any recovery is not actually reaching people in dire need and the frontline organizations that serve them.”

“More than 40 percent of the respondents predicted that government, corporate, foundation and United Way and other federated giving would fall this year. Only 21 percent predicted a decrease in giving by individuals and their board members, while 39 percent said giving would stay the same and 32 percent expected it to increase. …

“The organization is also working to lessen its reliance on government payments, which account for about 90 percent of its revenues. It has doubled its number of donors and is working harder to win grants from foundations and competitive government grant programs.

“It used $2 million it won in one such competition to open a car resale business, complete with a carwash and detailing center. The cars are donated, and participants in its programs work in the operation. “I never thought we’d be in the used-car business, but it is a great new revenue stream for us,” said John Voit, chief executive of Seguin.”