May 11, 2010

Nonprofits Are Bracing for a Tough 2010

The Nonprofit Finance Fund (NFF) recently released the results of its second annual survey on the state of the nonprofit sector. Of the more than 1,300 respondents, 417 (32%) were from arts, culture and humanities organizations. Most respondents were from small or midsized organizations, with operating budgets of $2 million or less. The survey asked nonprofit managers to assess current fiscal challenges and to share coping strategies. Of all the nonprofits that responded, nearly 90% expect fiscal year 2010 to be financially more difficult than or as difficult as 2009.

In general, arts organizations are being affected by the recession in the same way as the rest of the nonprofit sector. The majority of arts organizations and nonprofits as a whole have less than 3 months’ worth of cash on hand. One area in which arts organizations differ from the nonprofit sector is in the percentage that anticipate a decrease in government funding. Sixty-six percent of arts organizations expect a decrease, compared to 47% overall. Of the arts organizations that received stimulus money, approximately half expect that they will be able to replace the money in 2010.

While the overall theme of the NFF report is that of continuing struggle, some positive trends emerge. The table below compares several actions that nonprofit arts organizations put into effect in fiscal year 2009 with their plans for FY2010. The percentage of arts organizations that expect to freeze hiring or salaries in 2010 decreased substantially from the percentage of those that actually did so in 2009. In addition, arts organizations are less inclined to reduce staff or salaries, reduce staff hours, or reduce benefits in 2010.

For more information on the annual survey, view the full report. To obtain details on the breakout analysis of arts organizations, see NASAA’s new Nonprofit Finance page.

If you would like to talk to a NASAA staff person about this or other surveys, contact Shannah Sphar.