nonprofitfinancefund.org ©2010 nonprofit finance fund nonprofit finance fund ® 2010 state of the...

nonprofitfinancefund.org ©2010 Nonprofit Finance Fund

Nonprofit Finance Fund®

2010 State of the Nonprofit Sector Survey:Arts, Culture and Humanities Results

March 2010

For more information, please contact Jen Talansky at 212.868.6710 or visit nonprofitfinancefund.org

For full survey results, please visit http://www.nonprofitfinancefund.org/details.php?autoID=199

Data is based on a nationwide Zoomerang survey of nonprofit leaders conducted by Nonprofit Finance Fund, January-February 2010.

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Relentless in the Pursuit of Mission

Nonprofit Finance Fund recently conducted its second ‘State of the Nonprofit Sector’ survey. The survey focused on the intersection between finance and mission: are nonprofits financially equipped to keep up with the demand for services, and what are they doing to make sure they can meet the needs of their clients?

We asked nonprofit managers nationwide to assess the current financial challenges they face, and to share the coping strategies they’re employing to manage through these times.

1315 nonprofit leaders, 417 from arts, culture and humanities organizations, responded to our survey. Respondents stretched from coast-to-coast, from large organizations to small, and came from all sub-sectors.

What did we learn from their collective reply?

While bracing for another tough year in 2010, nonprofits are relentless in the pursuit of mission.

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What Areas of Need Do Survey Respondents Address?

Arts Organizations Are Well-Represented

32%

14%

4%1%

29%

1%

1%

7%

3%8%

Arts, Culture, and Humanities

Education

Environment and Animals

Health

House of Worship

Human Services

International, Foreign Affairs

Mutual/Membership Benefit

Public, Societal Benefit

Other, please specify


What is the Annual Expense Size of Arts Respondents?

Most respondents from small- to mid-sized nonprofits

32%

16%28%

13%

5%

3%3%

$0- $250,000

$250,001- $500,000

$500,001- $2,000,000

$2,000,001- $5,000,000

$5,000,001- $10,000,000

$10,000,001- $20,000,000

greater than $20,000,000


Arts Respondents Anticipate Greater Demand for Services in 2010

Service Demand in 2009 and 2010

14%

40%

28%

18%16%

53%

25%

6%

0%

10%

20%

30%

40%

50%

60%

a significant increasein demand for our

services

a slight increase indemand for our

services

no change indemand for our

services

a decrease indemand for our

services

2009 Actual

2010 Expected


What Are Organizations’ Revenue Expectations for 2010?

Respondents are most worried about government, foundation, and corporate giving

*Percentage of respondents receiving revenue from this source. Figures shown in the graph exclude responses marked “Not Applicable” for this question.

2010 Revenue ExpectationsExcludes 'Not Applicable' Responses

9%11%

16%

34% 35%

66%

56%

47%

25%22%

25%

33%

37%

43%41%

0%

10%

20%

30%

40%

50%

60%

70%

Government(91%)*

Fdn, UW, Fed(84%)*

Corp giving, sp(95%)*

Indiv & Board(96%)*

Earned rev(93%)*

increase

decrease

stay the same


What are Arts Organizations’ Operating Results?

It’s getting harder to operate above break-even: In last year’s survey, 37% ended 2008 with a surplus, versus 32% in 2009. Only 16% predict doing so in 2010.

2009 vs. 2010 Operating Results

37%

32%31%

26%

16%

45%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

an operating deficit an operating surplus break- even financialresults

unable to predict

FY 2009 Actual

2010 Expected


How Many Months of Cash Do Organizations Have Set Aside?

65% of respondents have 90 days or less of cash available:

13%

19%

33%

18%

16%

0% 5% 10% 15% 20% 25% 30% 35%

None

1 month

2- 3 months

4- 6 months

6+ months


What Actions Did Arts NPOs Take in 2009 and What Are They Planning for 2010?

Nonprofits are responding creatively to keep services going. In 2010, more groups are planning to expand programs and geographies than to cut them. Many are engaging with their Boards, and collaborating on programs.

ActionsEngage board 66% 65%Collaborate on programs 54% 59%Freeze hires and salaries 28% 53%Rely on more volunteers 49% 44%Develop contingency budget 46% 41%Add/expand programs 39% 41%Reduce/eliminate programs 22% 38%Reduce staff or salaries 13% 36%Use reserve funds 23% 34%Hold conversations with funders 35% 32%Delay vendor payments 18% 31%Reduce staff hours 12% 29%Reduce benefits 9% 24%Speed up collection of receivables 21% 20%Expand geographies served 19% 18%Reduce or refinance occupancy costs 12% 14%Collaborate on expenses 24% 13%Change mission or vision 12% 7%Sell assets 5% 4%Restructure/reduce geographies served 2% 3%Merge 1% 1%Other 9% 11%None- business as usual 5% 4%

Planning for 2010

Taken in 2009


What Financial Reports Are Arts NPOs Producing to Help Manage in These Times?

Board & management reports in last six months:

62%

81%

87%

26%

78%

9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Monthly cash flow projection

Balance sheet

Budget vs. actual incomestatement

Program economics analysis

Budget projections/scenarios

Other


25%

39%

41%

16%

28%

13%

13%

14%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Analyzing financialsituation

Scenario planning

Tools to communicatewith board

Collaboration or mergeranalysis

Program financeanalytics

Assistance negotiatingwith banks/ lenders

Debt restructuring

Other

What Type of Technical Assistance Would Be Helpful?

Arts managers expressed interest in technical assistance


Will the 31% of Arts Respondents that Received Government Stimulus Funding Be Able to Replace It?

Will you be able to replace stimulus money?

47%

7%

47%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

No

The funding was for atemporary program

Yes


What is Your Financial Outlook for 2010? How Will It Compare to 2009?

For our organization, 2010 will be:

9%

50%

41%

0% 10% 20% 30% 40% 50% 60%

Easier than 2009

Harder than 2009

More or less the same as2009


We continued to publish books at the same level as in previous years, despite having a smaller staff, believing that if we are less visible we will quietly die away.

Cut back on the few discretionary expenses we have; worked to keep staff morale up in the face of salary freezes, benefit cuts and vacancies. We were able to provide a high level of service in spite of problems.

Re-examination of expenses… and creative collaborations with partners to share costs while expanding program options.

Secured a $100,000 unsecured line of credit to help stabilize cash flow.

We are very fiscally organized and well able to understand and predict our operational and program costs.

What makes you proudest about how your nonprofit responded to 2009 financial challenges?

Cut programming, in-house printing, outsourced phone/ box office/email, reduced ticket prices.

We had just started construction on our capital project at the beginning of 2009 and we were able to mobilize our staff, kids, parents and our community to have our project be finished.

We reduced our costs dramatically without impacting what our audience saw on stage and without impacting the quality of our student instruction.


Conclusions

For most arts and culture organizations, 2010 will be as difficult or more difficult than 2009.

Despite difficult financial circumstances, nonprofits are going to great lengths to maintain– or increase– service levels.

There is some optimism for 2010. For example, fewer nonprofits are planning to reduce staff-related costs. However, it isn’t known if this is a function of improving conditions or drastic cuts in 2009.

Nonprofits reach out to peers in times like these. More than half are collaborating on programs.

Responses to several questions indicate that nonprofits are looking to make the best use of their Boards to help them manage through economic change.


About Nonprofit Finance Fund: Where Money Meets Mission

Nationwide network of experts in nonprofit finance Served thousands of nonprofits & funders since 1980 CDFI with $200 million in loans and over $1 billion in capital

leveraged for nonprofits Financial consultant with over 1,000 customized

consultancies/workshops Hundreds of strategic partnerships to advance the sector Debt, PRI/MRI management, New Markets Tax Credits Assistance in structuring philanthropic equity for change Thought leadership to advance friendlier funding practices across

the nonprofit sector

“[NFF is]… arguably the most influential voice in the ongoing effort to reshape thinking and practice about nonprofit capitalization.” -The NonProfit Times

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Nonprofit Finance Fund®

Where Money Meets MissionTM

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For the full survey results, please visit our web site, nonprofitfinancefund.org, or click on this link:http://www.nonprofitfinancefund.org/details.php?autoID=199

For questions related to the survey, please contact Jen Talansky at 212.868.6710.

Thank you.

“We’re in the business of helping nonprofits run better.”

–Clara Miller Nonprofit Finance Fund President and CEO

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