Donations drop for nonprofits in 2008

February 9, 2009
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Nearly half of Michigan nonprofits surveyed last month by Grand Valley State University saw a drop in fund-raising in 2008.

Arts and entertainment organizations were particularly hard it, with 65 percent in the survey reporting less donation income. The survey of more than 200 Michigan nonprofits was conducted in January by GVSU’s Johnson Center for Philanthropy and Nonprofit Leadership for the Michigan Nonprofit Association.

Human services agencies faired better, but 40 percent of them reported a lag in donations. Overall, the rate was 45 percent.

“I think the real concern we have is that while we know that demand is going up, giving is going down and nonprofits doing work in human services are getting pinched, both from giving being down and government payments being delayed,” MNA President & CEO Kyle Caldwell said.

Many nonprofit human services agencies have contracts with governmental units to provide services, such as case management or counseling. Of the 65 percent of surveyed nonprofit that reported government funding, 45 percent said they’ve experienced delays in receiving those payments. Twenty-nine percent reported that those payments are more than 90 days behind schedule.

Just as in the for-profit world, credit has tightened up for nonprofits. Forty-six percent agreed that the financial crisis has made lines of credit tougher to get, and 16 percent said their lines had actually been reduced.

Most of the nonprofits surveyed said cash flow hasn’t changed much. But arts and entertainment organizations have taken the biggest hit in cash flow, with 75 percent of those surveyed saying it has decreased.

“They also often fight the misperception that their work is non-essential,” Caldwell said. “It’s hard to hold up supporting arts over food or shelter. But if you look at how economies recover, it’s because of the quality of life in their communities. Art and cultural organizations often lead that community transformation.”

Of the 44 percent in the survey who said cash flow was down, 57 percent have reduced the number of employees and 54 percent have reduced services. They’ve also cut back on benefits for employees and have cut hours of operation.

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