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Finding a Way

February 2009 Arizona Nonprofits Economic Survey Results

From February 3 through 13, the Alliance queried nonprofits across the state about the effects of the recession on their operations. Responses from 87 organizations approximately reflect the diversity of all organizations in Arizona, based upon geography, mission and budget. Organizations providing services in every county of Arizona were included in the survey.

The conclusion of "Finding a Way," demonstrates that while revenues are down and services are affected, Arizona nonprofits are being creative about finding a way to keep essential services afloat during the recession.

A summary of the survey findings shows that:

• Nonprofit revenues are down an average of 18% and 64% of organizations expect them to decline further in 2009.
• One-quarter of nonprofits have laid off staff or plan to enact layoffs this year. That could translate into more than 5,000 nonprofit employees out of work.
• Meanwhile, 75% nonprofits saw the demand for their services rise during 2008 and more than 80% expect that to happen in 2009.
• Therefore, because of tight budgets, many Arizona residents and communities will be affected: nearly 40% of organizations will either reduce the level of service or the number of people served as a result.
  

Nonetheless, nonprofits have long been resilient during lean times, and leaders report creative approaches to responding to the crisis.

• Overall, 44% of organizations report that they will absorb the combination of service increases and falling revenues by further reducing costs.
• More than a quarter of nonprofits are considering joint ventures or mergers with other organizations. Most survey respondents suggested they are exploring and interested in collaboration with other nonprofits, government and communities to keep essential missions being served.
  

As one survey respondent wrote: “Nonprofits always do more with less and we step up services when it gets even worse. We have more flexibility which is a great asset.”

 “There may have been some shell shock at the deep turn downward last fall,” stated Alliance President & CEO Patrick McWhortor. “But nonprofits are know showing the passion for their mission and commitment to communities they have long delivered on behalf of the people of Arizona. And in this hour of great need, thank goodness we have talented and creative leaders at the helm.”

Another nonprofit leader wrote: “Our company motto is ‘Just because something is impossible doesn't mean it can't be done.’ Challenges like the ones we face today shake us back to reality, connects us once again with our fundamental purpose and passion, and promotes growth. This is not a time to circle the wagons but to grow and be creative. It's very exciting!”

Nonprofits also report that volunteerism remains strong. Fewer than 20% reported any decrease in volunteers since the recession began.

MAJOR FINDINGS:

REVENUES ARE DOWN
• One half of nonprofits saw a decrease in revenues in 2008, and two-thirds expect a decrease in 2009.
• 75% of organizations already made cuts to their 2009 budgets.
• The funding sources down the most are foundations and corporations.
• Nearly 60% report their government funding is down already, and they expect deeper cuts in 2009. For some parts of the sector (most notably, social and human services) this is a significant portion of their total revenues.
• Contributions from individuals are down only 13.6%, though for the sector as a whole, this comprises 82% of all donations. (Other surveys nationally and in Arizona have indicated that wealthy donors only expect to decrease their giving modestly, less than 5% this year. Therefore, individual giving may continue to grow as a portion of nonprofit support.)

SERVICES ARE AFFECTED
• 75% of nonprofits saw demand for their services grow in 2008, and 84% expect demand to rise in 2009.
• 44% of organizations are reducing costs, while still absorbing this increase in demand.
• However, nearly 40% will either reduce the level of service or reduce the number of people who can receive services.
• 57% of nonprofits put on hold plans for expansion in 2008.
• 27% of nonprofits laid off employees in 2008 or expect to 2009.
• 8.5% of the paid workforce was laid off – extrapolating to the entire sector, as many as 11,000 nonprofit employees could be laid off by the end of 2009.

NONPROFIT ARE STILL RESILIENT
• Most nonprofits are exploring collaboration and innovative service delivery ideas to continue serving their missions through this recession.
• 27% are looking at joint ventures or mergers with other nonprofits.
• 83% of organizations report NO decrease in volunteerism since the recession began in 2008.