I’m attending a Nonprofit Economic Summit for Dane County, Wisconsin, this morning, co-sponsored by our county’s United Way. Lots of experts — including state, county, and Madison city officials — exploring the economy and the unique need and role for nonprofits. The sessions have been front-loaded with bleak information, as you might expect, tracing the collapse of many financial indicators. Among them, the dramatic and historic 18 percent drop of household wealth in 2008. See interactive charts from the Wall Street Journal.
But the really troubling news is the number of lags and delays in our economic system, suggesting that the tough year for nonprofits is still to come. Housing values tend to lag about a year. City and county revenues are closely tied to those property values (and the fees related to housing starts and zoning requests). Contributed income tends to see its biggest drop in the year following a recession. Endowment draws for foundations and most nonprofits, assuming a twelve-quarter rolling average, will be trending down for the next many years (not mentioning the loss in their total asset value).
So, even if the economy turns around in 2009, 2010 will likely be the difficult year for most nonprofits. Hang tough.
Thanks so much for attending the summit today and writing about it in your blog. I am interested to know more about your thoughts on the challenges in the coming year(s) and if you had more suggestions on what non profits can do to build capacity.
Best,
Tom Kuplic
United Way Dane County
Director of Communications
I think this will happen more broadly all across the sector; moreover, I think its a call to action…especially for boards. Look, the Aspen Institute says that the non-profit sector has grown 54% in revenues since 1995…a period when GDP growth has been about 34%. That’s a rise in revenues at nearly 160% of the GDP…and from four dominant sources: government, charitable contributions, dues, fees and charges and earned income. So here we are in a “correction” that has some of the earmarks of 1929 and all four of these revenue sources are under duress. Could the decline be as comparatively robust as its rise? dunno, but even if it tracks with the economy in general, this decline will place huge demands on the sector leadership…its executives and directors…to rethink the “business models” and independence mantras that under gird the sector. We’re not going to “bake sale” our way out of this. My article in the February 09 issue of Directors Monthly on “Voluntary Ownership: rethinking the Non Profit Board”, is the opener to this conversation.