Spring 2013 issue of Horizons

NOT-FOR-PROFIT

Not-for-Profit Economic Outlook

As not-for-profit organizations head into 2013 and look back on 2012, it seems like there is finally good news for organizations that were hard hit by the economic recession. Many organizations are cautiously forecasting revenue growth, with an expected rise in individual, corporate, and special event funding leading this charge. Organizations continue to remain cautious though as they wait to see if the economic recovery will continue, delaying significant organizational changes and instead generally striving to maintain consistent expenses and staffing levels. However, different types of organizations face unique challenges. Below is a snapshot of the current state of the various types of not-for-profit organizations. The complete results of our 2012 Not-for-Profit Economic Outlook survey can be found at http://tinyurl.com/NFP-Outlook.

Arts & Cultural Organizations Focusing on innovative and attractive programming options as well as new marketing initiatives and dynamic pricing strategies, these organizations are continuously striving to entice new patrons as well as retain their existing patrons. Foundations Depending on financial market conditions to generate the positive investment returns needed to make grant distributions, foundations have benefited from recent improvements in these markets. Foundations are also strategically reviewing their investment strategies to allow them to better respond to market swings such as re-evaluating target investment allocations to allow for more flexibility and considering the use of alternative investments. Private Schools As demographics continue to change, private schools strive to maintain and ultimately increase enrollment levels. With on average more than 75% of school revenues derived from program fees, private schools are evaluating ways to remain competitive and fiscally responsible. New ways of generating additional annual giving and special events revenue, evaluating budgets and identifying potential expense cuts, evaluating facility needs, and continuing to build and grow endowments are all being considered in this effort.

Religious Organizations These organizations benefit from being the type of organization to which the most charitable giving is directed. However, declining membership levels in religious congregations and communities is having a negative effect on these organizations’ financial stability. As such, these organizations are looking at electronic resources such as online giving, smart phone apps, lobby kiosks, and automatic bank withdrawals to increase tithing. Social Services Organizations Continued increase in demand for services coupled with expected flat or declining government funding is putting a strain on social services organizations and requiring them to look to other revenue sources to meet this growing need. Trade & Membership Organizations Relying on primarily membership dues to support these organizations, declining membership levels as well as pressure from members to maintain or even lower membership dues rates is causing a strain for these organizations. In response, these organizations are looking to increased electronic communications and advertising as well as word of mouth from current members to try to attract new members as well as exploring other revenue sources such as corporate sponsorships to counter declining membership levels.

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