In Challenging Times

How Organizations Have Responded to the Economic Downfall

In the fall of 2009, we reconnected with more than 100 of our grantees to find out how they were coping as the economic downtown continued. Originally contacted in January 2009, interviewees were surveyed by phone and asked to share their thoughts on the following matters:
  1. What impact has the economic downturn had on your organization?
  2. What actions have you taken in response to the economic challenge?
  3. Are you experiencing or observing greater collaboration within the not-for-profit (NFP) sector and what can we do to support this?

Highlights

Compared to the initial conversations in January and February of 2009, there were notable changes - both negative and positive -  in the status of several organizations.

The Positive
  • More than 72% of respondents reported collaboration in the sector was increasing;
  • A large majority of organizations (87%) have now developed plans to manage through the current economic uncertainty;
  • There have been minimal layoffs or cutbacks in services (they're coping but stretched).
The Negative
  • Food banks reported an average 25% increase in demand for services across the province;
  • More than 75% of respondents indicated that their organizations were feeling the effects of the  recession (compared to about 30% in January);
  • Almost two-thirds of organizations surveyed reported a decline in funding over the past year;
  • 68% said that the fundraising climate was worse (34%) or the same (34%) as in January;
  • About 30% reported a reduction in the number and value of corporate sponsorships;
  • 68.9% reported experiencing an impact on their programs and services as a result of the downturn -- 77% for social service organizations, 56% for arts organizations, 67% for environmental organizations.

Impact of the Economic Downturn

Organizations from all four OTF sectors are being affected. Some of the anxiety that agencies were experiencing earlier in the year has subsided. Most organizations described slight decreases in revenue areas such as corporate sponsorship or foundation grants. One concern is the possibility that organizations overwhelmed by economic issues are solely focused on "day-to-day management". This could come at the expense of long-term thinking and planning.

Organizations that depend on fundraising (donations, ticket sales, etc.) have had a more difficult time in the past year. The smaller the organization, the greater the vulnerability to even a slight downturn in revenue. Respondents confirmed that demand for services is increasing particularly for food banks, credit counselling, mental health counselling, and employment counselling. Not-for-profit organizations in St. Catharines, Windsor and North Bay report they have experienced a significant decline in earned revenue, ticket sales and donations.  Meanwhile demands for services has increased, especially for human and social service agencies.

Sector-specific examples include:
  • An environmental organization reported that some institutional funders or donors who in the past may have given $10,000 - $15,000 have cut back to the $2,000-to-$5,000 range for their gifts;
  • A community organization experienced a decline in donations. This was offset by increased sales at its thrift shop social enterprise;
  • One credit counselling agency reported a 45% increase in clients since late 2008;
  • An employment resource centre in Southwestern Ontario reported that by July client numbers had doubled compared to the previous year. In response staff work longer hours;
  • An arts festival organization had to outsource its entire management to a production company, while another shut its doors for the summer to save costs;
  • A social service funder in Eastern Ontario noted demand at a credit and family counselling service increased significantly with 1,000 new clients in May alone.

How Organizations are Responding

On a positive note almost 87% of organizations surveyed have developed plans or strategies since early 2009. They indicate they expect to manage the changes they are facing as a result of the recession.

Responses include:
  • Taking a more conservative approach to budgeting for 2009;
  • Exploring new social enterprise opportunities. For instance, an agency serving newcomers is looking at establishing a money transfer business;
  • Considering opportunities to share administrative services or even moving to a "virtual office" set-up;
  • Drawing on reserves;
  • Focusing on nurturing core relationships with funders, donors and stakeholders;
  • Addressing the emotional and mental health needs of their staff - one agency initiated yoga and stress reduction classes;
  • Collaborating and taking a more active role in advocating for the needs of the sector.

Increasing Collaboration

 A majority of respondents indicated that collaboration, while not new to the sector, was on the rise. A significant number of organizations were enthusiastic about this trend. Several interviewees noted that during tough times agencies are often forced to come together to look at what they have in common and how to support each other. Many organizations spoke about partnering with 'non-traditional' organizations outside their sector (local business groups, health and educational institutions) and noted that the recession may have accelerated this trend.


 * Examples of collaboration cited by L. Robin Cardozo


Examples of Successful Collaborative Activities

A range of new networks are springing up across the province - some are regional such as the Halton Non-Profit Network, while others are Ontario-wide, such as the Ontario Non-Profit Network.

In Windsor, the Walk for a Creative City collaborative with WindsorEats, Windsor Essex Walking Network and the Windsor Endowment for the Arts drew 20 arts organizations together to hold a public fair.

In Leamington, the Ontario Association of Foodbanks partnered with a local farmers to bring 300,000 pounds of fresh peppers to food banks in the area.

Several Toronto women's shelters have come together, with support from the province, to undertake a collective strategic planning exercise.

In Sudbury, a number of local food, community development and environmental organizations are exploring how to go beyond simply sharing space to sharing services, programming and other resources.

In Northern Ontario a group of credit counselling agencies are exploring a possible joint marketing plan including print and radio advertising.

Renewable energy hubs involving municipalities, First Nations communities, nonprofit community power groups and local utilities are being created, encouraged by the Green Energy Act.

An Ottawa environment organization is collaborating with low-income housing providers to retrofit buildings and with local civic engagement organizations around neighbourhood walks.

The Problem of Collaboration Burn-Out

In some parts of the sector such as children's services, respondents raised the issue of collaboration 'burn-out'.  Over the past decade there has been growing emphasis on collaboration between agencies in service planning. It was noted that encouraging collaborative effort is appreciated but forcing collaboration may lead to resentment. There is concern that while collaboration is important, it can also disrupt key mission-centred work.

How has OTF responded?

Overwhelmingly, grantees were positive about how OTF has responded throughout 2009. Many respondents felt that OTF has been a proactive public voice regarding the value of the not-for-profit sector, and could, in fact, enhance this role.  Some respondents admitted that they felt overwhelmed by the number of requests from OTF and other funders to attend meetings and provide information, while others seemed to welcome these opportunities. Respondents also again asked for more collaboration and better communication between funders in Ontario.

Over the past 12 months OTF has:

  • Valued the importance of "taking the pulse" over the long term and has followed up with a second survey of OTF grantees;
  • Initiated Community Roundtables - in-person and online consultations and partnerships with networks and collaborations - to support information-sharing within and between communities and sectors;
  • Provided resources and links to community partners' resources as tools for organizations to gain knowledge, expertise and experience of others through an online community.
  • Convened events in a number of communities across Ontario with leading fundraiser Kim Klein to share resources around revenue generation;
  • Brought community funders together to build community investment strategies that better meet the funding needs of local organizations and agencies;
  • Launched a new online organization registration and application service and continues to look at new ways to enhance and streamline the OTF grant application process.

 * L. Robin Cardozo talks about what's next for Ontario's not-for-profits

Conclusion 

The economic downturn continues to have an impact on not-for-profits in Ontario. Many regions of the province will continue to feel the effects of the recession and longer-term economic restructuring in the months ahead. Many respondents recommended that we and other funders continue to monitor the impact of the recession. It appears that this recession has also helped some organizations to prepare for future challenges and may have accelerated trends such as collaboration and social enterprise in the sector.  

OTF continues to play a key role in sharing knowledge of what is happening in the sector today and supporting innovation and collaboration in the sector and at the community level across the province.

L. Robin Cardozo
CEO, Ontario Trillium Foundation