Nonprofit Management During Economic Downturns

Nonprofits, like almost all other businesses, are affected by downturns. But surveys show that the effects of the recent economic slump varied widely. Some charitable organizations, such as food banks, saw an increase in volunteers and donations. But others, including many cultural organizations such as volunteer orchestras and art programs for children, saw their funding shrink.

Surveys suggest that the nonprofits that have fared well have a few things in common:

  • Good communication: Especially when the need is great and money is in short supply, nonprofits need to make the case for their critical importance as persuasively as possible. When donations started to dry up, a California nonprofit program designed to bring volunteer music teachers into schools created a simple but stirring brochure about its work, including quotes from kids who were part of the program.

    The brochure communicated both the urgent need and the positive impact the program was having. It also outlined exactly how every dollar donated was put to work. After sending out the brochure, this small nonprofit had its best fundraising quarter ever.

  • Strong leadership: It’s easy for both paid staff and volunteers at nonprofits to get discouraged when they have to struggle for support to do the work they believe in. When funding falls short, morale can slump. A strong leader helps keep the troops focused and inspires everyone to make the extra effort.

  • Ambitious plans: When times are tight, many organizations are tempted to reduce or eliminate programs. Sometimes cutting back is essential. But cutting too many programs too close to the bone can cause donors to wonder what they’re donating for. Surprisingly, the nonprofits that did well during the recent downturn were typically groups that expanded their efforts, adding new programs and reaching out to help more people.

  • Diversified support: Not surprisingly, perhaps, nonprofits that weathered the economic turmoil are typically those that get their support from a wide range of donors, including individuals, foundations, public sources, and others. Nonprofits that manage to diversify their support also find themselves in a stronger position during economic expansions.

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