Financial Crisis - A 5 Year battle for NFPs

Australian Not for Profits face a five year battle with diminishing funds according to a dire warning delivered to participants at the Nonprofit Financial Forum in Melbourne last week.

Hugh Hodges, the CEO of ANZ Trustees told the Forum that Not for Profits should expect and budget for as much as a 30% drop in revenue in the next year and to expect another 10% drop in the second year as part of the rolling impact of the financial crisis.

Hodges pulled no punches when he told the audience "you will suffer". Hodges said Not for Profits have been living beyond their means with some fund managers telling them what they can afford to spend and organisations going out and spending it without realising the longer term impact of not reserving some of the gains made in the bull market for a rainy day.

He said now is the time for NFPs to engage with their fund managers and get them involved in their strategic decisions and that they should focus on one or two trusted advisors.

During audience discussion, Hodges was asked if Not for Profits should go into deficit to fund their programs.
He responded by saying avoid running a deficit at all costs. Another panel member added a cautionary note saying that some Foundations don’t like giving to organisations with deficits.

And finally Hugh Hodges predicted that it would take another two or three years for the Not for Profit sector to fully recover after hitting the bottom of the economic downturn as it would take some time before donors and companies felt themselves to be back in a position where they could give again.