Nonprofits’ Recession Woes: Demand Up, Supply Down

Last week, Guidestar released a broad survey of U.S. nonprofit organizations’ financial strength in the first five months of 2010.  As you might guess, the report contains some unwelcome news.  Many of the 7,000 organizations surveyed reported funding shortfalls, service cutbacks, and layoffs, none of which should surprise anyone who hasn’t been living under a rock for the past two years.

However, a majority of the nonprofits reported either increased (30%) or flat (28%) donation intakes through May of this year.  Not long ago one might have claimed this as evidence of vibrancy in the nonprofit sector (i.e. donors allowing poorly performing organizations to flounder and rewarding more effective organizations with increased funding).

But the real challenge most nonprofits face today—the canary in the proverbial coalmine for those working in the sector—comes in the form of increased demand for their services.  63% of organizations reported an increase in demand, and of those nearly half reported that demand has “increased greatly.”  Another 29% reported flat demand for services while only 6% reported a decrease (2% didn’t know).

This data confirms nonprofits’ fears reported in earlier survey conducted by the Nonprofit Finance Fund.  In that survey 80% of nonprofits reported anticipating increased demand for their services in 2010 and fewer than half expected to be able to meet this demand (Lee Mason and OMB Watch offer a nice summary of the data).  Overwhelming demand for services is a serious challenge for nonprofits that now risk being stretched too thin and for a public in need of a reliable and robust social safety net.

What to do?  Everything I read these days suggests that demand for nonprofit services will remain high or increase in the coming years.  Unfortunately, I don’t have any brilliant ideas for ending the recession.  But I do have a few practical ideas for nonprofits when it comes to meeting this increase in need.

At Causes we’ve spent a lot of time building tools to help nonprofits and activists raise funds from individuals and corporations.  Together the latter two groups account for over 80% of all philanthropic giving in the U.S. and while neither group has stopped giving, fundraisers now have to work harder—or “smarter”, as the adage goes—to capture their giving.  Whether you are a large nonprofit or an individual who wants to fundraise on behalf of a nonprofit, here are three tools that will help you use social media to raise money from individuals and companies:

Project-based Fundraising

You can create fundraising projects of all sizes that tell individual donors exactly what you are doing and how much impact their donation can have.  We’ve launched a beta version of our Projects Page for public browsing.  Nonprofits can create and promote new projects from their Causes Partner Center and activists who administer affiliated causes can feature and promote them as well.

Social Fundraising: Birthday Wish

Causes has pioneered peer-to-peer fundraising on Facebook through Birthday Wish, which allows anyone to donate his or her birthday to a nonprofit and ask friends to make contributions rather than give gifts.   In the past year, 90,000 Facebook users donated their birthday to their favorite nonprofit.  There are other 499,830,000-some Facebook users who haven’t yet committed their birthdays to anyone!  Nonprofits should start with employees and their most avid supporters.  As an activist, this is one of the best ways to help your favorite organization.  Either way, start here.

Corporate Matching Grants

If you have a community of supporters on Causes you have an asset that is valuable to companies that want to tell people about their philanthropic giving.  You can leverage your cause to retain existing corporate sponsors, increase the amount they give, and pitch potential new sponsors.  Companies are increasing “cause marketing” spending and are finding it to be the most effective way to communicate with people on Facebook.  You can ask a company to offer a matching grant for your organization on your cause, which channels funds and new donors to you, and a tremendous amount of good will advertising value for the company.  Learn more about the program here.  If you have lined up a sponsor who you would like to run a matching grant through your cause, please email partner@causes.com