January 24, 2009 — Already feeling the impact of the recession on their ability to fulfill their mandates, Massachusetts nonprofits are trying to plan for the future, but the effort is complicated by the fact that no one knows for sure where the economy is in the current cycle.

“There’s a tremendous amount of fear in the sector about what’s going to happen. There are already some cuts that are severe and some folks have been hurt dramatically,” said David Magnani, executive director, Massachusetts Nonprofit Network, the state’s nonprofit trade association, quoted in this week’s Boston Business Journal. “What we’re concerned about is whether it’s the iceberg or the tip of the iceberg.”

According to the report, “Leaders of the sector, who may have mingled in political circles but typically have avoided politicking, now are trudging Beacon Hill for meetings on funding issues, discussing tax policy changes and hoping for a lifeline thrown to the nonprofit sector out of the federal incentive package promised to Massachusetts by the Obama administration. And they are asking a question that, while not new, has more relevance than ever: Should foundations and corporations, rocked by the economic nosedive, be nonetheless digging deeper at such a critical time?”

Economic Implosion Affecting All Nonprofits

Kristen J. McCormack, faculty director of the public and nonprofit management program at the Boston University School of Management, was quoted: “I’ve been in this business for 30 years and I’ve never seen anything this bad. Every income stream that supports nonprofit organizations has been impacted by this economic implosion. In previous times you’d have significant downturns in private contributions, or big cuts at the state level or the federal level. Rarely do you get the simultaneous cuts of the magnitude that we’re beginning to see.”

According to the Boston Business Journal, The Women’s Lunch Place , recently met its 2008 budget goals, but is now operating on an emergency plan.

Not all outlooks are negative. Ron Ancrum, president of Associated Grant Makers, was quoted, “Organizations that have strong and healthy development staffs and have been good in securing major gifts and annual contributions from wealthy individuals are probably the strongest in an economy like this.”

However, he said, that foundations in Massachusetts are in little better shape than the organizations they fund, and are reporting endowment investment losses of as much as 35 percent.

Under the best of circumstances, foundations will look to maintain the status quo by distributing the same amounts in 2009 that they granted out in 2008, and keeping the same grantee relationships they developed last year. During the financial good times, according to Ancrum.

“If I were a company, I’d spend less money on a gala dinner and spend more money on direct services,” Ancrum was quoted as saying.

Many businesses have done what he suggested. For example, Accounting Management Solutions in Waltham recently toned down its annual winter employee party and contributed $10,000 to three local nonprofits.