Survey Reveals Effects of Economic Downturn on Nonprofits in Michigan
The country has officially been in a recession for 13 months, the state fiscal year 2009-10 budget estimates call for a shortfall of about $1.4 billion, and it is no secret that Michigan will continue to face tough economic times well into 2011. What is less obvious to the general public is how the economic downturn has affected the nonprofit sector.
This week I intend to blog about the economic impact of Michigan’s nonprofit sector and its struggle with the economic downturn. Nonprofits are seeing an increase in demand for their services and are being pressed to find new or revitalize old ways to support this increase. Before I can focus on strategies and solutions, I want to share with you the findings of a recent survey. In early October, the Michigan Nonprofit Association teamed up with the Johnson Center at Grand Valley State University to conduct the first ever “Critical Issues Affecting Michigan’s Nonprofit Sector” survey. With more than 300 participating organizations, our goal of the survey was to assess how the struggling economy is impacting nonprofits throughout the state.
We found that over the past 12 months there has been a surge in demand for nonprofit services across the state. Ninety four percent of nonprofits agreed that the economy was the primary reason behind this growth. Other contributors? Cuts in the state budget, foreclosures, and the rising costs of fuel and food. While two out of three nonprofits currently have been able to meet the growing demand, we can only speculate how much more nonprofits can handle as domestic auto manufacturing dips further or goes under.
What I find more troubling is that while 71 percent of responding nonprofits stated that demand for their services has been increasing, half of nonprofits have experienced a decrease in their financial and in-kind support over the past 12 months. Again, the economy appears to be the main factor. Changes in financial and in-kind donations have had varying affects on organizations around the state. Southeast Michigan has been the hardest hit with more than 63 percent of nonprofits reporting a decrease in support during the past year. Finally, with the forecast for even harder times on the horizon for the Rust Belt States and Automotive Manufacturing Industry, we have to ask ourselves some hard questions.
What does the future hold? Michigan nonprofits forecast even stronger demand for services in 2009 and expect financial and in-kind support to continue to decrease. Nearly 80 percent of responding nonprofits expect to see an increase in demand for their services in the next year. And I should share that 96 percent (yes, nearly all) of Human Services nonprofits who responded to the survey anticipate a growth in demand. Although many nonprofits are anticipating an increase in demand, the survey found 31 percent of nonprofits with budgets over $6 million have experienced a growth in financial/in-kind support during the past year. This demonstrates the largest nonprofits in Michigan are adapting to the changing economy.
There is no doubt Michigan nonprofits have been affected by the struggling economy in several ways and it will be important to follow these trends in the coming months. However, the nonprofit sector is strong and will need to adapt to the economic changes. Also, Michigan historically has a strong tradition of giving and volunteering. According to MNA’s 2007 Giving and Volunteering survey, almost half of Michigan’s residents volunteered in 2006, and nine out of ten residents made a charitable contribution in the previous year. Specific to Southeast Michigan, 43 percent of residents volunteer and nearly 90 percent made a charitable contribution. We hope to see this giving spirit continue as we see more of our neighbors turning to nonprofits for assistance.
If you work for or volunteer with a nonprofit, have you noticed an increase in demand for services? What strategic changes are you making to evolve with the current economic realities?
To download the full Economic Downturn report, visit www.mnaonline.org.
Kyle Caldwell is the President and CEO of Michigan Nonprofit Association. You can read more about Michigan’s nonprofit sector through the Michigan Nonprofit Association blog. Research was compiled and analyzed by Wesley Miller, a graduate assistant at Grand Valley State University working with the Michigan Nonprofit Association.