Nonprofits use business savvy to weather economy

Non-profits get a bum rap sometimes for being, well, nonprofit.

But non-profits have, in the past quarter-century, taken on many research, community service, and social service functions formerly provided by government. To put in in a context that might make some nonprofit leaders a bit uncomfortable, nonprofits have, in a sense, served played a big privatization role in recent years.

So it is no surprise to learn that Michigan nonprofits are feeling the full weight of the economic crisis. We’ve heard of a charity or two which closed due to the Madoff pyramid scheme. We know others who are scrambling to replace funding previously provided by the foundation arms of the Big Three.

It’s also no surprise that non-profits are rapidly improvising and transforming in these down times to overcome, survive, and continue serving constituencies. A new study released by the Michigan Nonprofit Association explains:

  • Nearly half (45%) of responding nonprofit organizations raised fewer funds in 2008 year-end fundraising compared to previous years.
  • Arts & Entertainment nonprofits were hardest hit with 65% of these organizations stating that they had raised fewer funds in their 2008 year-end fundraising efforts.
  • 65% of responding nonprofits receive government funding, and of those, 45% have experienced a delay in scheduled payments from the government.
  • 44% are experiencing a decrease in their cash flow.
  • In response to the decrease in cash flow, these organizations have

  • Reduced the number of employees (57%)
  • Reduced services (54%)
  • Reduced employee benefits (43%)
  • Reduced hours of operations (21%)
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    3 Comments

    1. Susan C.
      Posted February 12, 2009 at 11:17 am | Permalink

      I found your discussion of potential cuts in budget items to be of interest. Unfortunately, it reflects a standard approach – cut around the edges without considering the effectiveness (or need) for the programs/activities that are being funded. It’s time to revisit the fundamentals, including the number of local governmental units, the breadth and scope of entitlement programs, state-wide infrastructure needs (including roadways,internet connectivity, and energy infrastructure and its regulation), and our education system model.

      An old saying comes to mind, “if you do what you did, you get what you got…”

      What we’ve got in not working. To continue to fund this failing model, albeit with a few cuts here and there, will still get us to the same place – continuing decline, hardship and eventual bankruptcy.

      It’s time to take a giant step and try something entirely new. I don’t see how we could be worse off.

    2. Chuck Fellows
      Posted February 12, 2009 at 12:40 pm | Permalink

      A standard approach of a little cut here and another cut there is very satisfying since those that do the cutting receive the satisfaction of being able to do ’something’.

      It also avoids taking really innovative, and tough actions. It is the low risk, and low return, approach to problem solving and it never does work.

      For profit and non profit, (they both need cash flow to survive), should pause and reflect on the reason they exist and insure that everything they are doing is focused upon delivering that reason to their customers and stakeholders.

      Anything else being done is waste.

      Governments ‘of the people’ exist to support the health, general welfare and safety of those that created them and provide their cash flow. Maybe the centralization of government (eliminating local units of government)is exactly the wrong thing to do since it serves to separate those governed from those doing the governing. Look how ‘out of touch’ those in the echo chambers of Lansing and Washington are. How about a flatter pyramid throughout governance?

      Just imagine a state bureaucracy filling a pothole in a timely and cost effective manner. ARRGGGH!

      Education currently exists to satisfy the needs of the adults who have (think they have) finished their schooling. As adults they demand accountability and insist that learning can be accurately assessed via standardized tests, and spend enormous sums of public money to design and administer these tests. What foolishness. There is absolutely no scientific or practical evidence of any kind any where in the universe that demonstrates that all this testing accomplishes what it is alleged to do. With the stroke of a pen those that govern could eliminate the waste of BILLIONs we spend on testing and return education to its purpose – learning.

      We’ve been testing (norm or criterion referenced) for over fifty years and have not improved learning one whit. We have improved how to teach to the test and spent even more money to design curriculums that are aligned with the stuff we test for – actually made the curriculums so shallow and broad that they will ‘fit’ any test question given; and are curriculums that can never be covered in a childs lifetime.

      Lots of waste with absolutelty no evidence of a positive return of any kind.

      Of course if your goal is 100% proficient in ‘whatever’ by 2014 (NCLB) you live in a world where everyone you meet is above average. As a nation we spend $845 Billion annually to make it so.

      Welcome to Lake Wobegon!

    3. Jim Wellman
      Posted February 12, 2009 at 1:05 pm | Permalink

      I agree with Susan C.’s posting. What we’ve got is not working.
      I feel the “stimulas” package is a very bad joke and passage of same just fortifies my stance that although “revistation of the fundamentals” sounds warm and fuzzy, our government representatives do not have the moxie (guts) to do what the majority of their constituants want. Unless, of course, there is some juicy Pork available.
      Politics as usual. You scratch my back, I’ll scratch yours, and to hell with the consequences and to hell with the ignorant masses.