“Perfect Storm” of Fiscal Stress Hits Nonprofits

June 29, 2009 — Eighty percent of nonprofit organizations are experiencing fiscal stress according to a survey released today by Johns Hopkins University, and close to 40 percent of them reported that this stress was “severe” or “very severe.” Theaters and orchestras were particularly hard hit, with nearly 75 percent of the former and half of the latter reporting “severe” or “very severe” stress.

Contributing to this stress has been a perfect storm of impacts including declining revenues (51 percent of organizations); increased costs, particularly for health benefits; declining endowments; and decreased cash flow as a result of restricted credit and government payment delays.

The 363 organizations that participated in the survey as part of the Johns Hopkins Nonprofit Listening Post differ widely in size, cover all regions, and represent a diverse array of fields, including children and family services, elderly services and housing, community development, education, arts and culture, and others.

Despite the dire challenges, more than two-thirds of the organizations indicated that they have been “successful” or “very successful” in coping with the current fiscal crisis. This is consistent with experience in prior recessions, during which nonprofits boosted employment while for-profit employment declined. This suggests that nonprofits are a counter-cyclical force in the economy.

"Our nation’s nonprofit organizations are displaying exceptional resilience in the face of enormous fiscal challenges,” said Lester M. Salamon, director of the Johns Hopkins Center for Civil Society Studies, which conducted this survey as part of its Listening Post Project. “Nearly three-fourths of the organizations reported being able to maintain or actually increase the number of people they serve, and this was especially true of service to vulnerable populations."

To achieve this result, nonprofits have displayed unusual resolve and launched inventive coping strategies:

· Well over half of all organizations have launched new or expanded fund-raising efforts, targeting individuals, state and local government, the federal government and foundations.