Welcome to the Non-Profit Recession Watch blog site

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Toronto, Ontario, Canada
The Non-Profit Recession Watch blog has been developed by ReStructure Non-Profit Consulting (www.restructure.ca) as a means to provide leaders of non-profit organizations with a central repository of information on the recession as well as strategies, tips, and resources to manage the impact of the recession on the organizations they lead. Information relating to the recession and its impact on Canada, US and UK will be updated daily in the "Recession Watch Data & Informaiton" sections below, and blogs will be written to provide information on how the recession has impacted the non-profit sector specifically. Please feel free to share information, news and resources with me - Betty Ferreira at blog [at] restructure.ca.

Tuesday, April 28, 2009

Non-Profit Recession Watch: Which organizations will withstand the recession?

Non-Profit Recession Watch: Which organizations will withstand the recession?

Which organizations will withstand the recession?

In late January 2009, a study authored by Retriever Development Counsel LLC, was conducted in the US, assessing the impact of the economy on the fundraising efforts of over 180 organizations. The survey was conducted in partnership with Nonprofit Association of Oregon, Grantmakers of Oregon and Southwest Washington, Oregon and SW Washington Chapter of the Association of Fundraising Professionals, Meyer Memorial Trust.

Although this survey focused on the Oregon and South West Washington area, the results are likely applicable to non-profits across North America. Respondents were primarily executive directors and development directors representing a range of organizations and sectors across the board. The results were illuminating and provide an interesting insiders look on how nonprofits perceive to be faring during the current economic situation.

First and foremost, there was a significant amount of good news coming out of the survey, which should give nonprofits, whether in the US or Canada, reason to pause. For one thing, fundraising trends tended to be higher in 2008 than in 2007. For another, the majority of nonprofits surveyed predicted a recovery time of two years or less. And many organizations said they were looking to the economic downturn as an opportune time to reconnect with their mission, re-align their strategic vision, establish new partnerships and introduce a higher level of creativity into their overall approach. What’s more, many have witnessed an increase in the use of their services and are planning to expand their offerings in the coming year.

Interestingly, however, the organizations who claim to be doing well aren’t boasting the largest budgets or the most effective fundraising efforts in 2008, b
ut they do share some of the following criteria:

  • A diversified revenue stream.
  • An engaged leadership—including executive, development/fundraising and board— ready, willing and able to take on any new challenges that lie ahead.
  • Greater efforts at relationship-building and donor outreach.
  • Emphasis on development staff or resources.
  • They are proactive, always looking for ways to improve and increase their planning and their efforts.

On the downside, however, the survey found that, for those organizations who witnessed a decline in their fundraising dollars, most attributed it to the economy. Many nonprofits also approached the new year with short-term solutions to the current situation. Those who predicted longer recovery times, cited organizational problems (e.g. leadership) or lack of development/fundraising efforts as the main culprits.

But, in line with the above, and contrary to what many would believe, the organizations who claim not to be doing well are not necessarily those with the smallest budgets or staff. Nor are they the ones decrying 2008 an abysmal year for fundraising.

Yet, they all seem to have a few things in common, such as:

  • Problems with leadership or board.
  • Reactive as opposed to proactive strategies.
  • Little donor stewardship.
  • Lack of fundraising efforts.

Another intriguing tidbit is that, overall, nonprofits surveyed said they experienced higher fundraising results in 2008. To what did they attribute the increase? By and large, the answer was simple: a greater focus on the “ask”. Likewise, in order to achieve their 2009 revenue goals, donor stewardship was deemed the top priority, followed by foundation grants and major gifts. It should come as no surprise then that when asked about their priorities for 2009, 81% stated it would be communicating with donors.

Some other noteworthy takeaways from the report include:

  • A large percentage of respondents (77%) anticipate recovery in two years or less.
  • The impact of the economic crisis appears to vary among nonprofits, with some experiencing greater consequences and others a lot less.
  • Nonprofits who appear to be faring better in the economic climate are, by and large, the ones who promote diverse revenue streams and effective management.
  • Development activities, particularly individual donor relations, seem to underlie the approach of the more successful organizations.
  • Board members need to increase their level of involvement and engagement.
  • Non-profit leaders need to take a greater role in communicating the organization’s goals, decisions and vision moving forward.
  • A greater focus on internal communication within the organization is necessary.
  • Sometimes an organization’s perception of how well they are faring does not reflect the realities of the situation.

Unquestionably, like our neighbours to the south, Canadian nonprofits will feel the effects of the economic downturn and core funding/fundraising efforts will be impacted. But as the survey and its report demonstrates, even in these harder times, a proactive strategy is the key to resilience. Strong leadership, scenario planning, restructuring, donor stewardship, diversity and creativity are just a few of many priorities that can mean the difference between funding and fundraising highs and lows.

Wednesday, April 22, 2009

NY State Health Foundation providing funding for strategic restructuring

New York State Health Foundation recently announced it will dedicate a portion of its funding to support vital NY health non-profits to “transition to new and reorganized forms” that will be more sustainable over time. This is an excellent example of funders understanding the real impact this recession is having on NPOs and supporting proactive change.

As I have written time and again in this blog and in my articles (see
“Strategies to proactively assess the impact of the recession” and “Leaner Times call for Leaner Measures”), tough economic times can be just the catalyst needed for non-profit organizations to develop new strategies to become more efficient. Strategically restructuring operations can strengthen the capacity of organizations.

Assessing your financial status, the cost per program and assessing the impact of these programs as well as implementing strategic cost containment initiatives will allow organizations to have more clarity and impact in their work and it also is often a catalyst to consider innovative approaches and collaborative initiatives such as joint ventures, outsourcing, joint purchasing programs, mergers and management service organizations.

The recession may be the catalyst the non-profit requires to seek innovative approaches to the way they operate, and now funders are starting to fund these new approaches. As non-profits would not have to pay for these services - if money is accessed through restructuring funds made available by funders, than non-profits have nothing to lose by assessing whether they are candidates for strategic and financial restructuring.

In a time where budget deficits are rising and only 12% of US non-profits expect to end the year with an operating surplus (Nonprofit Finance Fund), it’s great to see funders acting progressively to support fundamental and lasting changes in non-profit organizations. Non-profits can leverage this by becoming more intimately acquainted with their programs, assessing their impact and assessing the financial models used to fund programs and services.

Have you heard of any funders in Canada supporting similar initiatives? If so, please share! Email Betty Ferreira at blog@restructure.ca

Click
here to read the announcement from NY State Health Foundation.

Monday, April 6, 2009

Collaborate, Collaborate, Collaborate

The article Strengthen key relationships: collaboration and the economic downturn quotes the CEO of the NCVO (The National Council for Voluntary Organisations) as saying

“Charities that diversify their funding streams, collaborate with partners and get their income strategy right are more likely to weather the current economic crisis and emerge financially secure on the other side.”

For more information, tips and strategies on mergers and collaborations please read Strengthen key relationships: collaboration and the economic downturn, and view the collection of articles in the "Restructuring Information & Resources" and "Non-Profit Mergers Information and Resources" sections found below (in the www.nonprofitrecessionwatch.com blog).

Thursday, April 2, 2009

Foundations Collaborate to Fortify Against the Recession

One of the many, many things I admire about the non-profit sector is its ability to innovate and survive in the face of adversity. There are many examples that I could provide to demonstrate this resilience, but I will focus on just one of the most recent ones that were profiled in the NYTimes.com in their article "As Detroit Struggles, Foundations Shift Mission".

Over a dozen Detroit foundations have decided to pool their money into an emergency fund for struggling charities, and they are also investigating ways in which they can strategically use funds that have been ravaged by the stock market decline. By pooling their funds, approximately $100 million over years from 10 foundations, this collaborative foundation network will attract skilled workers to the city, fill empty houses, and occupy empty retail storefronts. The impact of collaborating and leveraging expertise and funds has led to a refreshing strategic approach to the issues facing the Detroit economy.

Not only will this pooled fund leverage the capacity to restructure Detroit's economy beyond the capacity of any single foundation, the effort has also attracted additional funding from three national foundations (W.K Kellogg, Kresge, Charles Stewart Mott) which will further enable this collaborative foundation network to fulfill upon its mission.

Do you know of other collaborative initiatives that have arisen as a result of the recession - either on behalf of foundations or non-profits? I would like to profile them - email me at
blog [at] restructure.ca.

Canadian Recession Watch Data & Information

USA Recession Watch Data & Information

Global & General Recession Watch Data & Information

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