3 of the 5 things for non-profits to know in 2010: Confirmed.

 I don’t want to be demeaning and say, “I told you so…,” but, I told you so. I came across a couple more articles this morning that confirmed three of my “5 things non-profits must know for 2010″ blog post. The first article comes from Ed Brock of American City & County (2009). Ed says “frugality is now the new normal,” and points out that 1) government and non-profit agencies will need to be collaborating to provide services, 2) duplicated services provided by both the government and non-profits will need to be streamlined, 3) duplicated services provided by both the government and non-profits will need to be streamlined, and 4) duplicated services provided by both the government and non-profits will need to be streamlined. Redundancies of services will be targeted as a money-saving initiative. This potential merger of private non-profits with public government is just one form of collaboration that will be increasingly considered in 2010.

The second report comes from the National Association of Counties (NACo; 2009). In research they conducted with 138 counties across 34 states, they found that almost half said “their anticipated budget shortfall was worse than expected and 4 out of 5…said the shortfalls will continue into their next fiscal year.” This shortfall directly impacts non-profits, and as the NAC0 Executive Director Larry Naake says, “The great challenge for counties of all sizes in the months and years ahead is continuing to provide essential services to residents who are relying more on county services and programs.” The financial outlook is such that non-profits need to be fundamentally changing how they go about their work to be more efficient and more streamlined to respond to more peopl . As I had stated in my “5 things to know” post, 2010 is not looking financially promising for non-profits.

The NACo piece also makes reference to considering what will happen when recovery/stimulus funds run out. Naake puts it bluntly: “Our grave concern is what happens to state and county budgets when the federal economic stimulus dollars end next year?” What happens is one of two things: More money is given, in which case watchdog organizations require greater accountability and transparency for how the funds are used. The second scenario is that money is cut off, in which case, competition for funds will increase, and those organizations that can prove their value–in quantifiable outcomes and accountability–will be selected over those organizations that can’t prove their value. Either way, the ability to be accountable for funds and show measurable outcomes will be critical for non-profits.

It’s also important to note that Dec 31, 2010 isn’t a doomsday. That’s when the recovery funds are scheduled to end, but the disbursement and receipt of funds is likely to carry into 2011. The NACo report points out that most of the counties have only received about half of the funds at this point, and that those will continue to trickle in over the coming months, and likely into 2011.

One interesting point regarding the stimulus funds for non-profits is that they may be receiving stimulus funds, but at the same time, they are likely to have decreases in other sources of funding, such as individual or foundation gifts. Executive directors of non-profits need to be prepared for a mind-boggling budgeting meeting for the 2010 fiscal year that takes into account which resources will produce less income and which are likely to produce more.