It is no secret that as the current economic downturn is affecting business everywhere, the American nonprofit sector is particularly affected. GuideStar.org recently conducted a survey of approximately 7,000 charitable organizations in order to gauge how these organizations performed during the first five months of 2010. The results shed light on the overall industry financial performance.
Of those organizations surveyed, 40% of respondents reported a decline in contributions while 63% reported an increase in demand for their services. Since a decline in contributions reduces the funds available to finance services, a simultaneous increase in demand for services intensifies the pressure upon an organization to more effectively leverage its assets to continue to meet demand.
The following are the top five factors reported by organizations as the cause for a decline in contributions:
According to GuideStar.org, the impact of the economic decline is evenly distributed among all types of nonprofit organizations. Mental health and crisis intervention organizations, however, proved the most susceptible to this weak economy by experiencing a more dramatic drop in contributions. Conversely, food and nutrition organizations, such as food banks, saw an uptick in contribution income.
For complete results of the survey please refer to the article, “The Effect of the Economy on the Nonprofit Sector: A June 2010 Survey” published by GuideStar USA, Inc.
By Benjamin Arthur, Staff Accountant