Most Nonprofits Lack Recession Plan

Two-thirds of nonprofits don’t have a plan to deal with a recession, according to survey data from the Center for Effective Philanthropy.

And the vast majority of nonprofits — 96 percent — say the foundations they rely on for funding have not talked with them about how a recession would change the way they support those nonprofits. But nonprofits appear very eager to have those conversations; 89 percent say they would like their supporting foundations to discuss recession planning.

Since the end of the Great Depression, the typical American economic expansion cycle has lasted an average of about five years. The current economic expansion is entering its 11th year since the Great Recession, causing economists and nonprofit officials alike to wonder when the next downturn will hit.

Among the 33 percent of nonprofits that reported they did have a plan, 38 percent said their organization would need to tap into a reserve fund to ride out the next recession. Asked for anecdotal data as part of the survey, one nonprofit official told pollsters, “We are preparing now, but not soon enough, by establishing a rainy-day fund to hold six months of operating cash.”

Twenty-one percent of nonprofits with a plan said they would have to reduce programs and services if a recession hit. Meanwhile, 64 percent of nonprofits said a recession would increase the need for their programs or services.

The results are drawn from a survey of nearly 420 grant-seeking nonprofits with operating budgets of $100,000 to $88 million.