News and analysis
August 17, 2010

40% of Charities Faced Fund-Raising Losses in First Five Months of 2010, New Study Finds

Richard White/The Chronicle of Philanthropy

Donations to many charities have been sluggish in the first five months of the year, according to a new study of more than 7,000 nonprofit organizations. Forty percent of charities reported a decline in giving from January through May, compared with the same period in 2009, according to GuideStar, a Web site that maintains financial information about charitable organizations. Eight percent of organizations said that they were “in imminent danger of closing due to financial reasons.”

At the same time, 63 percent of nonprofits said that demand for services had increased in the first five months of the year.

Fewer Donors

The survey included organizations of all sizes. Fifty-six percent were small, with annual budgets of less than $1-million, a quarter had budgets of $1-million to $4.9-million, and another 16 percent had budgets of $5-million or more.

Charities said the biggest reason donations dropped was that fewer people were giving, with 67 percent citing that concern. Two-thirds of organizations also said that the size of average gifts donated was smaller than in the past. Forty percent of charities said that both corporate and foundation grants were smaller than they had been in 2009, while some groups reported that grants from foundations were discontinued (22 percent), government grants were smaller (20 percent) or discontinued (10 percent), or corporate grants were discontinued (19 percent).

Nearly 30 percent of nonprofits said that their 2010 budgets were smaller than last year’s.

Among those organizations, 58 percent said they had cut back programs or services to achieve savings. Half of the groups froze salaries, while 38 percent said they did not do any new hiring, 23 percent reduced employee benefits, and 21 percent reduced salaries. Sixteen percent of the charities reduced operating hours, while 12 percent restructured or merged.