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Friday, October 10, 2008

What's Happening in the Not For Profit World in General?

I like to bring a variety of subjects to my blog and sitting on my desk in front of me are two articles on the economic crisis and non-profits (NFP). Unfortunately, there are so many newspapers and magazines in front of me that I've lost the Newsweek article which had some good substance. So, I will have to stick with the front page of the most recent Accounting Today publication: "Tough time cause belt-tightening at nonprofits." Newsweek is available to the general public anyways. I doubt Accounting Today is sitting on the desk of most of my readers, although no doubt it is sitting on some desks.

Here are my notes on the highlights from the article regarding trends in giving:
  • Donor Giving is Down, especially in the social service organizations.
  • Social service organizations are far more dependent on smaller donations given by individuals, and donations in the $1000 and under range have fallen. Additionally, the average amount of a smaller donation is down.
  • Major donor gifts are not particularly falling (although the Newsweek article disputed this, especially considering the large gifts from financial firms). Major donors have made an investment in their favorite organization, made giving a part of their estate plan, and are generally following through according to Accounting Today.
  • Large donors are reducing their gifts. Large donors often donate appreciated property (stocks, real estate) because they can take the donation at fair market value, while avoiding paying capital gains tax. However, as the value of assets plummet, large donors loose some of their incentive to donate valuable property. These donations are at stake.

  • Organizations with broad missions are feeling the pinch, while organizations with a more narrow cause are still gaining support.
  • Donors will give to the organizations they are most passionate about, even where the general trend of giving is down.
  • More donors are giving "restricted funds," i.e. funds that are for a specific program or initiative, rather than leaving the donation open to be used as the NFP sees fit.
  • Donors are seeking higher levels of accountability and are asking for more financial reports in order to track how their restricted donations have been spent.
How organizations are tightening their belts:
  • Scaling back staff costs by reducing staff hours.
  • Consolidating administrative offices. (Regular readers will know why I put this in bold).
Suggests for NFP Organizations from Accounting Today:
  • Diversity funding sources.
  • Create or strengthen major gifts programs.
  • Find new ways to communicate the impact of their mission.
  • Do not drop marketing. Organizations must communicate results, effectiveness, factual data (highlighted because it it important to relate the trend of donors asking for more accountability with the need to market accountability), and differentiate themselves.

Certainly a lot to consider and now that I've recorded my notes I can send this publication to our recycle bin.

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