The Impact of the Great Recession on Non-Profits 2010 Leadership Forum On behalf of Mainstream, Inc. and the KS & MO Non-P...
About Us <ul><li>Family Investment Center was founded by Dan Danford in 1998. </li></ul><ul><li>Commission-free investment...
Our Team Carolyn Pearl Research Services Elaine Coder Director of Client Services Jason White Director of Investments Laur...
About Today’s Discussion… <ul><li>Johns Hopkins University Non-Profit Listening Post Project nationwide survey (363 respon...
Nonprofits and the Great Recession <ul><li>Significant economic stress </li></ul><ul><li>Impressive resilience </li></ul><...
Significant Economic Stress <ul><li>80% of survey respondents reported fiscal stress within their organizations </li></ul>...
Significant Economic Stress <ul><li>Hardest hit have been mid-sized non-profits with revenues of $500,000 to $3 million </...
Significant Economic Stress <ul><li>Declining non-profit revenues </li></ul><ul><ul><li>In 2003, 20% reported declining re...
Significant Economic Stress <ul><li>Revenue declines over ALL support sources </li></ul><ul><ul><li>Individual contributio...
Significant Economic Stress <ul><li>Upward cost pressure </li></ul><ul><ul><li>56% report rising wage and benefit costs </...
Significant Economic Stress <ul><li>Endowment investment performance </li></ul><ul><ul><li>80% of endowments decreased in ...
Significant Economic Stress <ul><li>Increased competition for financial resources </li></ul><ul><ul><li>58% reported incre...
Significant Economic Stress <ul><li>“ A perfect storm of pressure…” </li></ul><ul><ul><li>Declining revenues </li></ul></u...
Impressive Resilience <ul><li>Non-profits face fiscal difficulty, but not as severe as the post-9/11 economic recession </...
Impressive Resilience <ul><li>“ Ultimately, the real test of the impact of the current recession on the non-profit sector ...
Impressive Resilience <ul><li>Non-profit bootstrapping </li></ul><ul><ul><li>73% of survey respondents report equal or hig...
Impressive Resilience <ul><li>Unfortunate “hidden” consequences </li></ul><ul><ul><li>Increased wait time for services </l...
Coping Strategies <ul><li>Best Practices </li></ul><ul><ul><li>Long range strategic planning mitigates some harm </li></ul...
Conclusion <ul><li>The Great Recession of 2007-09 will not soon be forgotten </li></ul><ul><li>Economic recovery will be s...
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The recession and nonprofits

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The recession and nonprofits

  1. 1. The Impact of the Great Recession on Non-Profits 2010 Leadership Forum On behalf of Mainstream, Inc. and the KS & MO Non-Profit Associations Presented by Jason T. White, Economics Ph.D.
  2. 2. About Us <ul><li>Family Investment Center was founded by Dan Danford in 1998. </li></ul><ul><li>Commission-free investment advisory firm. </li></ul><ul><li>Specializes in managing large portfolios ($100,000 or more) for individuals, foundations, and non-profit organizations. </li></ul>
  3. 3. Our Team Carolyn Pearl Research Services Elaine Coder Director of Client Services Jason White Director of Investments Laura Price Investment Advisor Dan Danford Chief Executive Officer
  4. 4. About Today’s Discussion… <ul><li>Johns Hopkins University Non-Profit Listening Post Project nationwide survey (363 responses) </li></ul><ul><ul><li>Children and family services </li></ul></ul><ul><ul><li>Elderly housing and services </li></ul></ul><ul><ul><li>Education </li></ul></ul><ul><ul><li>Community and economic development </li></ul></ul><ul><ul><li>Arts </li></ul></ul><ul><ul><li>http://www.ccss.jhu.edu/index.php?section=content&view=9&sub=5 </li></ul></ul>
  5. 5. Nonprofits and the Great Recession <ul><li>Significant economic stress </li></ul><ul><li>Impressive resilience </li></ul><ul><li>Various coping strategies </li></ul><ul><li>Family Investment Center’s goal today is to share this “ actionable data ” with YOU </li></ul>
  6. 6. Significant Economic Stress <ul><li>80% of survey respondents reported fiscal stress within their organizations </li></ul><ul><ul><li>40% said the stress was “severe” or “very severe” </li></ul></ul><ul><ul><li>Some described the current environment as: </li></ul></ul><ul><ul><ul><li>“ the most difficult financial time…in 35 years” </li></ul></ul></ul><ul><ul><ul><li>“… a question of survival” </li></ul></ul></ul><ul><ul><ul><li>“… only months to determine our fate” </li></ul></ul></ul>
  7. 7. Significant Economic Stress <ul><li>Hardest hit have been mid-sized non-profits with revenues of $500,000 to $3 million </li></ul><ul><ul><li>Most affected to least: </li></ul></ul><ul><ul><ul><li>Culture and the Arts </li></ul></ul></ul><ul><ul><ul><li>Child and Family Services </li></ul></ul></ul><ul><ul><ul><li>Elderly Housing and Services </li></ul></ul></ul><ul><ul><ul><li>Community and Economic Development </li></ul></ul></ul><ul><ul><ul><li>Education, Museums and related services </li></ul></ul></ul>
  8. 8. Significant Economic Stress <ul><li>Declining non-profit revenues </li></ul><ul><ul><li>In 2003, 20% reported declining revenue </li></ul></ul><ul><ul><li>Today, 51% report declining revenue </li></ul></ul>
  9. 9. Significant Economic Stress <ul><li>Revenue declines over ALL support sources </li></ul><ul><ul><li>Individual contributions down 53% </li></ul></ul><ul><ul><li>Corporate contributions down 44% </li></ul></ul><ul><ul><li>Foundation contributions down 42% </li></ul></ul><ul><ul><li>Government support down 35% </li></ul></ul><ul><li>Cultural institutions and the Arts </li></ul><ul><ul><li>Revenues down nearly 80% </li></ul></ul>
  10. 10. Significant Economic Stress <ul><li>Upward cost pressure </li></ul><ul><ul><li>56% report rising wage and benefit costs </li></ul></ul><ul><ul><ul><li>25% had health benefit costs rising by over 10%/yr. </li></ul></ul></ul><ul><ul><li>Large organizations and human services providers fared worst </li></ul></ul>
  11. 11. Significant Economic Stress <ul><li>Endowment investment performance </li></ul><ul><ul><li>80% of endowments decreased in value </li></ul></ul><ul><ul><ul><li>Two-thirds of respondents lost more than 20% of endowment value during the recession </li></ul></ul></ul>
  12. 12. Significant Economic Stress <ul><li>Increased competition for financial resources </li></ul><ul><ul><li>58% reported increased competitiveness for non-profit funding </li></ul></ul>
  13. 13. Significant Economic Stress <ul><li>“ A perfect storm of pressure…” </li></ul><ul><ul><li>Declining revenues </li></ul></ul><ul><ul><li>Upward cost pressure </li></ul></ul><ul><ul><li>Poor endowment performance </li></ul></ul><ul><ul><li>Increased competition for scarce financial resources </li></ul></ul>
  14. 14. Impressive Resilience <ul><li>Non-profits face fiscal difficulty, but not as severe as the post-9/11 economic recession </li></ul><ul><li>Most have not faced cuts in lines of credit or other lending arrangements </li></ul><ul><li>Low interest rates have helped reduce some financial stress </li></ul><ul><li>Only 1 in 3 non-profits surveyed carried debt </li></ul><ul><li>Less than 5% faced imminent danger </li></ul>
  15. 15. Impressive Resilience <ul><li>“ Ultimately, the real test of the impact of the current recession on the non-profit sector is not the consequences for the organization, but the consequences for those they serve…” </li></ul>
  16. 16. Impressive Resilience <ul><li>Non-profit bootstrapping </li></ul><ul><ul><li>73% of survey respondents report equal or higher demand for services </li></ul></ul><ul><ul><li>Protecting the vulnerable by doing more with less </li></ul></ul><ul><ul><li>The example of Michigan </li></ul></ul>
  17. 17. Impressive Resilience <ul><li>Unfortunate “hidden” consequences </li></ul><ul><ul><li>Increased wait time for services </li></ul></ul><ul><ul><li>Staff morale, retention and hiring freezes </li></ul></ul><ul><ul><li>Recruitment and management of volunteers </li></ul></ul><ul><ul><li>Decreased goodwill and reputational effects </li></ul></ul>
  18. 18. Coping Strategies <ul><li>Best Practices </li></ul><ul><ul><li>Long range strategic planning mitigates some harm </li></ul></ul><ul><ul><li>Prudent budgeting has helped </li></ul></ul><ul><ul><li>Offense not defense </li></ul></ul><ul><ul><ul><li>Intensified fundraising </li></ul></ul></ul><ul><ul><ul><li>Belt-tightening </li></ul></ul></ul><ul><ul><ul><li>Entrepreneurial thinking </li></ul></ul></ul><ul><ul><li>A positive outlook </li></ul></ul>
  19. 19. Conclusion <ul><li>The Great Recession of 2007-09 will not soon be forgotten </li></ul><ul><li>Economic recovery will be slow, but the trends continue to be positive </li></ul><ul><li>Non-profit fiscal management has been effective and will continue to improve </li></ul><ul><li>Experience is the best teacher </li></ul>

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