Nonprofits Employ Tougher Measures as Downturn Deepens: Bridgespan Survey Shows 41 Percent Turning to Layoffs, 33 Percent Reserve Draw-Downs, but Also Hope

BOSTON--(BUSINESS WIRE)--The negative effects of the economy on nonprofit organizations has accelerated over the last six months, according to responses from nearly 100 nonprofit leaders participating in a Bridgespan study initiated in November 2008 and updated in May 2009. The percentage of nonprofits that have resorted to layoffs, broad-based programmatic reductions, and reserve draw-downs has increased measurably. Nevertheless nonprofit leaders appear to be optimistic about the future. Almost half of the respondents reported that they believed their organization would be on stronger financial footing in a year’s time.

Since that initial survey, the country has a new President, and a new budget and stimulus package. Nonetheless, as the economic crisis has deepened, the situation for nonprofits has continued to deteriorate. According to Bridgespan partner William Foster, “This survey highlights just how tough times really are. Ninety-two percent of nonprofits responding to the May 2009 survey indicated they were experiencing the effects of the downturn, up from 75 percent in November. Forty-nine percent reported that their financial situation had worsened, and the percentage of nonprofits reporting funding cuts has increased from 52 percent to 69 percent. Further, the percentage reporting cuts of more than 20 percent has increased from 13 percent to 24 percent.” Bridgespan’s survey indicates a shift in tactics being employed by nonprofits in response including:

Key Tactics Employed by Nonprofits to Manage in Tough Times
	Tactic	Nov 2008		May 2009
	Work closely with existing funders to address challenges	79%		81%
	Redesign programs to achieve outcomes in a less costly manner	59%		67%
	Examine and improve key processes and structures (e.g. improve decision-making, cross functional teams) to increase organizational efficiency	64%		67%
	Have a clearly-defined contingency plan	48%		62%
	Consciously identify key positions and shift resources to keep these positions filled	51%		60%
	Renegotiate terms of funding to focus on core programs	34%		48%
	Create new programs that are related to mission and can attract greater funding	39%		45%
	Reduce the level of activity across all programs	31%		43%
	Lay off staff	28%		41%
	Dip into reserve funds	19%		33%
	Cut staff salaries	16%		23%
	Examine opportunities to merge with or acquire other nonprofit organizations	20%		21%

“Further analysis of all of these tactics suggests that large nonprofits in particular have been using the economic crisis as an opportunity to strengthen their organizations by redesigning programs to achieve outcomes in a less costly manner, actively looking for newly-available talent, and examining and improving key processes and structures to increase organizational efficiency,” added Foster.

Bridgespan has also collected insights and advice from our clients, from other nonprofit leaders and experts, and from our own leadership to help organizations manage through the downturn. (See our Managing in Tough Times Resource Center). To arrange an interview with William Foster or to receive a copy of the Bridgespan 2009 Survey, please contact: Liz London, liz.london@bridgespan.org, 646-562-8906.

About The Bridgespan Group

Founded in 2000 and incubated at Bain & Company, the Bridgespan Group is a 501(c)(3) nonprofit organization that helps nonprofit and philanthropic leaders to make strategic decisions and to build organizations that inspire and accelerate social change.