A couple of weeks ago, the Nonprofit Finance Fund, which makes loans and provides financial consultations, released the results of its annual State of the Sector survey. In this year’s edition, of 1,315 nonprofit leaders, it found most were bracing for a tough 2010. No surpise, there.
But it also found, in the arts sector, that many want help with their boards — maybe that’s no shock either, but it speaks to an issue I’ve mentioned before as worrisome.
In general, across all kinds of non-profits — arts, human services, environment, education, animal welfare, etc.:
Nearly 90% expect 2010 to be as difficult or more difficult than 2009; only 12% expect 2010 to be financially easier for their organizations.
80% of nonprofits anticipate an increase in demand for services in 2010; 49% expect to be able to fully meet this demand level.
Only 18% of organizations expect to end 2010 above break-even; 35% of organizations ended 2009 with an operating surplus.
The majority – 61% – have less than three months of cash available; 12% have none.
Arts groups made up the biggest component — 32% — of respondents, but I still wanted to see just the arts’ picture. I asked the Nonprofit Finance Fund for the results just from those 417 arts leaders, and it obliged. Here are a few interesting points I pulled from them:
–54% experienced an increase, slight or significant, in demand for their services in 2009, but 64% expect an increase in 2010.
–In 2009, 37% had an operating deficit, while 26% expect to have a deficit this year.
–In 2009, 32% had an operating surplus, but only 26% expect a surplus this year.
–28% could not fully meet demand last year, and 34% do not believe they will this year.
–13% have no cash reserve, and only 16% had more than six months’ worth of cash in reserve. The vast majority — 65% — have less than 3 months cash on hand.
–The board and management have money on their minds: in the last six months, way more than half asked for reports on cash-flow projections, balance sheets, actual vs. budgeted expenses, and budget projections/scenarios — but only 26% had asked to see economic analyses of programs. (In the all-group survey, even more boards/managements asked for more of all of these reports.)
–The biggest response to economic challenges both last year and this year was “engaging the board,” which came from more than 60% of those surveyed. The second biggest response, of 20+ possibilities, which included hiring freezes, relying on volunteers, reducing hours, etc., was “collaborating on programs.”
–Asked what type of technical assistance would be most helpful, the largest response — 41% — asked for “tools to communicate with board.” Second choice was “scenario planning,” at 39%.
These are worrisome numbers. It’s hard to draw too many conclusions from them, however, but I do find it interesting that, while many groups are trying to engage their boards, many also still want more and better “tools” to do so. There’s no way of knowing the overlap between those two groups.
Unquestionably, having a good, engaged, creative and, yes, wealthy board is critical most of the time, and especially in tough times.
The full survey and other tools, plus last year’s survey, can be found here. On arts groups, you have to trust me.