Transcript Slide 1

Nonprofit Finance Fund
Summary Report:
Arts Nonprofit Survey Results
March 27, 2009
For more information, please contact Joyce F Jonat at
973.642.2500 x115 or visit nonprofitfinancefund.org.
Data is based on a nationwide Zoomerang survey of nonprofit leaders conducted by
Nonprofit Finance Fund, February-March 2009.
nonprofitfinancefund.org
©2009 Nonprofit Finance Fund
Introduction to the Survey
Nonprofit Finance Fund recently conducted a survey of nonprofits
nationwide to assess the real-time financial challenges they face. The
survey focused on surfacing the most critical areas of need, both for
the immediate and longer-term durability and effectiveness of the
sector.
Over one thousand nonprofit leaders responded to our survey; near a
quarter of them were arts organizations. Survey respondents stretched
from coast-to-coast and from large organizations to small.
What did we learn from their collective reply?
America’s nonprofit sector is financially vulnerable.
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Arts Organizations Comprise 24% of
Survey Respondents
Survey Respondents by Sector
Unknow n,
Mutual/Membership Unclassified
Benefit
Arts, Culture, and
Humanities 24%
Religion Related
Public, Societal Benefit
International, Foreign
Affairs
Education
Human Services
Environment and Animals
Health
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What is the Annual Expense Size of
Arts Respondents?
Most Arts Respondents from Small-to-Mid-Sized Nonprofits
6%
4% 2%
18%
15%
13%
$0-$250,000
$250,000-$500,000
$500,000-$2,000,000
41%
$2,000,000-$5,000,000
$5,000,000-$10,000,000
$10,000,000-$20,000,000
greater than $20,000,000
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26% of Arts Respondents Primarily
Serve Vulnerable Populations
Do you primarily serve low-to-moderate income populations?
80%
74%
70%
60%
50%
40%
30%
26%
20%
10%
0%
Yes
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No
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What is the Financial State of Arts
Organizations?
Last year, 37% of arts organizations had a surplus;
this year, only 8% are anticipating above break-even results
50%
43%
45%
40%
38%
38%
37%
35%
30%
25%
25%
20%
15%
11%
8%
10%
5%
0%
Operating deficit
Operating surplus
Break-even financial results
(revenue matches expenses)
Most recently ended fiscal year
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Unable to predict this year's
financial results
Current fiscal year
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What Are Arts Organizations’
Revenue Expectations for 2009?
Organizations are bracing for funding cuts from all types of donors
80%
69%
70%
62%
59%
60%
50%
47%
40%
30%
26%
20%
10%
17% 16%
20%
14%
23%
17%
13%
8%
3%
1%
2%
0%
Government funding
Foundation funding
Increase
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Decrease
©2009 Nonprofit Finance Fund
Individual donations
No change
Earned revenue
N/A
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Plans & Actions to Weather the
Recession
Arts nonprofits are taking or considering notable actions to keep their
doors open in these difficult times
69%
Develop a ‘worst-case scenario’ contingency budget
Funder conversations to explain situation and/or use of currently
restricted grants
55%
68%
Engage more closely with your board
Speed up the collection of receivables
20%
Delay payments to vendors
31%
48%
Use reserve funds
Sell assets such as a building or securities
6%
Reduce or refinance occupancy costs
Merge with another organization
17%
2%
C ollaborate with another NPO to reduce administrative expenses
12%
C ollaborate with another NPO to provide programs
42%
45%
Reduce or eliminate programs
18%
Reduce staff benefits
27%
Reduce staff hours (short weeks, furloughs, etc.)
53%
Freeze all hires and current salaries
43%
Reduce staff or salaries
No change- business as usual
0%
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3%
10%
20%
30%
40%
50%
60%
70%
80%
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What Type of Technical Assistance
Would Be Helpful?
Nonprofit arts leaders expressed interest in tools to help them
manage through the crisis
Assistance analyzing your current
financial situation
36%
Program finance analytics
(revenue/expense breakdown
per program)
32%
11%
Merger feasibility analysis
Tools to communicate financial
picture to board and/or funders
55%
57%
Financial scenario planning
Assistance negotiating with
banks or other lenders
17%
0%
10%
20%
30%
40%
50%
60%
% of organizations
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Summary of Key Arts Findings
The Financial State of Nonprofits

Only 8% of arts respondents expect to operate above break-even this year.

Just 12% anticipate being able to cover their operating expenses in both 2009
and 2010.

33% don’t have enough operating cash in hand to cover more that one month
of expenses, and another 31% have less than three months’ worth.

In 2009:
–
59% anticipate a decrease in funding from government
–
69% anticipate a decrease in funding from foundations
–
62% anticipate a decrease in funding from individuals
–
47% anticipate a decrease in earned revenue

56% of respondents expect the recession to have a long-term (2+ years) or
permanent negative financial effect on their organizations.

49% of arts organizations anticipate an increase in demand in 2009.
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Summary of Key Findings:
What Are Arts Nonprofits Doing?
Actions Nonprofits are Taking or Considering

Develop a ‘worst-case scenario’ contingency budget: 69%

Reduce staff or salaries: 43%

Freeze all hires and current staff salaries: 53%

Reduce or eliminate programs: 45%

Collaborate with another organization to provide programs: 42%

Use reserve funds: 48%

Delay payments to vendors: 31%

Speed up the collection of receivables: 20%

Engage more closely with board through more frequent reports and meetings: 68%

Hold conversations with funders to explain situation and projections and/or to discuss
the use of currently restricted grants: 55%
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What Actions Can Funders Take?
We encourage funders to be active supporters of the organizations they care about.
Steps that can be taken include:

Ask grantees how you can best help them continue to deliver on the promise of
their mission. Be aware of how your grant fits into the overall revenue picture
for the organization, and fund at the ‘enterprise’ level. Consider how you might
advocate on behalf of grantees, on anything from government funding policy to
funder collaboration.

Avoid restrictions that compromise liquidity– unrestricted operating funds may
be the best way to ensure organizations are able to continue providing vital
programs.

Reduce the paperwork, stress and expense on grantees:
– Think in terms of “net grants” that take into account the cost of grant
application and reporting.
– In the application process, ask only for what you need.
– Increase transparency around grant cycle timing and process.
The recession brings a long-standing problem into sharp relief: it reveals the
precarious state of a sector that is continually asked to do more with less. This
crisis presents funders and government with an opportunity to substantively change
practices that perpetuate inefficiency and stymie innovation and growth. The talent,
resources, and passion that people in the sector bring to the goal of addressing
society’s most pressing issues must be protected and nurtured. This recession is
forcing the issue of how to better invest in what works for the benefit of society.
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Thank you.
For the full survey results, please visit our website,
nonprofitfinancefund.org
For any questions regarding the survey, please contact Joyce F. Jonat at
973.642.2500 x115
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©2009 Nonprofit Finance Fund
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