Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

March 29, 2010

Nonprofits face moment of truth

By Todd Cohen

Nonprofits still see no exit from the financial whipping they are taking from the battered economy.

Stressed by rising demand for services from people hurt by the economic tailspin, and by shrinking resources to meet that demand, nonprofits are giving a gloomy forecast about their ability to stay financially afloat.

While nonprofits have taken steps to try to meet that rising demand, most expect 2010 to be as grim as 2009, or grimmer, according to a new survey by the Nonprofit Finance Fund, reported today in the Philanthropy Journal.

And most are operating with little if any financial buffer.

In a recent Philanthropy Journal special report on nonprofit finance, Clara Miller, president and CEO of the Nonprofit Finance Fund, says nonprofits need to focus like lasers on tracking their finances and identifying revenue that is likely to continue and distinguishing it from revenue that is based on special or one-time funding.

In the same special report, Judith Alnes, director of MAP for Nonprofits, says nonprofits need to be bold in making financial plans and changes, and in shedding programs and operations they cannot afford that are not critical to their mission.

Nonprofits are at a crossroads that is precarious yet filled with promise: Instead of running for cover, nonprofits should be taking stock of their finances, operations and programs.

They should be engaging their supporters with compelling stories about their impact on their communities and with brutal honesty about the impact of the economy on their ability to serve their communities.

And they should be making tough choices about what they can and cannot afford to be doing right now, while thinking big about what they can do in the future if they act smart and are willing to invest in securing the resources they need.

“Nonprofits aren’t rolling over in the face of economic strain,” says Miller of the Nonprofit Finance Fund.

“The sector is filled with determined individuals and inspiring organizations focused on the most critical issues we face as a society," she says. "While the ‘coping mechanisms’ we’re seeing are encouraging, we also need to make fundamental changes to the way the sector is financed.”


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