Tough Times for Nonprofits

This recession is putting a strain on both ends of nonprofits these days. There are more people in need of the assistance offered but at the same time there are less resources to offer due to a decrease in government funding and individual donations. Shelly Banjo and S. Mitra Kalita wrote an article for the Wall Street Journal on this topic, saying that nonprofits "are undergoing a painful restructuring, including mergers, acquisitions, collaborations, cutbacks and closings."

Though donations had steadily been rising the last few decades, there has been a drop off in private donations as seen in the chart above. In 2008 private giving decreased by 6%, the most substantial decrease since USA Giving began tracking this information.

Though there are a lot of negative effects that are being compounded by tough economic times, there may be some positive outcomes to this situation. The reality of current circumstances has brought up the controversial issue of whether there are too many nonprofit organizations to effectively help people. Cutbacks have caused smaller organizations to merge together and in some cases it has allowed them to do things never before possible on their own. One such example is Big Brothers Big Sisters:

"The changes are not only making Big Brothers Big Sisters more efficient, but also attracting new donors, board members and participants. In the past three years, the organization has been able to double the number of children served in Chicago to 1,300 a year. In 2009, it expanded the board by six people and won a $346,000 grant from Atlantic Philanthropies to run mentoring programs for more than 300 new children. By running programs at other nonprofits or companies they partner with, the organization has generated $750,000 in new revenue."