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.

The Bridgespan Group
Liz London, 646-562-8906
liz.london@bridgespan.org

Copyright Business Wire 2009