Layoffs, program cuts at nonprofits on rise because of recession

The impact of the economic downturn on the nonprofit sector has deepened over the past six months, with an increasing number of organizations resorting to layoffs, broad programmatic reductions and reserve draw-downs, a new report from the Bridgespan Group that was written about in Philanthropy News Digest finds.

Issued as a follow-up to a November 2008 survey, the new report, Managing in Tough Times: May 2009 Nonprofit Leaders Survey, found that 92 percent of nearly 100 nonprofit leaders surveyed in May reported that their organizations were experiencing adverse effects of the downturn — up from 75 percent in November. What’s  more, 49 percent said their organization’s financial situation had worsened, with the number of nonprofits reporting funding declines jumping from 52 percent to 69 percent, and those reporting declines of more than 20 percent increasing from 13 percent to 24 percent.

In response to the tough economic climate, 41 percent of respondents said they had laid off staff (compared with 28 percent in November), 67 percent had redesigned programs to reduce costs (59 percent in November), and 33 percent had dipped into reserve funds (19 percent in November). According to the survey, the most popular recession-fighting tactic among nonprofits was to work more closely with existing funders.

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